REG - South African Prop. - Half Yearly Report - Part 1
30 Mar 2010
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RNS Number : 4068J
South African Property Opps PLC
30 March 2010
SOUTH AFRICAN PROPERTY OPPORTUNITIES PLC
('SAPRO' or the 'Group')
Interim results for the six months ended 31 December 2009
South African Property Opportunities plc (AIM: SAPO), an investment company established to invest in real estate
opportunities in South Africa, announces its unaudited interim results for the six months ended 31 December 2009.
Matrix Paul Fincham +44 (0)20 3206 7175
Hogarth Partnership Tim McCall (office) +44 (0)20 7357 9477
(mobile) +44 (0)77753 561862
A copy of the results announcement will be available on the Company's website at www.saprofund.com
Notes:
Note to Editors:
- South African Property Opportunities plc (SAPRO) is a company investing in the South African property market.
Its shares were admitted to AIM in October 2006 raising an initial £30 million (before placing expenses). In May 2007 a
further £34.2 million (before placing expenses) was raised from new and existing investors.
Chairman's Statement
Introduction
I am pleased to report South African Property Opportunities plc's ("SAPRO's" or "the Company's") unaudited interim results
for the six months ended 31 December 2009.
We continue to work to identify projects within the portfolio which have the potential to generate an appropriate level of
return. This is against the background, as identified in our final results, of a depressed property market in South
Africa. This has impacted our net asset value ("NAV"), but we believe that the portfolio is well placed for recovery and
this puts the Company in a good position as and when residential and commercial demand picks up. In addition, the Company
and its subsidiaries (the "Group") has a healthy balance sheet with cash of £12.5 million enabling it to take full
advantage of the opportunities inherent in the investments.
Financial results
As at 31 December 2009, the NAV of the Group, calculated in accordance with International Financial Reporting Standards
("IFRS") stood at £73.1 million (117.3 pence per share), up 4.1% from £70.2 million (112.7 pence per share) as at 30 June
2009. IFRS does not permit the recognition of increases in land value of certain types of property that are held for
development and accordingly, the IFRS NAV shows these development properties at cost.
The board of directors of the Company (the "Board") is also publishing an adjusted NAV that incorporates open market
property valuations in accordance with guidelines produced by the European Public Real Estate Association ("EPRA"). As with
previous results, these property valuations have been carried out by CBRE. The EPRA NAV, reflecting the increase in value
net of the associated tax, was £86.0 million (138.0 pence per share), up 3.2% from £83.3 million (133.7 pence per share) as
at 30 June 2009.
The rise in the EPRA NAV is due to the movement in currency and to the ongoing investments in some of the projects. On a
like-for-like basis (in Rand terms), there has been a marginal fall in values, reflecting the lower level of transactional
activity in South Africa, together with a more cautious approach in the market.
Ongoing management arrangements
Since this Board was constituted in October 2009, we have taken a number of steps to rationalise the business.
We served notice on the current investment manager and their notice period lasts until 20 October 2010. We have started to
put in place appropriate arrangements for when the contract comes to an end later this year. We will clearly inform you as
and when these arrangements are finalised. As explained in the report and accounts for the year ended 30 June 2009, John
Chapman and Craig McMurray continue to ensure the Company is managed effectively on a day-to-day basis.
We have also replaced the South African administrator with the GMG Group. GMG is a well reputed company with a strong
presence in South Africa. We were also able to negotiate fees that are substantially less than those of the previous
administrator. The turnover has not been entirely smooth, however, and, amongst other issues, we have had to requisition
many general meetings in South Africa to remove directors and replace them with our choices. This has taken several months
(given that there are two layers of local companies in South Africa) but we are now close to concluding this process.
As we have previously announced, the Company's investment manager has made a claim for performance fees allegedly due for
an amount of up to £5.1 million (in cash and shares). The Company believes that the claim is without merit and intends to
vigorously defend it. The Investment Manager has also made a claim for unpaid management fees for 2010.
I hope that we can quickly put these legacy issues behind us and focus on the ongoing development of the Group.
Investments and valuations
As I mentioned in my December report, we are undertaking a comprehensive evaluation of SAPRO's entire portfolio and are
sorting our assets into three categories - develop, hold and sell. We intend to approach this process rigorously by forming
a clear view as to the expected rate of return from each project and whether this rate is adequate. In my view the required
rate of return must factor in two major risk components - country risk plus project risk.
