TIDMMCAU
RNS Number : 2840C
Speymill Macau Property Company PLC
30 April 2012
30 April 2012
Speymill Macau Property Company plc
("Speymill Macau" or the "Company")
Annual Results for the Year Ended 31 December 2011
Speymill Macau Property Company plc (MCAU.L), the Macau focused
property investment company listed on AIM, announces preliminary
results for the year ended 31 December 2011.
Highlights of the year
Balance sheet 31 Dec 2011 31 Dec 2010
------------------------------ ------------ ------------
Net assets (US$'000) 92,005 130,714
Net assets per share
(US$) 0.86 1.21
Distribution to shareholders
(US$ per share) 0.30 0
Total assets (US$'000) 93,133 222,917
Property assets**
(US$'000) - 159,884
------------------------------ ------------ ------------
** The sale of the AIA Tower was contracted on 30 November 2011
under the terms of a sale and purchase agreement. The sale was
concluded on 31 January 2012.
Income statement 31 Dec 2011 31 Dec 2010
-------------------------- ------------ ------------
Gross rental income
(US$'000) 7,876 7,962
Valuation gains/(losses)
(US$'000) 3,882 (666)
Impairment of goodwill (6,451) -
Loss after tax (US$'000) (5,933) (5,152)
Basic and diluted
loss per share
(US cents per share) (5.52) (4.61)
-------------------------- ------------ ------------
Business highlights
-- AIA Tower, the last remaining property asset has been sold effective 31 January 2012.
-- Property sold outside existing corporate structure
crystallising previously provided tax liabilities of
$11,179,000
-- As a result of the sale being for the property alone,
goodwill of $6,451,000 arising on acquisition has been impaired to
Nil
-- The Board approved a $0.30 return of capital to shareholders paid on April 28, 2011.
Matrix Corporate Capital Galileo Fund Services
LLP
(Nominated Adviser/Broker) (Administrator)
Paul Fincham Ian Dungate
Jonathan Becher +44 1624 692600
+44 20 7131 4000
Chairman's statement
The year just past was very satisfying for the board since we
were able to complete the sale of almost all of the Company's
assets and entered into a Sale and Purchase Agreement for the sale
of the last asset, the AIA Tower to American International
Assurance Company (Bermuda) Limited, a limited liability company
incorporated in Bermuda and its wholly owned subsidiary, Golden
Liberty Investment Limited.
Following year end, but not by much (we closed Jan 31, 2012) we
completed the sale of the AIA Tower for a price above its valuation
in the NAV of HK$1.2 Billion. The gross sale price for the property
was HK$1,260,000,000 (US$161.9 million) and as the sale was for the
property itself and not SPI Macau Limitada, the subsidiary company
which holds the property, this crystallised a tax liability of
HK$87 million (US$11.2 million). The crystallisation of this
liability resulted in the need to impair to nil the goodwill that
arose on the purchase of SPI Macau Limitada (US$6.5 Million).
Following this successful sale, and after discussions with a
number of Shareholders it became apparent to the Directors that a
majority of Shareholders by value would like to maintain their
investment in the Company and would support the continuation of the
life of the Company following the adoption of a new investment
objective and investing policy. This was a change from the initial
view to simply sell the portfolio and liquidate the Company. The
board appreciates this show of support and the restructuring of the
Company would be undertaken in conjunction with the appointment of
an external investment manager, being Terra Partners Asset
Management Limited, a company owned by three of the four directors,
namely Howard Golden, Fillip Montfort and Yarden Mariuma.
All elements of the proposed Restructuring will be subject to
Shareholder approval at an Extraordinary General Meeting which is
being called and which should be held shortly after the issuance of
this report. Any Shareholders who do not wish to retain their
investment in the Company post the Restructuring (if implemented)
will, subject to the passing of the appropriate resolution at the
Extraordinary General Meeting, be able to exit the Company
completely through a Tender Offer to all shareholders. In order to
ensure that this restructuring plan is desired by the majority of
the shareholders, the board decided that the Tender Offer and
Restructuring will be conditional upon, inter alia, the Company
receiving tenders in respect of no more than 60% of the issued
Ordinary Share capital of the Company. If the Company receives
tenders in respect of more than 60% of the issued Ordinary Share
capital of the Company, neither the Tender Offer nor the
Restructuring shall proceed and the Company shall, in due course,
put proposals for the winding up of the Company to Shareholders for
their approval.
The full details of the tender offer and restructuring are
included in the circular to shareholders to be issued on or around
30 April 2012 and copies of this document will be available on the
Company's website: www.speymillmacau.com or by contacting the
Administrator.
We have enjoyed our tenure as directors and Filip Montfort will
continue in this capacity while Harald Wengust, Yarden Mariuma and
I will resign to allow other, independent directors to take our
place, so this is my last missive to shareholders.
Cordially,
Howard Golden
Howard I. Golden,
Chairman
27 April, 2012
Directors' report
The Directors hereby submit their annual report together with
the audited consolidated financial statements of Speymill Macau
Property Company plc (the "Company") for the financial year ended
31 December 2011.
The Company
The Company is incorporated in the Isle of Man and has been
established to invest in the high quality residential and
commercial real estate market in Macau.
Results and dividends
The results and position of the Company at the year-end are set
out on pages 9 to 16 of the financial statements.
At the Extraordinary General Meeting held on 19 November 2010,
the shareholders approved a revised Investing Policy as
follows:
The Company shall cease making new investments and shall, as
soon as is considered reasonably practicable by the Directors of
the Company in their sole discretion, dispose of all of its
investments in an orderly manner and return the net proceeds
generated to shareholders.
In accordance with the shareholders resolution, the Directors
declared an interim return of capital of 30 cents per share as
follows.
Ex Dividend date 13 April, 2011
Record date 15 April, 2011
Payment date 28 April, 2011
Directors
There has been no change to the constitution of the Board during
the year. The Directors during the year and up to the date of this
annual report were as follows.
Date Appointed
Howard I Golden 21 July 2009
Filip Montfort 21 July 2009
Yarden Mariuma 21 July 2009
Harald Gerhard 7 September 2009
Wengust
Directors' interests in the shares of the Company
The interests of the Directors in the share capital of the
Company as at 31 December 2011 are set out below:
Director No. of shares
Harald Gerhard
Wengust 148,000
Howard I Golden** 29,350,000
Yarden Mariuma** 29,350,000
Filip Montfort** 29,350,000
-------------------- --------------
** Messrs. Golden, Mariuma and Montfort are principals of Terra
Partners Group, the Investment Manager to Worldwide Opportunities
Fund (Cayman) Limited, which held 29,350,000 shares in the Company
as of the date of this financial statement.
Director's interests
None of the Directors had any interest during the year in any
material contract for the provision of services which was
significant to the business of the Company.
Independent Auditors
KPMG Audit LLC have expressed their willingness to continue in
office in accordance with Section 12 (2) of the Companies Act
1982.
Corporate governance
Although the Company is not obliged by the listing rules to do
so, the Board intends, where appropriate for a Company of its size,
to comply with the main provisions of the principles of good
governance and code of best practice set out in the Combined Code
('the Code').
Responsibilities of the Board
The Board of Directors are responsible for the implementation of
the investment policy of the Company. The investment policy, which
is to cease making new investments and, as soon as is considered
reasonably practicable by the Directors of the Company in their
sole discretion, to dispose of all of the Company's investments in
an orderly manner and return the net proceeds generated to
Shareholders, was set by the shareholders at an extraordinary
general meeting held on 19(th) November, 2010. Following the
termination of the Investment Manager the Board became responsible
for the Company's day-to-day operations and assiduously worked with
the administrator and all the employees of the AIA Tower in Macau
to ensure that the Company ran efficiently and properly.
