Source - RNS
RNS Number : 1161K
Terra Capital PLC
19 September 2016
 

19 September 2016

Terra Capital Plc ('Terra' or 'the Fund')

Interim Results

 

Terra Capital Plc, the AIM quoted investment company focussed on investing in value opportunities globally, primarily in frontier markets, announces interim results for the six month period ended 30 June 2016.

 

The Company undertakes its activities in line with its strategy to provide high absolute returns by investing in under-evaluated companies which present significant deep value opportunities.  Due to market inefficiencies, the Fund and its Investment Manager, Terra Partners Asset Management Limited, believe that frontier markets provide many such prospects. 

 

For more information, please visit www.terracapitalplc.com or contact:

 

Galileo Fund Services Limited (Administrator)

Frazer Pickering

+44 1624 692600

Panmure Gordon (UK) Limited (Nominated adviser and corporate broker)

Paul Fincham or Jonathan Becher

+44 20 7886 2500

Terra Capital plc.

Ian Dungate, Director

+44 1624 692600

St Brides Partners Ltd             

Elisabeth Cowell / Frank Buhagiar        

+44 (0) 20 7236 1177

NOTES:

Terra Capital plc is an AIM quoted investment trust focussed on generating high absolute returns while ensuring volatility is kept to a minimum.  The fund predominantly invests in under-researched and under-valued companies.  The Fund Manager targets companies that are trading at less than their intrinsic worth and so, aside from any potential growth prospects, provide scope for capital appreciation as a result of a reversion towards underlying value.  Investments are also made in companies which are viewed as fair value but offer opportunities for growth at a reasonable price.  Due to inherent market inefficiencies, the Investment Manager believes many such 'value' opportunities can be found in Frontier Markets and utilises in-house teams of analysts on the ground in areas of interest to investigate suitable opportunities rather than rely on third party research. 

Douglas

 

Chairman's Statement

The Net Asset Value at 30 June 2016 stood at $0.939 against $0.925 at the end of 2015. When taking in to account the dividend of 3.24 cents per share paid in February, this NAV represents a total return for the six month period of 5.02%. This return of 5.02% compares favourably to the MSCI Frontier Markets Index which declined by 0.13% since 31 December 2015 and continues to demonstrate the benefits of the Investment Manager's value based approach.

 

The Company's portfolio holdings at June 30 comprised 65 positions with exposure to 27 currencies and is performing well on both an absolute basis and a relative basis as outlined in the Investment Manger's report below.

 

In accordance with the dividend policy we announced in late 2013 we have paid a dividend of 3.24 cents per share in February 2016 based on our income in 2015. This represented a dividend yield at the time of declaration of 3.5% on Net Asset Value and 3.9% on the closing middle market price.   

 

The Investment Manager has continued to maintain a diverse portfolio of undervalued assets and equity exposure at 30 June 2016 stood at 85% spread across 65 positions in 42 different markets and 27 currencies. The portfolio is performing well on both an absolute basis and a relative basis as outlined in the Investment Manger's report below.

 

Further details can be found on the Company's website http://terracapitalplc.com/.

 

 

 

 

 

Sincerely yours,

Dirk Van den Broeck

 

Chairman 

 

16 September 2016

 

Report of the Investment Manager

TCA's First Half Return & Portfolio

The Fund's NAV increased to $0.939 at June 30th, 2016 from $0.925 as of December 31, 2015, after taking account of the dividend of 3.24 cents per share paid on 29 February 2016, this represents a net total return of 5.02% for the six month period.

 

The Fund's investment level (equity, fixed income and hedging) increased from 85.23% at December 31 2015 (including commitment to Terra Argentine Fund) to 92.0% at June 30.

 

Specific Areas of Investment:

Asia

The Fund's exposure to Asia increased from 16.83% to 22.80%, and is now the fund's largest regional exposure. The fund increased its position in five holdings, which include Kcell (Kazakhstan), Century Pacific Foods (Philippines), Belle Corp (Philippines), Travelers Int'l Hotels (Philippines), and Emperador (Philippines). The fund liquidated its position in Hyundai (Korea).

Europe

The Fund's exposure to Europe decreased slightly from 24.67% to 22.09%, and is now the second largest regional allocation. The Fund liquidated three positions: JSC Acron (Russia), PKP Cargo (Poland), and VIB Vermoegen (Germany). There were no other changes during the period.