As for country risk, shareholders should keep in mind that while South Africa offers a lot of opportunity, it also presents
substantial risks. Because there was no real credit boom in the early part of this decade, South Africa has not suffered in
the global recession like so many other countries. Although there were some excesses in South African property prices,
especially in the residential sector, property prices never disengaged from economic reality to the extent they did in
other parts of the world. There continue to be many arguments why South Africa's future should be bright including the
increasing demand from a newly emerging middle class and South Africa's position as the business centre of Africa. Having
said that, South Africa faces many challenges as well. Consumer price inflation is projected to be in the order of 6% for
2010. Approximately 25% of the eligible work force is unemployed, and recent economic growth, while positive with GDP
growth projected at 2.8% for 2010, is not at a level sufficient to materially diminish the unemployment numbers nor offer
sufficient opportunity to South Africa's large underclass. Political stability must also be considered given that the
unequal wealth distribution is primarily along racial lines. These risks and inflationary expectations are reflected in the
yields on South African government paper, ten year government bonds yielding close to 9%. Factoring in an appropriate
development risk premium, your board believes the assets in the portfolio need to be able to exceed a high hurdle, although
this hurdle will vary from the lower risk of holding land to the higher risk decision of carrying out development.
With this in mind, let me now turn to our assets and give you an overview of what has been accomplished since the last
report. The projects as at 31 December 2009 were as follows:
Project Name SAPRO Interest (%) SAPRO Share of Land Cost (ZAR million) SAPRO Share of Land Value (ZAR million) SAPRO Share of Uplift (ZAR million) SAPRO Share of Uplift over Cost (%)
Residential
African Renaissance 65 41.5 82.9 41.4 100
Driefontein Residential 100 22.0 25.8 3.8 17
Kindlewood Nature Estate 89 72.0 72.0 - -
Kyalami Residential Estate 90 25.4 25.4 - -
Mixed Use
Brakpan 50 15.2 15.9 0.7 5
Emberton 80 41.6 41.5 (0.1) -
Lenasia 100 55.1 55.1 - -
Longmeadow 49 80.5 111.9 31.4 39
Sandton 79 89.6 89.6 - -
Starleith 50 18.7 17.4 (1.3) (7)
Industrial
Clayville Industrial Park 100 6.7 17.7 11.0 164
Gosforth Business Estate 75 102.3 131.2 28.9 28
Hughes Industrial Park 30 13.4 12.6 (0.8) (6)
Imbonini Services Park (Phase 1) 50 13.7 13.7 - -
Acacia Park * 50 19.6 19.6 - -
Imbonini Services Park (Phase 2) 50 34.6 69.2 34.6 100
Waltloo Industrial Park 50 7.7 9.7 2.0 26
Total 659.6 811.2 151.6 23
£1 = R11.7889 (31 December 2009 rate) Source: Proteus Property Partners, GMG and CBRE
* Acacia Park is a mini unit industrial park that has been developed on the Imbonini Park (Phase 1) land.
28
Hughes Industrial Park
30
13.4
12.6
(0.8)
(6)
Imbonini Services Park (Phase 1)
50
13.7
13.7
-
-
Acacia Park *
50
19.6
19.6
-
-
Imbonini Services Park (Phase 2)
50
34.6
69.2
34.6
100
Waltloo Industrial Park
50
7.7
9.7
2.0
26
Total
659.6
811.2
151.6
23
£1 = R11.7889 (31 December 2009 rate)
Source: Proteus Property Partners, GMG and CBRE
* Acacia Park is a mini unit industrial park that has been developed on the Imbonini Park (Phase 1) land.
Residential Developments
The residential sector has been under a lot of pressure and it remains questionable how quickly things will improve. For
2009 as a whole, the total area of residential buildings completed in South Africa declined by 23.2%, while that of plans
passed fell by an even greater level, 40.4%.
We expect 2010 to be another tough year for the residential building sector, and for the year as a whole completions growth
is expected to be flat. This, however, can imply an improving level of activity as the year progresses, with the worst part
of the year being the first half, while the second half is expected to see some positive year-on-year growth off what is
now a very low base.