At each of the regular Board meetings held, the financial
performance of the Company and its portfolio assets are reviewed.
The Board also received regular property asset performance reports
from initially the Manager and the Investment Adviser and
subsequently the property managers following the termination of the
contract of the Manager in June 2011.
In addition the Board members have made regular trips to Macau
during the year to make site visits to the properties and meet with
the local service providers such as the property managers, local
attorneys, auditors and consultants.
.
Audit Committee
The Audit Committee is a sub-committee of the Board and makes
recommendations to the Board which retains the right of final
decision. The Audit Committee has primary responsibility for
reviewing the financial statements and the accounting policies,
principles and practice underlying them, liaising with the external
auditors and reviewing the effectiveness of internal controls. The
Audit Committee maintains a risk register to help it identify,
evaluate, monitor and control risks.
The terms of reference of the Audit Committee covers the
following:
-- The composition of the Committee, quorum and who else attends meetings.
-- Appointment and duties of the Chairman.
-- Duties in relation to external reporting, including reviews
of financial statements, shareholder communications and other
announcements.
-- Duties in relation to the external auditors, including
appointment / dismissal, approval of fee, discussion of the
audit.
-- Duties in relation to internal systems, procedures and controls.
On behalf of the Board
Howard I. Golden
Chairman
Statement of Directors' Responsibilities in Respect of the
Directors' Report and the Financial Statements
The Directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year, which meet the requirements of
Isle of Man company law. In addition, the Directors have elected to
prepare the financial statements in accordance with International
Financial Reporting Standards.
The financial statements are required by law to give a true and
fair view of the state of affairs of the Group and Parent Company
and of the profit or loss of the Company for that period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with
International Financial Reporting Standards; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Parent
Company will continue in business.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the Parent
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Parent Company and to enable
them to ensure that its financial statements comply with the
Companies Acts 1931 to 2004. They have general responsibility for
taking such steps as are reasonably open to them to safeguard the
assets of the Group and to prevent and detect fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation governing the preparation and
dissemination of financial statements may differ from one
jurisdiction to another.
On behalf of the Board
Howard I. Golden
Chairman
27 April 2012
Report of the Independent Auditors, KPMG Audit LLC, to the
members of Speymill Macau Property Company plc
We have audited the financial statements of Speymill Macau
Property Company plc for the year ended 31 December 2011 which
comprise the Group Income Statement, the Group Statement of
Comprehensive Income, the Group and Parent Company Balance Sheets,
the Group Statement of Cash Flows and the Group and Parent Company
Statement of Changes in Equity and the related notes. The financial
reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards
(IFRSs).
This report is made solely to the Company's members, as a body,
in accordance with Section 15 of the Companies Act 1982. Our audit
work has been undertaken so that we might state to the Company's
members those matters we are required to state to them in an
auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of Directors and Auditors
As explained more fully in the Directors' Responsibilities
Statement set out on page 11, the Directors are responsible for the
preparation of financial statements that give a true and fair view.
Our responsibility is to audit, and express an opinion on, the
financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
(APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Group's circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the Directors; and the overall
presentation of the financial statements.
Opinion on the financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the Group's and
Parent Company's affairs as at 31 December 2011 and of the Group's
loss for the year then ended;
-- have been properly prepared in accordance with IFRSs; and
-- have been properly prepared in accordance with the provisions
of Companies Acts 1931 to 2004.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Acts 1931 to 2004 require us to report to you
if, in our opinion:
-- proper books of account have not been kept by the Parent
Company and proper returns adequate for our audit have not been
received from branches not visited by us; or
-- the Parent Company's balance sheet and income statement are
not in agreement with the books of account and returns; or
-- certain disclosures of directors' remuneration specified by law are not made; or
-- we have not received all the information and explanations we require for our audit.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man, IM99 1HN
27 April 2012
Consolidated income statement
Notes For the year For the year
ended 31 ended 31
December December
2011 2010
US$'000 US$'000
----------------------------------------------------------------- ------------- ------------- -------------
Rent and related income 7,876 7,962
Direct expenses (4,191) (3,134)
-----------------------------------------------------------------
Net rent and related income 3,685 4,828
----------------------------------------------------------------- ------------- ------------- -------------
Impairment of goodwill 11 (6,451) -
Gain/(Loss) on disposal of investment property 12 3,882 (666)
----------------------------------------------------------------- ------------- ------------- -------------
(2,569) (666)
----------------------------------------------------------------- ------------- ------------- -------------
Manager's fees 10.4 (1,361) (2,751)
Audit and professional fees 10.3 (812) (252)
Other expenses 10.1,10.2,20 (1,581) (1,789)
Administrative and other expenses (3,754) (4,792)
----------------------------------------------------------------- ------------- ------------- -------------
Net operating loss before net financing expense (2,638) (630)
----------------------------------------------------------------- ------------- ------------- -------------
Finance income 101 96
Finance cost (1,986) (1,762)
----------------------------------------------------------------- ------------- ------------- -------------
Net finance cost 7 (1,885) (1,666)
----------------------------------------------------------------- ------------- ------------- -------------
Loss before tax (4,523) (2,296)
Taxation 21, 22 (1,410) (2,862)
Loss for the year (5,933) (5,158)
----------------------------------------------------------------- ------------- ------------- -------------
Attributable to:
Owners of the Company (5,933) (5,152)
Non-controlling interest - (6)
(5,933) (5,158)
----------------------------------------------------------------- ------------- ------------- -------------
Basic and diluted loss per share (cents per share) for loss
attributable to the owners of
the Company during the year 16 (5.52) (4.61)
----------------------------------------------------------------- ------------- ------------- -------------
Consolidated statement of comprehensive income
For the year For the year
ended 31 December 2011 ended 31 December 2010
US$'000 US$'000
------------------------------------------------ ------------------------ ------------------------
Loss for the year (5,933) (5,158)
------------------------------------------------ ------------------------ ------------------------
Other comprehensive income
Currency translation differences 63 (119)
------------------------------------------------ ------------------------ ------------------------
Other comprehensive income/(loss) for the year 63 (119)
------------------------------------------------ ------------------------ ------------------------
Total comprehensive loss for the year (5,870) (5,277)
------------------------------------------------ ------------------------ ------------------------
Total comprehensive loss attributable to:
Owners of the company (5,870) (5,267)
Non-controlling interest - (10)
------------------------------------------------ ------------------------ ------------------------
Total comprehensive loss for the year (5,870) (5,277)
------------------------------------------------ ------------------------ ------------------------
Consolidated balance sheet
Note 31 December 2011 31 December 2010
US$'000 US$'000
------------------------------------------------- ----- ----------------- -----------------
Intangible assets 11 - 6,451
Investment property 12 - 159,884
Plant and equipment - 1,121
Total non-current assets - 167,456
Assets held for sale and associated liabilities 13 77,189 -
Trade and other receivables 14 28 16,943
Cash and cash equivalents 15 15,916 38,518
Total current assets 93,133 55,461
------------------------------------------------- ----- ----------------- -----------------
Total assets 93,133 222,917
------------------------------------------------- ----- ----------------- -----------------
Issued share capital 17 10,783 10,783
Share premium 62,356 62,356
Retained earnings 16,593 55,365
Other reserves 2,217 2,217
Foreign currency translation reserve 56 (7)
Equity attributable to owners of the parent 92,005 130,714
------------------------------------------------- ----- ----------------- -----------------
Non-controlling interest - 1,217
------------------------------------------------- ----- ----------------- -----------------
Total equity 92,005 131,931
------------------------------------------------- ----- ----------------- -----------------
Deferred income tax 22 - 10,063
Total non-current liabilities - 10,063
------------------------------------------------- ----- ----------------- -----------------
Interest-bearing loans and borrowings 18 - 76,022
Trade and other payables 19 1,128 4,901
Total current liabilities 1,128 80,923
------------------------------------------------- ----- ----------------- -----------------
Total liabilities 1,128 90,986
------------------------------------------------- ----- ----------------- -----------------
Total equity & liabilities 93,133 222,917
------------------------------------------------- ----- ----------------- -----------------
Net asset value per share 8 0.86 1.21
------------------------------------------------- ----- ----------------- -----------------
Company balance sheet
Note 31 December 2011 31 December 2010
US$'000 US$'000
------------------------------------------ ----- ----------------- -----------------
Trade and other receivables 14 28 20
Cash and cash equivalents 15 12,310 14,038
Intercompany balances 5 80,794 116,798
------------------------------------------ ----- ----------------- -----------------
Total current assets 93,132 130,856
------------------------------------------ ----- ----------------- -----------------
Total assets 93,132 130,856
------------------------------------------ ----- ----------------- -----------------
Issued share capital 17 10,783 10,783
Share premium 62,356 62,356
Retained earnings 16,649 55,022
Other reserves 2,217 2,553
Total equity 92,005 130,714
------------------------------------------ ----- ----------------- -----------------
Trade and other payables 19 1,127 142
Total current liabilities 1,127 142
------------------------------------------ ----- ----------------- -----------------
Total liabilities 1,127 142
------------------------------------------ ----- ----------------- -----------------
Total equity & liabilities 93,132 130,856
------------------------------------------ ----- ----------------- -----------------
Net asset value per parent company share 8 0.86 1.21
------------------------------------------ ----- ----------------- -----------------
The loss made by the Company for the year ended 31 December 2011
was US$5,870,000 (year ended 31 December 2010, loss
US$5,267,000).