Americas

The allocation to this region increased from 16.93% to 20.13%. The fund contributed to the fourth capital call in the Terra Argentine Fund and initiated a new investment strategy in Brazil. In addition, it increased its position in Copa Holdings. The Fund decreased its holdings in Refineria La Pampilla (Peru) and Ferreycorp (Peru).

Middle East

Exposure to the Middle East decreased during the last quarter from 16.56% to 16.40%. The Fund increased its holdings in Blom Bank (Lebanon), Solidere (Lebanon), and Abu Dhabi Commercial Bank (UAE). The Fund decreased its holdings in Oman Cement (Oman) and Bank Sohar (Oman).

Africa

The Fund's allocation to Africa decreased slightly from 10.23% to 10.54%. The Fund increased its position in Holdsport (South Africa) and Umeme (Uganda) and initiated a new position in Nigerian Breweries (Nigeria). The fund decreased its position in Onatel (Burkina Faso) and UAC of Nigeria (Nigeria).

Fund Details

Details of the Company's holdings may be found in note 7 on pages 13 to 14

 

 

Respectfully Submitted by:

 

 

 

Terra Partners Asset Management Limited

Suite 8/5A, Portomaso Tower, Portomaso Avenue,

St. Julian's STJ 4011 Malta

Regulated by the Malta Financial Services Authority, Reg. No. C 56353

 

Unaudited consolidated income statement

 


Note

For the period from

1 January 2016 to

30 June 2016

For the period from

1 January 2015 to

30 June 2015



US$'000

US$'000

Income

 




Net changes in fair value on financial assets at fair value through profit or loss


2,310

(1,806)

Realised gain on sale of financial assets at fair value through profit or loss


174

2,433

Interest income on cash balances


8

5

Interest income on bonds


-

34

Dividend income on quoted equity investments


1,884

2,036

Total net income


4,376

2,702

Manager's fees

6

(364)

(385)

Audit and professional fees


(59)

(45)

Other expenses


(538)

(367)

Administrative and other expenses


(961)

(797)





Profit before tax


3,415

1,905





Taxation

12

(229)

(155)





Profit for the period


3,186

1,750









Basic and diluted earnings per share (cents per share) for the period

10

4.66

2.56

 

Unaudited consolidated statement of comprehensive income



For the period from 1 January 2016 to 30 June 2016

For the period from   1 January 2015 to 30 June 2015



US$'000

US$'000

Profit for the period


3,186

1,750

Other comprehensive income




Foreign exchange differences


(19)

(11)

Total comprehensive profit for the period


3,167

1,739

 

 

The accompanying notes form an integral part of these interim consolidated financial statements

 

Unaudited consolidated balance sheet


Note

Unaudited

At 30 June 2016

Audited

At 31 December 2015



US$'000

US$'000

Financial assets at fair value through profit or loss

8

57,161

51,835

Funds held in escrow


2,254

2,256

Trade and other receivables

9

533

237

Cash and cash equivalents          


6,678

11,182

Total current assets


66,626

65,510

Total assets


66,626

65,510

Issued share capital

11

7,726

7,726

Capital redemption reserve


5,274

5,274

Retained earnings


50,300

49,326

Foreign currency translation reserve


832

851

Total equity


64,132

63,177

Total current liabilities




Taxation

12

1,939

1,940

Trade and other payables

14

555

393

Total current liabilities


2,494

2,333

Total liabilities


2,494

2,333

Total equity and liabilities


66,626

65,510

Net Asset Value per share

5

0.94

0.93

 

 

Approved by the Board of Directors on 16 September 2016

 

 

 

Ian Dungate                                                             Dirk van den Broeck

 

Director                                                                   Director

 

The accompanying notes form an integral part of these interim consolidated financial statements

Unaudited consolidated statement of changes in equity

For the six months ended 30 June 2016


Share capital

Retained earnings

Capital redemption reserve

Foreign currency translation reserve

Total

 

 


US$'000

US$'000

US$'000

US$'000

US$'000

Balance at 1 January 2016

7,726

49,326

5,274

851

63,177

Profit for the period

-

3,186

-

-

3,186

Other comprehensive income






Foreign exchange translation differences

-

-

-

(19)

(19)

Total comprehensive profit

-

3,186

-

(19)

3,167

Dividends paid

-

(2,212)

-

-

(2,212)