It is not expected that that the recovery in nominal house prices will result in a change in real house prices in the near
term. The reasons for this are:
· Tough prospects for the country's finances (adding pressure on taxes)
· Rising unemployment
· Already high house prices in real terms
· Already high levels of household debt
· Constraints on economic growth through electricity shortages and an uncertain outlook for the world economy
Given this situation SAPRO will exercise prudence before it commits to further top structure residential development.
Kindlewood phase one is now complete. The Kindlewood development comprises two adjoining plots with a combined area of 5.3
hectares and is located north of Durban. Phase one comprises forty-one units. Sales have been slow with eleven units sold.
Given the market conditions, we have begun letting units and now have two units under lease. Considering the difficult
market conditions and slow sales in Kindlewood phase one, we have no immediate plans to commence construction on phase two
of the project.
African Renaissance is predominantly undeveloped land east of Pretoria. The plan has been to construct a large residential
development along with a commercial/retail component. We have been considering hiving off African Renaissance's
commercial/retail component, which should be attractive to investors separately from the residential component. We would
then sell the residential component separately.
Driefontein comprises a vacant 13.2 hectare site suitable for low cost residential housing located four miles south of
Johannesburg airport. It is adjacent to a former mining site. Final conditions of establishment have been granted and the
necessary bulk services have been secured. However, environmental approvals have been withheld for reasons that we do not
believe are justified. We are working on overturning the relevant decision. We will then need to determine how to proceed,
with one possibility being selling the entire site to a developer experienced in constructing low cost housing.
Kyalami is undeveloped agricultural land situated in Kyalami, north of Johannesburg. The original plan was for a high
density residential development. The town planning process is well advanced and the Johannesburg City Council has approved
higher density development than was originally anticipated. Whether SAPRO will develop Kyalami or sell it on to a developer
remains to be determined. Originally SAPRO was to hold 55%, with a group of development partners holding the remainder. It
has subsequently been suggested that the partners are considering reducing their position; SAPRO is expecting a proposal
shortly.
Emberton is a 16.5 hectare site located outside of Durban. A local developer with considerable experience in the region is
responsible for obtaining the various approvals for a high quality residential development with a smaller component of
retail and commercial. Under the terms of the contract, the developer had an option to inject capital into the development
by mid-February 2010 and thereby participate as a 20% equity investor. The development partner so far has not done so and
the parties are engaged in negotiations to restructure the arrangement. Progress has been made with the acquisition of
planning rights but considerable work remains. SAPRO has been approached by the regional council to sell a portion of the
property for ZAR 9 million to construct a new water reservoir.
Mixed Use Developments
Continued global economic problems have resulted in an amount of uncertainty regarding investment yields for property in
South Africa resulting in persistent instability in the industry. In spite of the technical emergence of the economy out of
recession, the rental markets in particular continue to feel the pinch of weak economic conditions across the commercial,
industrial and residential arenas. Generally the outlook for building activity is negative, as building-input costs and
tender prices continue to weaken.
Latest reports show that real retail sales in December 2009 were still in negative territory, declining at a rate of 3.7%
year on year. This poor performance is due to a combination of a lack of consumer confidence, still-high levels of
household debt, the almost one million jobs lost last year and very little appetite for credit.
Tempered expectations for real rentals remains the main risk to capitalisation rates necessitating higher income returns
for investors because of lower capital-return prospects, resulting in suppressed values. Capitalisation rates for
non-residential property types have remained static from Q4 2009.
Brakpan comprises 6.65 hectares of undeveloped land with final approvals expected later this year. At that point SAPRO
will need to decide whether to proceed with top structure development or sell the asset to a third party. Brakpan will take
time and substantial money to develop. The original plan was to obtain the requisite approvals, develop and lease the site,
and sell it to an institutional investor at a later date. Whether the expected returns from this strategy are commensurate
with the risks remains to be determined.
Lenasia comprises 12.95 hectares of undeveloped vacant land at a busy intersection in Johannesburg's Lenasia district. The
original plan was to team up with a local developer/retailer to build a large mixed use retail and commercial complex. As
things stand now we have no development partner but progress has recently been made on the provision of bulk electricity
for a first phase.