Consolidated statement of changes in equity
Foreign
Capital currency Total Total
Share Share Retained redemption translation parent Non-controlling equity 31
capital premium earnings reserve reserves equity Interest December
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------- ---------- ---------- ---------- ----------- ------------ -------- ---------------- ----------
Balance at 1
January 2010 11,682 62,356 67,240 1,318 108 142,704 1,227 143,931
--------------- ---------- ---------- ---------- ----------- ------------ -------- ---------------- ----------
Loss for the
year - - (5,152) - - (5,152) (6) (5,158)
Other
comprehensive
income
Foreign
exchange
translation
differences - - - - (115) (115) (4) (119)
--------------- ---------- ---------- ---------- ----------- ------------ -------- ---------------- ----------
Total
comprehensive
loss for the
year - - (5,152) - (115) (5,267) (10) (5,277)
Shares
cancelled
following
market
purchases/
transfer to
capital
redemption
reserve (899) - (6,723) 899 - (6,723) - (6,723)
--------------- ---------- ---------- ---------- ----------- ------------ -------- ---------------- ----------
Balance at 31
December 2010 10,783 62,356 55,365 2,217 (7) 130,714 1,217 131,931
--------------- ---------- ---------- ---------- ----------- ------------ -------- ---------------- ----------
Consolidated statement of changes in equity
Foreign Total
Capital currency Total equity
Share Share Retained redemption translation parent Non-controlling 31
capital premium earnings reserve reserves equity Interest December
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------- ---------- ---------- ---------- ----------- ------------ --------- ---------------- ---------
Balance at 1
January 2011 10,783 62,356 55,365 2,217 (7) 130,714 1,217 131,931
--------------- ---------- ---------- ---------- ----------- ------------ --------- ---------------- ---------
Loss for the
year - - (5,933) - - (5,933) - (5,933)
Other
comprehensive
income
Foreign
exchange
translation
differences - - - - 63 63 - 63
--------------- ---------- ---------- ---------- ----------- ------------ --------- ---------------- ---------
Total
comprehensive
loss for the
year - - (5,933) - 63 (5,870) - (5,870)
--------------- ---------- ---------- ---------- ----------- ------------ --------- ---------------- ---------
Shares
repurchased
to be held in
treasury - - (490) - - (490) - (490)
Non
controlling
interest
settled on
disposal of
properties - - - - - - (1,217) (1,217)
Distribution
paid - - (32,349) - - (32,349) - (32,349)
--------------- ---------- ---------- ---------- ----------- ------------ --------- ---------------- ---------
Total
contributions
by and
distributions
to owners - - (32,839) - - (32,839) (1,217) (34,056)
Balance at 31
December 2011 10,783 62,356 16,593 2,217 56 92,005 - 92,005
--------------- ---------- ---------- ---------- ----------- ------------ --------- ---------------- ---------
Company statement of changes in equity
Share Capital redemption Total equity 31
capital Share premium Retained earnings reserve December
US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 January
2010 11,682 62,356 67,348 1,318 142,704
Loss for the year - - (5,267) - (5,267)
---------------------- --------- --------------- ------------------- --------------------- ----------------------
Total comprehensive
loss for the year - - (5,267) - (5,267)
---------------------- --------- --------------- ------------------- --------------------- ----------------------
Transactions with
owners:
---------------------- --------- --------------- ------------------- --------------------- ----------------------
Shares cancelled
following market
purchases/ transfer
to capital
redemption reserve (899) - (6,723) 899 (6,723)
---------------------- --------- --------------- ------------------- --------------------- ----------------------
Balance at 31
December 2010 10,783 62,356 55,358 2,217 130,714
Loss for the year - - (5,870) - (5,870)
---------------------- --------- --------------- ------------------- --------------------- ----------------------
Total comprehensive
loss for the year - - (5,870) - (5,870)
---------------------- --------- --------------- ------------------- --------------------- ----------------------
Shares repurchased to
be held in treasury - - (490) - (490)
Distribution paid - - (32,349) - (32,349)
---------------------- --------- --------------- ------------------- --------------------- ----------------------
Total contributions
by and distributions
to owners - - (32,839) - (32,839)
Balance at 31
December 2011 10,783 62,356 16,649 2,217 92,005
---------------------- --------- --------------- ------------------- --------------------- ----------------------
Consolidated statement of cash flows
Note For the year ended For the year ended
31 December 2011 31 December 2010
US$'000 US$'000
------------------------------------------------------ ----- ------------------- -------------------
Operating activities
Group profit/(loss) before tax (4,523) (2,296)
Adjustments for:
Revaluation of investment property 13 (7,711) -
Loss on disposal of investment property 184 666
Depreciation 1,013 710
Impairment of goodwill 11 6,451 -
Interest income 7 (101) (96)
Interest expense 7 1,986 1,735
Operating income before changes in working capital (2,701) 719
Decrease in trade and other receivables 1,040 559
Liabilities relating to assets held for sale 10,384 -
Increase/(decrease) in trade and other payables (3,773) 18
Cash generated from operations 4,950 1,296
Interest received 7 101 96
Interest paid 7 (1,986) (1,735)
Income tax paid 33 (626)
Cash flows used in operating activities 3,098 (969)
------------------------------------------------------ ----- ------------------- -------------------
Investing activities
Sale of investment property 21,333 12,903
Purchase of fixed assets - (554)
Cash flows generated from investing activities 21,333 12,349
------------------------------------------------------ ----- ------------------- -------------------
Financing activities
Cost of Ordinary Shares purchased (490) (6,723)
Dividends paid (32,349) -
Payment to non-controlling interest (1,217) -
Repayments of secured bank loans (13,040) (2,564)
------------------------------------------------------ ----- ------------------- -------------------
Cash flows used in financing activities (47,096) (9,287)
------------------------------------------------------ ----- ------------------- -------------------
Net increase/(decrease) in cash and cash equivalents (22,665) 2,093
Cash and cash equivalents at beginning of year 38,518 36,598
Difference on foreign exchange 63 (173)
------------------------------------------------------ ----- ------------------- -------------------
Cash and cash equivalents at end of year 15 15,916 38,518
------------------------------------------------------ ----- ------------------- -------------------
Notes to the consolidated financial statements
1 The Company
Speymill Macau Property Company plc (the "Company") 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.