Shares repurchased to be held in treasury

-

-

-

-

-

Total contributions by and distributions to owners

-

(2,212)

-

-

(2,212)







Balance at 30 June 2016

7,726

50,300

5,274

832

64,132

 

For the six months ended 30 June 2015


Share capital

Retained earnings

Capital redemption reserve

Foreign currency translation reserve

Total

 

 


US$'000

US$'000

US$'000

US$'000

US$'000

Balance at 1 January 2015

7,726

53,007

5,274

851

66,858

Profit for the period

-

1,750

-

-

1,750

Other comprehensive income






Foreign exchange translation differences

-

-

-

(11)

(11)

Total comprehensive profit

-

1,750

-

(11)

1,739

Dividends paid

-

(2,541)

-

-

(2,541)

Shares repurchased to be held in treasury

-

-

-

-

-

Total contributions by and distributions to owners

-

(2,541)

-

-

(2,541)

 

Balance at 30 June 2015

7,726

52,216

5,274

840

66,056

The accompanying notes form an integral part of these consolidated financial statements

Unaudited consolidated statement of cash flows



For the period from

1 January 2016 to      30 June 2016

For the period from

1 January 2015 to      30 June 2015



US$'000

US$'000





Operating activities




Profit before tax


3,415

1,905

Adjustments for:




   Net changes in fair value on financial assets at fair


(2,310)

1,806

   value through profit or loss




   Finance income


(8)

(39)

   Finance costs


-

-

Operating gain before changes in working capital


1,097

3,672





(Increase)/decrease in trade and other receivables


(294)

9

Increase/(decrease) in trade and other payables


161

(74)



(133)

(65)





Taxation paid


(230)

(155)

Net finance costs paid


-

-

Interest received


8

39

Cash flows generated from operating activities


742

3,491





Investing activities




Purchase of financial assets


(7,709)

(9,049)

Proceeds from sale of financial assets


4,693

4,057

Funds held at Brokers


-

-

Cash flows used in investing activities


(3,016)

(4,992)





Financing activities




Purchase of shares


-

-

Dividends paid


(2,212)

(2,541)

Cash flows used in financing activities


(2,212)

(2,541)





Net decrease in cash and cash equivalents


(4,486)

(4,042)

Adjustment for foreign exchange


(18)

(11)

Cash and cash equivalents at beginning of period


11,182

14,057

Cash and cash equivalents at end of period


6,678

10,004





 

The accompanying notes form an integral part of these consolidated interim financial statements

 

Notes to the consolidated financial statements

1.          The Company

 

Terra Capital plc (formerly named Speymill Macau Property Company plc) was incorporated and registered in the Isle of Man under the Isle of Man Companies Acts 1931 to 2004 on 31 October 2006 as a public company with registered number 118202C.

 

Pursuant to the Extraordinary General Meeting held on 24 May 2012 a tender offer was made for ordinary shares of US$0.10 each in the issued ordinary share capital of the Company at a price of US$0.835 per ordinary share. As a result of the tender 36,896,674 shares were tendered and were purchased by the Company. At that same meeting the shareholders approved a plan to sell off the Company's real estate portfolio and change its investment mandate to investing in equities primarily in the Frontier and Emerging markets.   This investment mandate was subsequently refined in an EGM held on the 26th January 2015 when the fees paid to the investment manager were also reduced and a potential wind up date for the fund in 2018. To obtain full details, all of the documentation may be found on the Company's website http://www.terracapitalplc.com/regulatory-news.

 

The interim consolidated financial statements of Terra Capital plc as at, and for, the six months ended 30 June 2016 comprise the Company and its subsidiaries (together referred to as the "Group").

 

The consolidated financial statements of the Group as at, and for, the year ended 31 December 2015 are available upon request from the Company's registered office at Millennium House, 46 Athol Street, Douglas, Isle of Man, IM1 1JB or at www.terracapitalplc.com.

 

The Company's investment objective is to achieve capital appreciation while attempting to reduce risk primarily by applying a disciplined and diversified value investing philosophy in purchasing securities in Frontier markets for its portfolio.

 

2              Statement of compliance and significant accounting policies

 

These condensed consolidated interim financial statements have been prepared in accordance with 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 31 December 2015.

 

These condensed consolidated interim financial statements were approved by the Board of Directors on 16 September 2016.