Sandton and Starleith are two adjacent properties in the heart of Johannesburg's Sandton business district. Our partners,
two well regarded South African developers, continue to work on obtaining the requisite approvals for what is expected to
comprise office, residential and retail components. Consents are not expected until 2011.
Longmeadow is a substantial investment comprising a commercial, residential and retail mixed use site in Fourways,
Johannesburg - which is about four miles from Johannesburg's Sandton district. The project has two phases with phase one
comprising 12,769 square metres of hotel and commercial space and phase two the remainder. Substantial progress has been
made in developing phase one, where planning rights were received in late 2008. City Lodges Hotels, a major national hotel
operator, has taken a long term ground lease and developed a hotel on the north eastern corner of the property. The City
Lodge hotel is now open for business and rents are being paid. Substantial progress has also been made on the construction
of the adjacent 5,400 m² commercial development, and the Longpoint building is now being fitted out for its new tenants
with all of the retail space and about 20% of the office space now fully let. Our manager is working on obtaining the
requisite approvals to commence phase two, which is expected to comprise residential, retail and commercial components.
Industrial Developments
The effects of the softer economic activity on the demand for industrial space, and consequently its effect on market
rentals, have become evident. The industrial market is equally affected by the major drivers of the local economy as
described above and until a sustained improvement is evident one can expect the tough market fundamentals to put pressure
on the growth of the new industrial space and the feasibility for new projects coming to market.
Clayville Industrial Park is a 49.3 hectare site located North West of the Johannesburg airport. The idea here was to sell
serviced stands to industrial users. This objective has been delayed due to delays in obtaining bulk electricity. Clayville
was a relatively small investment (ZAR 2.1 million) and due to the favourable acquisition price should produce an
acceptable return regardless of when bulk electricity is finally provided.
Gosforth Business Estate is one of SAPRO's major projects with planning consents in place to develop between 130,000 and
150,000 m² of gross developable area. The plan here is to develop a portion of the property and sell serviced stands on
the remainder. The installation of bulk services is complete and the installation of internal services for the first phase
of the park is also complete. Completion of construction of the first eight units of small warehouse facilities is expected
by May of this year. One unit has been sold, one let and one is under negotiation.
Hughes Industrial Park is a small industrial project. It comprises 3.69 hectares of former agricultural land, which has
been planned for light industrial use. SAPRO has a minority interest (30%) in a development vehicle with four other
partners. Hughes has been planned in two phases. The first phase, which comprises eighteen small warehouse units, is
complete. Sales have been slow with four units sold and seven let. Our development partners intend to proceed with phase
two once phase one is predominantly sold or let.
Imbonini comprises over 100 hectares of land and has been planned in two phases. The development essentially has three
components, Acacia Park (the 10,400 m² sectional title mini-unit development on one of Imbonini 1's serviced stands), the
remainder of the land comprising Imbonini 1, being a 36 hectare industrial estate, and Imbonini 2, being a 77 hectares of
agricultural land adjacent to Imbonini 1. Imbonini 1 is approximately 66% sold with further sales currently being
negotiated. As for Imbonini 2, planning consents have been obtained though services are not yet in place. Considering the
high cost of servicing the land (forecast > ZAR 100 million) our thinking in the current market is to make bulk sales of
development sites available to other developers or sell the entire site. Active marketing will commence this month.
Waltloo Industrial Park comprises a 4.4 hectare site located east of the Pretoria central business district held in
partnership with a local developer. Recently our partner has approached us with a development proposal. We gave careful
consideration to the proposal but finally determined that it did not provide an appropriate risk adjusted return. Following
negotiations, we agreed to sell our interest to the developer at its CBRE appraised value.
Outlook and project business plans
Your Board continues to develop an in-depth appraisal of the various projects and the outlook for their development. We
have made significant strides in this and will have it in place to begin implementation, at the optimum time for each
project, as the market moves into recovery mode. This will identify projects where we believe continued ownership can earn
our shareholders an appropriate rate of return and those where we believe that it is more attractive to realise value in
the shorter term.
Against this background, your Board continues to believe that the Company is well placed and that the coming year will see
a strong focus on delivering value to our shareholders.