The annual report of the Company as at and for the year ended 31
December 2011 comprises the Company and its subsidiaries (together
referred to as the "Group").
At the Extraordinary General Meeting held on 19 November 2010 it
was resolved that; the Company shall cease making new investments
and shall, as soon as is considered reasonably practicable by the
Directors of the Company in their sole discretion, dispose of all
of its investments in an orderly manner and return the net proceeds
generated to Shareholders.
2 Basis of preparation
2.1 Statement of compliance
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
(IFRSs).
The consolidated financial statements were authorised for issue
by the Board of Directors on 27 April, 2012.
2.2 Basis of measurement
These consolidated financial statements have been prepared on
the historical cost basis except for investment properties and
assets held for sale, which are stated at fair value/realisable
value.
2.3 Functional and presentation currency
These consolidated financial statements are presented in United
States Dollars (US$), which is the Company's presentation currency.
The Hong Kong Dollar (HK$) is the currency of the primary economic
environment in which the entity operates ("the functional
currency").
2.4 Use of estimates and judgements
The preparation of the consolidated financial statements in
conformity with IFRSs requires management to make judgements,
estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised and in any future periods
affected.
Following the agreement to sell the investment property (see
note 13) there are no significant areas requiring estimation.
Adoption of new and revised International Financial Reporting
Standards (IFRSs)
Standards affecting amounts reported in the current period
(and/or prior periods)
a) New and amended standards adopted by the Group
Annual improvements to IFRSs, effective 1 January 2011, were
issued by the IASB as part of the IASB's programme of annual
improvements resulting in amendments to 7 standards. The
improvements have not had a significant effect on the Group or the
Company.
The following new standards and amendments to standards are
mandatory for the first time for the financial year beginning 1
January 2011.
Revised IAS 24 (revised), 'Related party disclosures', issued in
November 2009. It supersedes IAS 24, 'Related party disclosures',
issued in 2003. IAS 24 (revised) is mandatory for periods beginning
on or after 1 January 2011. Earlier application, in whole or in
part, is permitted. The revised standard clarifies and simplifies
the definition of a related party and removes the requirement for
government-related entities to disclose details of all transactions
with the government and other government-related entities. The
Group and the Company has updated its disclosure in relation to any
transactions between its subsidiaries and its associates.
IFRS 7 (amendment), 'Financial instruments', effective 1 January
2011. Emphasises the interaction between quantitative and
qualitative disclosures about the nature and extent of risks
associated with financial instruments. The amendment has not had
any impact on the Group or the parent entity's financial
statements.
IAS 1, 'Presentation of financial statements', effective 1
January 2011. Clarifies that an entity will present an analysis of
other comprehensive income for each component of equity, either in
the statement of changes in equity or in the notes to the financial
statements. This has not had a significant effect on the Group or
the parent entity's financial statements.
IAS 27, 'Consolidated and separate financial statements',
applicable to annual periods beginning on or after 1 July 2010.
Clarifies that the consequential amendments from IAS 27 made to IAS
21, 'The effect of changes in foreign exchange rates', IAS 28,
'Investments in associates', and IAS 31, 'Interests in joint
ventures', apply prospectively for annual periods beginning on or
after 1 July 2010, or earlier when IAS 27 is applied earlier. This
has not had any impact on the Group or the parent entity's
financial statements.
b) Standards, amendments and interpretations to existing
standards relevant to the Group, that are not yet effective and
have not been early adopted by the Group
IFRS 9, 'Financial instruments', issued in November 2009. This
standard is the first step in the process to replace IAS 39,
'Financial instruments: recognition and measurement'. IFRS 9
retains but simplifies the mixed measurement model and establishes
two primary categories for financial assets: amortised cost and
fair value. The basis of classification depends on the entity's
business model and the contractual cash flow characteristics of the
financial asset. The standard is not applicable until 1 January
2013 but is available for early adoption. The Group is yet to
assess IFRS 9's full impact.
IFRS 10, 'Consolidated financial statements', issued in May
2011. This standard builds on existing principles by identifying
the concept of control as the determining factor in whether an
entity should be included within the consolidated financial
statements. The standard provides additional guidance to assist in
determining control where this is difficult to assess. This
standard is applicable for periods beginning on or after 1 January
2013. The Group is yet to assess the full impact of IFRS 10, but
the adoption may change the entities that are consolidated as
subsidiaries from 1 January 2013.
IFRS 12, 'Disclosure of interests in other entities', issued in
May 2011. This standard includes the disclosure requirements for
all forms of interests in other entities, including joint
arrangements, associates, special purpose vehicles and other off
balance sheet vehicles. This standard will be applicable for
periods beginning or after 1 January 2013. The Group, subject to EU
endorsement, will adopt this standard from 1 January 2013. It is
not expected to have a significant impact on the Group.
IFRS 13, 'Fair value measurement', issued in May 2011. This
standard aims to improve consistency and reduce complexity by
providing a precise definition of fair value and a single source of
fair value measurement and disclosure requirements for use across
IFRSs. The requirements, which are largely aligned between IFRSs
and US GAAP, do not extend the use of fair value accounting but
provide guidance on how it should be applied where its use is
already required or permitted by other standards within IFRSs or US
GAAP. This standard is applicable for periods beginning on or after
1 January 2013. The Group is yet to assess IFRS 13's full
impact.
3. Significant accounting policies
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated
financial statements, and have been applied consistently by Group
entities.
3.1 Basis of consolidation
Subsidiaries
Subsidiaries are those enterprises controlled by the Company.
Control exists where the Company has the power, directly or
indirectly, to govern the financial and operating policies of an
enterprise so as to obtain benefits from its activities. The
financial statements of subsidiaries are included in the
consolidated financial statements from the date that control
effectively commences until the date that control effectively
ceases.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are eliminated
in preparing the consolidated financial statements.
3.2 Foreign currency
The individual financial statements of each group entity are
presented in the currency of the primary economic environment in
which the entity operates (its functional currency). For the
purpose of the consolidated financial statements, the results and
financial position of each group entity are expressed in United
States Dollars, which is the presentation currency for the
consolidated financial statements.
In preparing the financial statements of the individual
entities, transactions in currencies other than the entity's
functional currency (foreign currencies) are recognised at the
rates of exchange prevailing at the dates of the transactions. At
the end of each reporting period, monetary items denominated in
foreign currencies are retranslated at the rates prevailing at that
date. Non-monetary items carried at fair value that are denominated
in foreign currencies are retranslated at the rates prevailing at
the date when the fair value was determined. Non-monetary items
that are measured in terms of historical cost in a foreign currency
are not retranslated.