 

The Group has one segment focusing on achieving capital appreciation while attempting reduce risk primarily by applying a disciplined and diversified value investing philosophy. No additional disclosure is included in relation to segment reporting as the Group's activities are limited to one business segment.

 

The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at, and for, the year ended 31 December 2015.

 

The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2015.

 

3              Use of estimates and judgements

 

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

 

Certain investments are in illiquid/inactive markets and classified as Level 2 in the IFRS 7 fair value Hierarchy (see note 7).

 

4              Finance income and costs

 

 

Period ended

30 June 2016

Period ended

30 June 2015


US$'000

US$'000

Bank interest income

8

5

Finance income

8

5

Bank charges

(5)

(2)

Finance costs

(5)

(2)

Net finance income

3

3

 

5              Net asset value per share

 

The net asset value per share as at 30 June 2016 is US$0.94 based on 68,299,236 ordinary shares in issue as at that date (excluding 8,956,423 shares held in treasury) (31 December 2015: US$0.93 based on 68,299,236 ordinary shares).

 

6              Related party transactions

 

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.

 

Parties are considered to be related if one party has the ability to control the other party or to exercise significant influence over the party making financial or operational decisions.

 

A total of $3.4 million has been committed to be invested in the Terra Argentine Fund ("TAF") a fund managed by the Manager. It was determined by the Board that this was the most efficient method of obtaining a diversified investment in this market and the Manager has waived all duplicate fees on this investment pursuant to an agreement 

 

Directors of the Company

 

Howard Golden and Filip Montfort are directors of the Manager. The Manager was appointed at the EGM held on 24 May 2012. Following the EGM, Mr Golden and Mr Yarden Mariuma resigned as directors of the Company and Mr Dirk van den Broeck was elected Chairman of the Board of Directors as an independent non-executive director and Mr Ian Dungate was elected as an independent director.

 

Filip Montfort is a director of the Investment Manager and remained as a Director of the Company following the above noted EGM until his resignation on 16 December 2015.

 

Mr Dungate is a director and principal of the administrator.

 

With effect from the date of appointment of the Manager, Mr Montfort agreed to waive his entitlement to Directors remuneration throughout the period of his appointment.

 

Directors remuneration is disclosed in note 13

 

The Investment Manager

Following the EGM held on 24 May 2012, the Company appointed the immediate predecessor to the current investment manager  until the current investment manager, Terra Partners Asset Management, Limited ("TPAM") received its license in Malta and then the Investment Management Contract was assigned to TPAM to be the Group's investment manager (the "Manager"). 

 

Term and termination

The Investment Management Agreement may be terminated by either party giving to the other not less than 12 months' notice expiring on, or at any time after, the third anniversary of the commencement date of the agreement or otherwise, in circumstances, inter alia, where one of the parties has a receiver appointed over its assets or if an order is made or an effective resolution passed for the winding-up of one of the parties.

Management fee

The Manager shall be entitled to receive a management fee equal to 1.25 per cent. per annum of the aggregate Net Asset Value of the Company during the relevant fee payment period, calculated on the first day of each month, accrued on a daily basis and payable monthly in arrears (or pro rata for lesser periods).

 

Performance fee

The Manager is also entitled to receive a performance fee equal to 12 per cent.  of the increase (if any) in the Net Asset Value per Share (with dividends and other distributions added back and ignoring any accrued performance fee) as at each semi-annual performance fee calculation period above the Net Asset Value as at the commencement of each such semi-annual performance fee calculation period, provided that any performance fee shall be payable only to the extent that the Net Asset Value of the Share exceeds the Net Asset Value immediately following the settlement of the Tender Offer or, if a performance fee has been paid, the Net Asset Value per Share when a performance fee was last paid.  The performance fee shall be calculated on 30 June and 31 December in each year and paid following such calculation. The performance fee for the period ending 30 June 2016 was US$ Nil (30 June 2015: US$ Nil).

Expenses

In addition, the Company shall be responsible for the payment of certain out-of-pocket expenses reasonably incurred by the Manager in the proper performance of the Investment Management Agreement up to a maximum of US$75,000 per annum and any other put-of-pocket expenses in excess of this maximum shall be borne by the Investment Manager.

 

The Administrator

The Administrator shall be paid by the Company a fixed fee of US$100,000 per annum, payable quarterly in arrears.