David Hunter
Chairman
29 March 2010
Consolidated Income Statement
(Unaudited) (Unaudited)
Period from 1 July 2009 to 31 December 2009 Period from 1 July 2008 to 31 December 2008
Note £'000 £'000
Revenue 525 -
Investment Manager's fees 4 (797) (835)
Accrual for potential performance fee 4 - (4,116)
Other administration fees and expenses 5 (1,506) (848)
Impairment in value of inventory 10 (457) -
Administrative expenses (2,760) (5,799)
Operating loss (2,235) (5,799)
Foreign exchange gain 3,496 6,904
Other income 3,496 6,904
Finance income 576 916
Finance costs (105) (82)
Net finance income 471 834
Share of (loss)/profit of associates 8 (102) 377
Profit before income tax 1,630 2,316
Income tax expense 6 (2) (46)
Profit for the period 1,628 2,270
Attributable to:
Owners of the Parent 1,621 2,270
Minority interest 7 -
1,628 2,270
Basic and diluted earnings per share (pence) for profit attributable to the equity holders of the Company during the period 7 2.60 3.64
Attributable to:
Owners of the Parent
1,621
2,270
Minority interest
7
-
1,628
2,270
Basic and diluted earnings per share (pence) for profit attributable to the equity holders of the Company during the
period
7
2.60
3.64
Consolidated Statement of Comprehensive Income
Note (Unaudited) Period from 1 July 2009 to 31 December 2009 (Unaudited) Period from 1 July 2008 to 31 December 2008
£'000 £'000
Profit for the period 1,628 2,270
Other comprehensive income
Currency translation differences 1,293 2,727
Other comprehensive income for the period (net of tax) 1,293 2,727
Total comprehensive income for the period 2,921 4,997
Total comprehensive income attributable to:
-Owners of the Parent 2,912 4,997
-Minority interest 9 -
2,921 4,997
2,912
4,997
-Minority interest
9
-
2,921
4,997
Consolidated Balance Sheet
Note (Unaudited) As at 31 December 2009 (Audited) As at 30 June 2009
£'000 £'000
Assets
Non-current assets
Intangible assets 9 1,484 1,376
Inventories 10 54,440 48,489
Investments in associates 8 7,127 6,707
Loans due from associates 8 9,622 8,465
72,673 65,037
Current assets
Trade and other receivables 11 4,629 1,689
Cash at bank 12 12,504 14,972
17,133 16,661
Total assets 89,806 81,698
Equity
Capital and reserves attributable to owners of the Parent:
Issued share capital 13 623 623
Share premium 14 61,943 61,943
Foreign currency translation reserve 3,934 2,643
Retained earnings 6,593 4,972
73,093 70,181
Minority interest 23 14
Total equity 73,116 70,195
Liabilities
Current liabilities
Loans from third parties 16 6,697 4,520
Trade and other payables 17 2,347 676
Current tax liabilities 72 65
Borrowings 18 7,574 6,242
16,690 11,503
Total liabilities 16,690 11,503
Total equity and liabilities 89,806 81,698
Loans from third parties
16
6,697
4,520
Trade and other payables
17
2,347
676
Current tax liabilities
72
65
Borrowings
18
7,574
6,242
16,690
11,503
Total liabilities
16,690
11,503
Total equity and liabilities
89,806
81,698
The financial statements were approved and authorised for issue by the Board of Directors on 29 March 2010 and signed on
its behalf by:
David Hunter Simon Godwin
Director Director
Company Balance Sheet
Note (Unaudited) As at 31 December 2009 (Audited) As at 30 June 2009
£'000 £'000
Assets
Non-current assets
Loans and receivables due from subsidiary 11 50,561 42,142
Investment in subsidiary 21,741 21,741
72,302 63,883
Current assets
Trade and other receivables 11 66 43
Cash and cash equivalents 12 8,253 11,944
8,319 11,987
Total assets 80,621 75,870
Equity
Capital and reserves attributable to owners of the Parent:
Issued share capital 13 623 623
Share premium 14 61,943 61,943
Retained earnings 17,606 12,962
Total equity 80,172 75,528
Current liabilities
Trade and other payables 17 449 342
Total liabilities 449 342
Total equity and liabilities 80,621 75,870
80,172
75,528
Current liabilities
Trade and other payables
17
449
342
Total liabilities
449
342
Total equity and liabilities
80,621
75,870
The financial statements were approved and authorised for issue by the Board of Directors on 29 March 2010 and signed on
its behalf by:
David Hunter Simon Godwin
Director Director
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
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 July 2008 623 61,943 (1,622) (2,510) 58,434 - 58,434
Comprehensive income
Profit for the period - - - 2,270 2,270 - 2,270
Other comprehensive income