Exchange differences are recognised in profit or loss in the
period in which they arise.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the subsidiaries are expressed in
United States Dollars using exchange rates prevailing at the end of
the reporting period. Income and expense items are translated at
the average exchange rates for the period, unless exchange rates
fluctuated significantly during that period, in which case the
exchange rates at the dates of the transactions are used. Exchange
differences arising, if any, are recognised in other comprehensive
income and accumulated in equity (attributed to non-controlling
interests as appropriate).
3.3 Financial instruments
(i) Non-derivative financial assets
The Group initially recognises receivables and deposits on the
date that they are originated.
The Group derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or it transfers the
rights to receive the contractual cash flows on the financial asset
in a transaction in which substantially all the risks and rewards
of ownership of the financial asset are transferred. Any interest
in transferred financial assets that is created or retained by the
Group is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount
presented in the balance sheet when, and only when, the Group has a
legal right to offset the amounts and intends either to settle on a
net basis or to realise the asset and settle the liability
simultaneously.
The Group has the following non-derivative financial assets:
receivables and cash and cash equivalents.
Receivables comprise trade and other receivables. Such assets
are recognised initially at cost. Subsequent to initial
recognition, receivables are measured at cost less any impairment
losses.
Cash and cash equivalents comprise cash balances and call
deposits with original maturities of three months or less. Bank
overdrafts that are repayable on demand and form an integral part
of the Group's cash management are included as a component of cash
and cash equivalents for the purpose of the statement of cash
flows.
(ii) Non-derivative financial liabilities
The Group initially recognises financial liabilities on the date
at which the Group becomes a party to the contractual provisions of
the instrument.
The Group derecognises a financial liability when its
contractual obligations are discharged or cancelled or expire.
Financial assets and liabilities are offset and the net amount
presented in the balance sheet when, and only when, the Group has a
legal right to offset the amounts and intends either to settle on a
net basis or to realise the asset and settle the liability
simultaneously.
The Group has the following non-derivative financial
liabilities: loans and borrowings and trade and other payables.
Loans and borrowings are recognised initially at fair value plus
any directly attributable transaction costs. Subsequent to initial
recognition, these financial liabilities are measured at amortised
cost using the effective interest method.
Trade and other payables are stated at their cost.
(iii) Share capital
Ordinary Shares
Ordinary Shares are classified as equity. Incremental costs
directly attributable to the issue of Ordinary Shares and share
options are recognised as a deduction from equity, net of any tax
effects.
3.4 Goodwill
Goodwill that arises upon the acquisition of subsidiaries is
included in intangible assets and is measured at cost less
accumulated impairment losses.
3.5 Revenue recognition
Rental income and expenses
Rental income from the investment properties leased out under
operating leases are recognised in the income statement on a
straight-line basis over the term of the lease. Related direct
costs are accounted for on an accrual basis. Lease incentives
granted are recognised as an integral part of the total rental
income, over the term of the lease.
Finance income and expenses
Finance income comprises interest income on funds invested and
changes in the fair value of financial assets at fair value through
profit or loss. Interest income is recognised as it accrues in
profit or loss.
Finance costs comprise interest expense on borrowings. Interest
expense is recognised as it accrues in profit or loss.
Foreign currency gains and losses are reported on a net
basis.
3.6 Impairment
Financial assets
A financial asset not carried at fair value through profit or
loss is assessed at each reporting date to determine whether there
is objective evidence that it is impaired. A financial asset is
impaired if objective evidence indicates that a loss event has
occurred after the initial recognition of the asset, and that the
loss event had a negative effect on the estimated future cash flows
of that asset that can be estimated reliably.
Losses are recognised in profit or loss and reflected in an
allowance account against receivables. When a subsequent event
causes the amount of impairment loss to decrease, the decrease in
impairment loss is reversed through profit or loss.
Non-financial assets
The carrying amounts of the Group's non-financial assets, other
than investment property are reviewed at each reporting date to
determine whether there is any indication of impairment. If any
such indication exists, then the asset's recoverable amount is
estimated. For goodwill, the recoverable amount is estimated each
year at the same time. The recoverable amount of an asset or
cash-generating unit is the greater of its value in use and its
fair value less costs to sell.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment loss
is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been
recognised.
3.7 Income tax expense
Income tax expense comprises current and deferred tax. Income
tax expense is recognised in the consolidated income statement
except to the extent that it relates to items recognised directly
in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at
the reporting date, and any adjustment to tax payable in respect of
previous years.
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.
3.10 Earnings per share
The Group presents basic and diluted earnings per share (EPS)
data for its Ordinary Shares. Basic EPS is calculated by dividing
the profit or loss attributable to ordinary shareholders of the
Company by the weighted average number of Ordinary Shares
outstanding during the period, adjusted for own shares held.
Diluted EPS is determined by adjusting the profit or loss
attributable to ordinary shareholders and the weighted average
number of Ordinary Shares outstanding, adjusted for own shares
held, for the effects of all dilutive potential Ordinary
Shares.
3.11 Dividends
Dividends are recognised as a liability in the period in which
they are declared and approved.
3.12 Segment reporting
An operating segment is a component of the Group that engages in
business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to
transactions with any of the Group's other components. The
operating result of the single operating segment is reviewed
regularly by the Group's Board of Directors to make decisions about
resources to be allocated and assess its performance.
3.13 Assets classified as held for sale
Assets classified as held for sale are measured at the lower of
carrying amount and fair value less costs to sell. Assets are
classified as held for sale if their carrying amounts will be
recovered through a sale transaction rather than through continuing
use. This condition is regarded as met only when the sale is highly
probable and the asset is available for immediate sale in its
present condition. Management must be committed to the sale, which
should be expected to qualify for recognition as a completed sale
within one year from the date of classification.
4. Financial risk management
Overview
The Group has exposure to the following risks from its use of
financial instruments:
-- credit risk
-- liquidity risk
-- market risk
-- foreign exchange risk
-- operational risk
This note presents information about the Group's exposure to
each of the above risks, the Group's objectives, policies and
processes for measuring and managing risk, and the Group's
management of capital. Further quantitative disclosures are
included throughout these consolidated financial statements.
Risk management framework
The Board of Directors has overall responsibility for the
establishment and oversight of the Group's risk management
framework.
The Group's risk management policies are established to identify
and analyse the risks faced by the Group, to set appropriate risk
limits and controls, and to monitor risks and adherence to limits.
Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Group's activities.
The Group aims to develop a disciplined and constructive control
environment.
The Group Audit Committee oversees how management monitors
compliance with the Group's risk management policies and
procedures, and reviews the adequacy of the risk management
framework in relation to the risks faced by the Group.
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from the
Group's financial assets.
Cash and cash equivalents
The Group limits its exposure to credit risk by investing only
with counterparties that have high credit ratings. Management
actively monitors credit ratings and does not expect any
counterparty to fail to meet its obligations.
Trade and other receivables
The Group's exposure to credit risk is influenced mainly by the
individual characteristics of each customer. However, management
also considers the demographics of the Group's customer base,
including the default risk of the industry and country in which
customers operate, as these factors may have an influence on credit
risk, particularly in the current economic circumstances.
Management has established a credit policy under which each new
tenant is analysed individually for creditworthiness before the
Group's standard payment terms and conditions are offered. The
Group's review includes external ratings, when available, and in
some cases bank references.