 

For the preparation of the financial statements the Administrator shall be paid by the Company US$3,000 per set.

 

In the event that the Administrator provides secretarial services to the Company, the Administrator shall be paid an annual fee of US$8,000. The Administrator shall be entitled to additional fees for such general secretarial services based on time and charges where the number of board meetings or general meetings exceeds for per annum. The Administrator shall be entitled to an attendance fee of US$750 per day or part thereof where the Administrator attends a board meeting or general meeting which is not held in the Isle of Man.

 

7              Fair value hierarchy

 

IFRS 7 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

 

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).

• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

 

US$46,440,000 (31 December 2015: US$41,016,000) of the Company's investments are classed as level 1 investments and US$10,721,000 (31 December 2015: US$10,819,000) of the Company's investments are classed as level 2 investments.

 

 

8              Financial assets at fair value through profit or loss

Group

30 June 2016: Financial assets at fair value through profit or loss (all quoted equity securities, except Terra Argentina Fund LP):

Security Name

Number

US$'000

AIR ARABIA B23DL40

2,947,000

1,051

ABU DHABI Commercial Bank

248,000

408

Ardent Leisure Group NPV

372,606

522

Square Pharma

629,734

2,119

Brac Bank Ltd

2,710,489

1,819

Speedy EAD-Sofia

16,818

342

Monbat AD-Sofia

115,000

479

Gulf Hotel Group

444,273

752

Bahrain Commercial Faclilti

200,000

357

SEEF Properties b.s.c

1,414,577

715

BB Votorantim (B65JNX7)

20,599

325

FDO S F Lima 2188023

129,135

84

Fii BM Edificio Galeria B8C2Zb5

9,800

169

Fii Torre Almirante B0B23L6

587

329

QF BNL Portfolio IMM

845

500

Gorenje Velenje

175,399

1,216

Polis Banc QF

1,789

2,160

Silvano Fashion Group

267,000

592

Crnogorski Telekom AD Podgoric

222,624

692

Bank of Georgia Holdings PLC

31,280

1,091

Qingling Motors Co Ltd

3,042,615

941

Hrvatski Telekom DD

36,228

755

Allami Nyomda (Hungarian Printing Co)

553,679

1,967

JMMB Group Limited

8,500,000

652

National Commercial Bank Jamaica Ltd

5,431,719

1,842

Scotia Group Jamaica

5,429,031

1,318

Lotte Chilsung Beverage Co-Prefs

749

552

Shinyoung Securities Co Ltd

8,370

363

Kumho Petro Chem

17,850

436

Residences Dar Saada

69,843

1,249

Komercijalna Banka AD

28,845

1,114

Nigerian Breweries (6637286)

70,000

34

UAC of Nigeria

1,541,658

109

Bank Sohar SAOG

1,116,811

499

Oman Cement Company

464,950

570

Oman Refreshment Company

175,000

1,000

Refineria La Pampilla SA

13,300,102

953

Ferreycorp SAA

1,827,387

866

Century Pacific Food Inc BLRL853

2,102,999

975

Emperador Inc BFG0SH1

4,279,000

658

Travellers International Hot BFG0SX7

9,300,000

669

Belle Corp 6090180

12,000,000

860

RFM Corporation 6736213

11,003,750

976

Kernel Holdings SA

86,323

1,159

Gulf Warehousing

40,750

645

Al Meera Consumer Goods Co

21,218

1,230

Doha Bank (DHBK QD)

83,692

812

Komercijalna Banka AD BE RSD

7,231

93

Galenika Fitofarmacija

82,744

1,953

Tunisie Leasing Rights

3,296

28

One Tech Holding

248,305

816

Tunisie Leasing

84,522

732

Artes SA (Automobile Reseau Tunisien)

246,934

901

UMEME Liimted

5,870,000

861

KCELL JT

296,000

1,006

X5 Retail Group NV

57,416

1,140

Copi Holdi NPV Class A

15,265

798

Terra Argentina Fund L.P.

1,700,000

2,386

BLOM Bank GDS

156,272

1,570

Lebanese GDS

95,308

905

IRSA-SP ADR

81,433

1,369

Imexpharm Pharmaceutica

802,158

1,609

Onatel BF

30,477

696

Onelogix Group Limited

2,281,292

449

Holdsport Limited

230,501

923




Total


57,161

 

9              Trade and other receivables

 


30 June 2016

31 December 2015


US$'000

US$'000

Prepayments and other receivables

533

237


533

237

 

10            Earnings per share

 

Basic earnings per share is calculated by dividing the profit for the period attributable to equity holders of the Company by the weighted-average number of ordinary shares in issue during the period.