Foreign exchange translation differences - - 2,727 - 2,727 - 2,727
Total comprehensive income for the period - - 2,727 2,270 4,997 - 4,997
Balance at 31 December 2008 623 61,943 1,105 (240) 63,431 - 63,431
2,727
2,270
4,997
-
4,997
Balance at 31 December 2008
623
61,943
1,105
(240)
63,431
-
63,431
Balance at 1 July 2009 623 61,943 2,643 4,972 70,181 14 70,195
Comprehensive income
Profit for the period - - - 1,621 1,621 7 1,628
Other comprehensive income
Foreign exchange translation differences - - 1,291 - 1,291 2 1,293
Total comprehensive income for the period - - 1,291 1,621 2,912 9 2,921
Balance at 31 December 2009 623 61,943 3,934 6,593 73,093 23 73,116
Balance at 31 December 2009
623
61,943
3,934
6,593
73,093
23
73,116
Consolidated Cash Flow Statement
Note (Unaudited) Period from 1 July 2009 to 31 December 2009 (Unaudited) Period from 1 July 2008 to 31 December 2008
£'000 £'000
Cash flows from operating activities
Profit for the period before tax 1,630 2,316
Adjustments for:
Interest income (576) (916)
Interest expense 105 82
Impairment of inventory 457 -
Share of loss/(profit) of associates 102 (377)
Foreign exchange gain (3,496) (6,904)
Operating loss before changes in working capital (1,778) (5,799)
Purchase of inventory (4,534) (11,030)
Increase in trade and other receivables (559) (243)
Increase in trade and other payables 1,550 4,833
Cash used in operations (5,321) (12,239)
Interest paid (11) (82)
Interest received 22 548
Net cash used in operating activities (5,310) (11,773)
Cash flows from investing activities
Acquisition of subsidiary - (1,118)
Acquisition of associates - (197)
Repayment/(payment) of loans to associates 96 (4,256)
Loan from third parties 1,613 1,066
Movement in cash restricted by bank guarantees 179 6,698
Net cash generated from investing activities 1,888 2,193
Cash flows from financing activities
Proceeds from bank loans 788 1,470
Net cash generated from financing activities 788 1,470
Net decrease in cash and cash equivalents (2,634) (8,110)
Cash and cash equivalents at beginning of the period 13,172 20,403
Foreign exchange gains on cash and cash equivalents 215 2,666
Cash and cash equivalents at end of the period 12 10,753 14,959
Cash flows from financing activities
Proceeds from bank loans
788
1,470
Net cash generated from financing activities
788
1,470
Net decrease in cash and cash equivalents
(2,634)
(8,110)
Cash and cash equivalents at beginning of the period
13,172
20,403
Foreign exchange gains on cash and cash equivalents
215
2,666
Cash and cash equivalents at end of the period
12
10,753
14,959
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.
Proteus Property Partners Limited (the "Investment Manager") has been appointed as the Company's 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 million shares. Following the
close of the placing on 26 October 2006 30 million shares were issued at a price of 100p per share.
The 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 shares were issued at a price of 106p per share, which were
admitted to trading on AIM on 22 May 2007.
The Company's agents and the Investment Manager perform all functions other than those carried out by the Board's executive
and non-executive directors. 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 period recognised in the Consolidated Income
Statement is £4,644,116 (31 December 2008: £4,307,330).
2 Summary of Significant Accounting Policies
Except as described below, the accounting policies applied by the Group in the preparation of these condensed consolidated
interim financial statements are the same as those applied by the Group in its consolidated financial statements for the
year ended 30 June 2009.
These interim financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS)
IAS 34: Interim Financial Reporting. They do not include all of the information required for full annual financial
statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year
ended 30 June 2009.
The interim financial statements for the six months ended 31 December 2009 are unaudited. The comparative interim figures
for the six months ended 31 December 2008 are also unaudited.
The financial statements have been prepared under the historic 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 4).
The following new standards and amendments to
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