The Group establishes an allowance for impairment that
represents its estimate of incurred losses in respect of trade and
other receivables. The main components of this allowance are a
specific loss component that relates to individually significant
exposures, and a collective loss component established for groups
of similar assets in respect of losses that have been incurred but
not yet identified. The collective loss allowance is determined
based on historical data of payment statistics.
Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another
financial asset.
The Group's approach to managing liquidity is to ensure, as far
as possible, that it will always have sufficient liquidity to meet
its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage
to the Group's reputation. The Group manages liquidity risk by
maintaining adequate reserves, banking facilities and reserve
borrowing facilities, by continuously monitoring forecast and
actual cash flows, and by matching the maturity profiles of
financial assets and liabilities.
Market risk
Market risk is the risk that the fair value or future cash flows
of a financial instrument will fluctuate because of changes in
market prices. The Group's market risks arise from open positions
in (a) foreign currencies and (b) interest-bearing assets and
liabilities, to the extent that these are exposed to general and
specific market movements.
The Group sets limits on the exposure to currency and interest
rate risk that may be accepted, which are monitored on a regular
basis. However, the use of this approach does not prevent losses
outside of these limits in the event of more significant market
movements.
Foreign exchange risk
The Group operates internationally and is exposed to foreign
exchange risk, primarily with respect to the US Dollar and HK
Dollar. Foreign exchange risk arises in respect of those recognised
monetary financial assets and liabilities, income and expense that
are not in the functional currency of the Group.
Operational risk
Operational risk is the risk of direct or indirect loss arising
from a wide variety of causes associated with the Group's
processes, service providers, technology and infrastructure, and
from external factors other than credit, market and liquidity risks
such as those arising from legal and regulatory requirements and
generally accepted standards of corporate behaviour. Operational
risks arise from all of the Group's operations.
The Group's objective is to manage operational risk so as to
balance the avoidance of financial losses and damage to the Group's
reputation with overall cost effectiveness. The Group has developed
standards for the management of operational risk in the following
areas:
-- requirements for appropriate segregation of duties
-- requirements for the reconciliation and monitoring of transactions
-- compliance with regulatory and other legal requirements
-- documentation of controls and procedures
-- requirements for the periodic assessment of operational risks
faced, and the adequacy of controls and procedures to address the
risks identified
-- ethical and business standards.
Capital management
The Board's policy is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and to sustain
future development of the business.
The capital structure of the Group consists of net debt
(borrowings as detailed in notes 13 and 18 offset by cash and bank
balances) and equity of the Group (comprising issued capital,
reserves, retained earnings and non-controlling interests as
detailed in note 17). The Board reviews the capital structure of
the Group on a semi-annual basis.
The Board of Directors monitors the net asset value per share,
which the Group defines as the total shareholders' equity divided
by the total number of shares in issue. The Board of Directors also
monitors the level of dividends to ordinary shareholders.
The Board seeks to maintain a balance between the higher returns
that might be possible with higher levels of borrowings and the
advantages and security afforded by a sound capital position. There
were no changes in the Group's approach to capital management
during the year. Neither the Company nor any of its subsidiaries
are subject to externally imposed capital requirements.
5 The subsidiaries
At the end of the year, the Company owned a controlling interest
in the following subsidiaries:
Country of incorporation Percentage of shares held
------------------------------------------------------- -------------------------- --------------------------
Armando Global Limited (intermediate holding company) British Virgin Islands 100%
Carlos Associates Limited British Virgin Islands 100%
Rafael Limited British Virgin Islands 100%
Quim Limited British Virgin Islands 100%
Toninho (Macau) Limitada Macau 100%
Speymill Property I (Macau) Limitada Macau 100%
Turbo Ventures Ltd Cayman Islands 100%
Inter-company loans from the Company to subsidiaries are
interest free, unsecured and repayable on demand.
6 Segment reporting
The Group has one segment focusing on disposing of all of the
Companies investments and returning the proceeds to shareholders.
No additional disclosure is included in relation to segment
reporting as the Group's activities are limited to one business and
geographic segment.
7 Net finance cost
31 December 31 December
2011 2010
US$'000 US$'000
--------------------- ------------ ------------
Interest income
on bank balances 101 96
--------------------- ------------ ------------
Finance income 101 96
--------------------- ------------ ------------
Interest expense
on bank loans (1,980) (1,575)
Bank charges (6) (27)
Amortised financial
charges - (160)
Finance cost (1,986) (1,762)
--------------------- ------------ ------------
Net finance cost (1,885) (1,666)
--------------------- ------------ ------------
8 Net asset value per share
The net asset value per share as at 31 December 2011 is US$0.86
based on 107,160,910 Ordinary Shares in issue as at that date
(2010: US$1.21 based on 107,828,910 shares).
9 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.
No director had any interest during the year in any material
contract for the provision of services which was significant to the
business of the Group, except for the Directors Incentive plan as
noted below.
At the Extraordinary General Meeting held on 19 November 2010,
Shareholders approved The Directors' Incentive Plan (payments under
which are to be divided between the Directors as they determine).
The Plan comprised two parts:
-- an immediate payment of $817,770 (representing 0.6% of the
announced NAV as at 30 June 2010) to reflect the substantial amount
of time, over and above that which would normally be expected of
Non-Executive Directors, that the Board has been required to devote
to the affairs of the Company; and
-- 0.6% of any future Distributions made by the Company during
its life, payable at the time of the Distribution. "Distribution"
is defined widely to include share buy backs, all forms of return
of capital and distributions in specie.
Payments under the Plan are in addition to the existing
Non-Executive Directors fees payable to the Directors and represent
separate remuneration for management and advisory services
performed outside the ordinary duties of the Directors.
The Managers' contract terminated on 28 June 2011, notice having
been served on 28 June 2010. Consequently, the Investment Manager,
Investment Adviser and property Adviser are not considered to be
related parties as at 31 December 2011 and subsequently.
10 Charges and fees
10.1 Nominated adviser and broker fees
As nominated adviser to the Company for the purposes of the AIM
rules, the Nominated Adviser is entitled to receive an annual fee
of GBP60,000 payable quarterly in advance.
The Nominated Adviser received additional fees during 2011 in
respect of special projects amounting to US$Nil (2010: US$8,366).
Total advisory fees payable to the Nominated Adviser and broker for
the year ended 31 December 2011 amounted to US$119,588 (2010:
US$159,446).
10.2 Administrator and Registrar fees
The Administrator is entitled to receive a fee of 10 basis
points per annum of the net assets of the Company between GBP0 and
GBP100m and 7.5 basis points of the net asset value of the Company
in excess of GBP100m, subject to a minimum monthly fee of GBP4,000,
and a maximum monthly fee of GBP11,250 payable quarterly in
arrears.
The Administrator assists in the preparation of the financial
statements of the Company for which it receives a fee of GBP1,750
per set and provides general secretarial services to the Company
for which it receives a minimum annual fee of GBP5,000.
Administration fees payable for the year ended 31 December 2011
amounted to US$125,244, (31 December 2010: US$157,757), secretarial
fees US$16,303 (2010: US$13,462), financial statement preparation
fees US$4,312 (2010: US$8,473), and Crest fees US$7,923 (2010:
US$5,577).
10.3 Audit and professional fees
Audit fees for the year ended 31 December 2011 amounted to
US$54,439, (31 December 2010: US$133,195), with US$24,720 still due
at 31 December 2011 (2010: US$58,125).
Professional fees for the year ended 31 December 2011 amounted
to US$757,428 (31 December 2010: US$119,289).