 


Period ended

30 June 2016

Period ended

30 June 2015




Profit attributable to equity holders of the Company (US$'000)

3,186

1,750

Weighted average number of ordinary shares in issue (thousands) (excluding 8,956,423 held in treasury (2015: excluding 8,956,423 held in treasury)

68,299

68,299

Earnings per share (cent per share)

4.66

2.56

 

11            Share capital


30 June 2015

US$'000

31 December 2015

US$'000

Authorised:



400,000,000 Ordinary shares of US$0.10 each

40,000

40,000

Allotted, Called-up and Fully-Paid:



68,299,236 (31 December 2015: 68,299,236) Ordinary shares of US$0.10 each in issue, with full voting rights

6,830

6,830

8,956,423 (31 December 2015: 8,956,423) Ordinary shares of US$0.10 each in issue, held in treasury

896

896


7,726

7,726

 

As at 30 June 2016, 8,956,423 Ordinary shares are retained in treasury (31 December 2015 8,956,423).  The Ordinary shares held in treasury have no voting rights and are not entitled to dividends 

 

12            Taxation

 


30 June 2016

31 December 2015


US$'000

US$'000

Balance at 1 January

1,940

1,939

Withholding taxes on dividends received

229

276

Tax paid

(230)

(275)

Balance at 31 December

1,939

1,940

 

Following disposal of the AIA Tower in Macau in 2011 the local authorities imposed a tax liability which the Directors and Investment Manager felt was wrongly calculated. On 29 July 2016 the Company received notice that its appeal to the administrative court in Macau had been ruled in the Company's favour. This ruling was subsequently appealed by the authorities on 15 September 2016 and a final decision will take a further 6-9 months from this date. As explained in note 15, Post balance sheet events, this liability remains outstanding until such time as a ruling has been issued by the courts that cannot be appealed.

 

Isle of Man taxation

The Company is resident in the Isle of Man which means that it pays income tax at 0%.  The Company pays a corporate charge of £390 to the Isle of Man Government for each tax year.

 

13            Directors' remuneration   

 

Mr Van den Broeck, as Chairman, is entitled to remuneration of US$45,000 per annum from the date of his appointment and Mr Dungate and Mr Bartlett are each entitled to remuneration of US$30,000 per annum from the respective dates of their appointments. Mr Montfort who was entitled to remuneration of US$30,000 per annum up until 16 December 2015 (the date of his resignation) had agreed to waive his Directors' fee for so long as he was associated with the Investment Manager.

14            Trade and other payables


30 June 2016

31 December 2015


US$'000

US$'000

Sundry creditors and accruals

555

393

Total

555

393

 

15            Contingent liabilities and capital commitments

 

The Company has committed to invest a total $3,400,000 in Terra Argentine Fund L.P. A total of $1,700,000 has been called and paid as at 30 June 2016 leaving a total commitment outstanding of $1,700,000. It is not known whether this amount will be called up during the limited life of this investment.

 

16            Post balance sheet events

 

On 29 July 2016 the Company was advised by its counsel in Macau that the Administrative Court had decided the pending appeal regarding the total amount of tax demanded by the local authorities in connection with the sale of the AIA tower, in favour of the Company. This would mean that the Company is allowed to deduct the accumulated, but not applied, depreciation from the selling price of the AIA Tower, thereby reducing the taxes due by about $1.9 million USD, which would result in the NAV of the Company increasing by approximately 2.8 cents per share.

 

The tax for the sale of the AIA Tower (sold as of Jan.1, 2012) was fully provisioned for when the Shareholders voted on April 30, 2012for the conversion of the Company from being a property company to an investment company investing primarily in frontier markets.

 

The counterparty has on 15 September 2016 filed an appeal against this decision and a further decision is expected to take 6-9 months from the date of the appeal. An adverse decision by a higher court would not negatively affect the company's NAV since the amount has already been provisioned for.  Any addition to the company's published NAV will be booked once there is a final, un-appealable decision.

 

Other than this, there have been no material events since the balance sheet date that require disclosure in the interim financial statements.


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR SFLFIMFMSEEU