10.4 Manager's fees
Annual fees
On 28 June 2010, the Manager, was served a 12-month notice from
the Company to terminate the investment management agreement dated
26 November 2006 which notice expired on 28 June 2011.
The Manager was entitled to receive a management fee of 2% per
annum of the net asset value of the Company payable monthly in
arrears.
Management fees payable for the year ended 31 December 2011
amounted to US$1,360,819 (31 December 2009: US$2,751,310). The
decrease being due to the termination of the investment management
agreement.
11 Intangible assets
The Group's intangible assets as at 31 December 2010 comprised
goodwill arising from the acquisition of 100% of the ordinary share
capital of Turbo Ventures Ltd, which with its wholly owned
subsidiary, Speymill Property I (Macau) Limitada, comprised an
investment property group, which owned the AIA Tower building in
Macau. Following an agreement to dispose of the property the
balance of the goodwill has been impaired to $Nil.
12 Investment property
Group AIA Tower Rafael properties 31 December 2011 31 December 2010
US$'000 US$'000 US$'000 US$'000
------------------------------------ ---------- ------------------ ----------------- -----------------
At beginning of year 154,242 5,642 159,884 282,104
Additions - - - -
Disposal - (5,642) (5,642) (121,704)
Transfer to assets held for resale (154,242) - (154,242) -
Exchange difference - - - (516)
------------------------------------ ---------- ------------------ ----------------- -----------------
Balance at end of year - - - 159,884
------------------------------------ ---------- ------------------ ----------------- -----------------
13 Assets held for sale and associated liabilities
31 December 2011
US$'000
AIA Tower transferred
from investment property 154,242
Fair value adjustment 7,711
Fixed assets 108
Net current liabilities (6,737)
Bank Loans repayable
(note 18) (62,982)
Provision for taxation
payable (note 22) (11,506)
Provision for amounts
payable on Disposal (3,647)
--------------------------- -----------------
Net realisable value 77,189
--------------------------- -----------------
The AIA Tower is stated at realisable value which is the price
it was sold for in January 2012, net of related assets and
liabilities including the costs to sell the property.
Provision for taxation payable represents the estimated amount
payable on the sale of the AIA Tower. The computation for this will
be submitted in June 2012 and any adjustment arising from the final
assessment will be made in the next financial period.
14 Trade and other receivables
Group Company Group Company
31 December 31 December 31 December 31 December
2011 2011 2010 2010
US$'000 US$'000 US$'000 US$'000
----------------------------------------------- ------------ ------------ ------------ ------------
Prepayments and other receivables 28 28 1,068 20
Receivable on disposal of investment property - - 15,875 -
----------------------------------------------- ------------ ------------ ------------ ------------
Total 28 28 16,943 20
----------------------------------------------- ------------ ------------ ------------ ------------
15 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and deposits
held with banks. All cash and bank balances are available for
operational use in the Group.
16 Basic and diluted loss per share
Basic loss per share is calculated by dividing the loss
attributable to owners of the Company by the weighted-average
number of Ordinary Shares in issue during the year.
31 December 2011 31 December 2010
-------------------------------------------------------------------------------- ----------------- -----------------
Loss attributable to owners of the Company (US$'000) (5,933) (5,152)
Weighted average number of Ordinary Shares in issue (thousands) (excluding
shares held in
treasury) 107,439 111,637
-------------------------------------------------------------------------------- ----------------- -----------------
Basic and diluted loss per share (cents per share) (5.52) (4.61)
-------------------------------------------------------------------------------- ----------------- -----------------
17 Share capital
Ordinary Shares of US$0.10 each Number US$'000
--------------------------------------------------- ------------ --------
In issue at 31 December 2010 and 31 December 2011 107,828,910 10,783
--------------------------------------------------- ------------ --------
The authorised share capital of the Company is US$40,000,000,
divided into 400,000,000 Ordinary Shares of US$0.10 each.
668,000 Ordinary shares were purchased during the year to be
held in treasury and were held in treasury at 31 December 2011
(2010: 8,764,791). No further shares were purchased during the year
for cancellation (2010: 227,880).
The holders of Ordinary Shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of the Company. All shares rank equally with
regard to the Company's assets.
18 Interest-bearing loans and borrowings
This note provides information about the contractual terms of
the Group's interest-bearing loans and borrowings.
31 December 2011 31 December 2010
US$'000 US$'000
--------------------- ------------------ -----------------
Current liabilities
Secured bank loans - 76,022
--------------------- ------------------ -----------------
The Group has a term loan facility of HKD 490,000,000 (initially
HKD 600,000,000) with Banco Weng Hang SA which is secured by way of
a first legal mortgage against the AIA Tower property in Macau. The
loan is repayable on the conclusion of the sale of the property and
was repaid in January 2012 and has been classified with assets held
for sale and associated liabilities at 31 December 2011. The loan
bears 1.85% interest per annum over the 3 month Hong Kong Inter
Bank Offered Rate (HIBOR).
19 Trade and other payables
Group Company Group Company
31 December 31 December 2011 31 December 31 December 2010
2011 2010
US$'000 US$'000 US$'000 US$'000
------------------------------- ------------- ------------------ ------------- ------------------
Current liabilities
Property taxes payable - - 389 -
Sundry creditors and accruals 1,128 1,127 4,512 142
------------------------------- ------------- ------------------ ------------- ------------------
Total 1,128 1,127 4,901 142
------------------------------- ------------- ------------------ ------------- ------------------
Property taxes have been classified with assets held for sale
and associated liabilities following the contract for sale of the
AIA Tower. The sale completed on 31 January, 2012.
20 Directors' remuneration
The maximum amount of remuneration payable to the Directors
permitted under the Articles of Association is GBP200,000 per annum
(2010: GBP200,000).
Howard Golden, Filip Montfort and Yarden Mariuma are each
entitled to receive an annual fee of GBP25,000. Harald Gerhard
Wengust is entitled to receive an annual fee of GBP 20,000.
The Directors are entitled to receive reimbursement of any
expenses in relation to their appointment. Total fees and expenses
payable to the Directors for the year ended 31 December 2011
amounted to fees of US$165,806 and expenses of US$20,526 (year
ended 31 December 2010: fees of US$151,972 and expenses of
US$57,005).
In addition to the directors' fees a payment of US$195,770 was
paid to the directors under the terms of the Directors' incentive
plan approved at the Extraordinary General Meeting held on 19
November 2010 (note 9) in respect of the dividend paid on 28 April
2011 and purchase of shares to be held in treasury. The payments
made under the incentive plan to the individual directors were
US$53,590 to each of Howard I Golden, Filip Montfort, Yarden
Mariuma and US$35,000 to Harald Gerhard Wengust.
Under the terms of the Directors incentive plan approved at the
Extraordinary General Meeting held on 19 November 2010 the
Directors are entitled to a payment of 0.6% of amounts distributed
to shareholders. As the disposal of all the companies assets had
effectively been completed at 31 December 2011 and the directors
would be entitled to a payment of approximately US$549,000 on
payment of these funds to shareholders this has been provided in
full in these accounts.
21 Taxation
2011 2010
US$'000 US$'000
--------------------- -------- --------
Current tax charge 294 347
Deferred tax charge 1,116 2,515
Total 1,410 2,862
--------------------- -------- --------
Isle of Man taxation
The Company is resident in the Isle of Man for tax purposes and
pays income tax at 0%. The Company pays a corporate charge of
GBP250 to the Isle of Man Government for each tax year.
Macau taxation
The SPVs are liable to Macau Complimentary Tax at 12% in respect
of their operating profits, excluding rental income which is
subject to property tax. Property tax is chargeable at the higher
of 10% (2010: 10%) of any rent received or 10% of the official
rateable rentable value.
22 Deferred taxation
Deferred income tax is based on temporary differences between
the revalued amounts of investment property in the books of the
Company's Macau subsidiaries and their respective tax bases. The
deferred tax provision for the Macau subsidiaries is based on the
taxable profits rate of 12%. Following the agreement to dispose of
the AIA tower this liability will crystallise at the point of sale
and has been transferred to assets held for sale and associated
liabilities.
Group
31 December 2011 31 December 2010
US$'000 US$'000
---------------------------------------------------------------- ----------------- -----------------
At beginning of year 10,063 7,575
Acquired in business combination - -
Recognised in profit or loss - 2,515
Transferred to assets held for sale and associated liabilities (10,363)
Exchange difference - (27)
---------------------------------------------------------------- ----------------- -----------------
At end of year - 10,063
---------------------------------------------------------------- ----------------- -----------------
23 Financial instruments
The Group's activities expose it to a variety of financial
risks: market price risk, foreign exchange risk, credit risk,
liquidity risk and cash flow interest rate risk.
All financial instruments are considered to be stated at amounts
which approximate their fair value.
Market price risk
The Group's strategy on the management of market price risk is
driven by the Group's investment objective. The Group was
established to invest primarily in the high quality commercial
residential real estate market of Macau. The main objective of the
Group was to provide shareholders with an attractive overall return
to be achieved primarily through long-term capital growth. The
Group's market price risk is monitored by the Investment Adviser on
a day to day basis and by the Directors at Board meetings.
The Group is exposed to property price and property rental risk
although the groups one remaining property asset was sold on 31
January 2012. The Group is not exposed to the market risk with
respect to financial instruments as it does not hold any equity
securities.
Foreign exchange risk
The Group's operations are conducted in jurisdictions which
generate revenue, expenses, assets and liabilities in currencies
other than the Hong Kong Dollar (the Functional Currency). 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 primarily the US Dollar. The Hong Kong
Monetary Authority operates a linked exchange rate system for the
Hong Kong Dollar : US Dollar exchange rate and as a result the
Group considers currency risk to be minimal.
The following table sets out the Group's total exposure to
foreign currency risk and the net exposure to foreign currencies of
the monetary assets and liabilities:
Monetary Monetary Net
31 December Assets Liabilities Exposure
2011 US$'000 US$'000 US$'000
Hong Kong Dollar 3,634 - 3,634
US Dollar 12,310 (1,078) 11,232
15,944 (1,078) 14,866
------------------ --------- ------------- ----------
31 December
2010
------------------ ------- --------- ---------
Hong Kong Dollar 41,853 (80,841) (38,988)
US Dollar 13,608 (82) 13,526
55,461 (80,923) (25,462)
------------------ ------- --------- ---------
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, as they
have a short term maturity.
At the reporting date, the Group's financial assets exposed to
credit risk amounted to the following:
31 December 31 December
2011 2010
US$'000 US$'000
----------------------------- ------------ ------------
Trade and other receivables 28 16,943
Cash at bank 15,916 38,518
----------------------------- ------------ ------------
15,944 55,461
----------------------------- ------------ ------------
The maximum exposure to credit risk is represented by the
carrying amount of each financial asset in the balance sheet.
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.
Trade and other receivables relate mostly to rental and related
income and this is monitored by the active management of the
properties. The Investment Manager and the Board of Directors do
not expect any losses from non-performance by these
counterparties.
Liquidity risk
The Group manages its liquidity risk by maintaining sufficient
cash and the availability of funding through an adequate amount of
committed credit facilities. The Group's liquidity position is
monitored by the Manager and the Board of Directors. Residual
undiscounted contractual maturities of financial liabilities at the
reporting dates were:
Less 3 months
than 1-3 to 1 1-5 No stated
1 month months year years maturity
Financial liabilities US$'000 US$'000 US$'000 US$'000 US$'000
----------------------- --------- -------- --------- -------- ----------
2011
Trade and other
payables 67 - 1,011 - -
Bank loan - - - - -
----------------------- --------- -------- --------- -------- ----------
67 - 1,011 - -
----------------------- --------- -------- --------- -------- ----------
2010
Trade and other 4,901 - - - -
payables
Bank loan - 76,022 - - -
----------------------- --------- -------- --------- -------- ----------
4,901 76,022 - - 10,063
----------------------- --------- -------- --------- -------- ----------
Interest rate risk
Cash held by the Group is invested at short-term market interest
rates. The Group has one interest-bearing loan, with interest at
variable rates (which was repaid on 31 January 2012). As a result,
the Company is not exposed to fair value interest rate risk due to
fluctuations in the prevailing levels of market interest rates.
However, it is exposed to interest rate cash flow risk.
The table below summarises the Group's exposure to interest rate
risks at 31 December 2011. It includes the Groups' financial assets
and liabilities at the earlier of contractual re-pricing or
maturity date, measured by the carrying values of assets and
liabilities:
Less 1-3 Non-interest Total
than months bearing
1 month
31 December US$'000 US$'000 US$'000 US$'000
2011
-------------------- --------- --------- ------------- ---------
Financial
assets
Trade and
other receivables - - 28 28
Cash 15,916 - - 15,916
-------------------- --------- --------- ------------- ---------
Total financial
assets 15,916 - 28 15,944
-------------------- --------- --------- ------------- ---------
Financial
liabilities
Trade and
other payables - - 1,078 1,078
Bank loan
-------------------- --------- --------- ------------- ---------
Total financial
liabilities - - 1,078 1,078
-------------------- --------- --------- ------------- ---------
Total interest 15,916 - - -
rate sensitivity
gap
-------------------- --------- --------- ------------- ---------
31 December US$'000 US$'000 US$'000 US$'000
2010
-------------------- --------- --------- ------------- ---------
Financial
assets
Trade and
other receivables - - 16,943 16,943
Cash 38,518 - - 38,518
-------------------- --------- --------- ------------- ---------
Total financial
assets 38,518 - 16,943 55,461
Financial
liabilities
Trade and
other payables - - (4,901) (4,901)
Deferred income
tax - - (10,063) (10,063)
Bank loan - (76,022) - (76,022)
-------------------- --------- --------- ------------- ---------
Total financial
liabilities
-------------------- --------- --------- ------------- ---------
- (76,022) (14,964) (90,986)
-------------------- --------- --------- ------------- ---------
Total interest
rate sensitivity
gap 38,518 (76,022)
-------------------- --------- --------- ------------- ---------
Fair Values
All financial assets and liabilities at 31 December 2011 and 31
December 2010 are considered to be stated at their fair values.
24 Post balance sheet events
The Sale of the AIA Tower was concluded on 31 January 2012 for a
price of HK$1,260,000,000 (US$161,953,000) and the secured bank
loan of HK$490,000,000 (US$62,982,000) was repaid at this time. All
expected costs and liabilities associated with the sale have been
provided in these accounts.
The Directors have proposed that a tender offer be made to
shareholders, pursuant to which the Company will purchase up to
100% of its Ordinary Shares at the tender price. The Ordinary
Shares purchased by the Company under the Tender Offer will be held
in treasury (to the extent permissible under Isle of Man law) or
cancelled at the discretion of the Directors. The Tender Offer, if
implemented, will be open to Shareholders on the Register at 5.30
p.m. on the date indicated in the Circular announcing the EGM to be
held which will be sent to Shareholders after the issuance of this
Report. Under the Tender Offer, if implemented, Shareholders will
be entitled to sell any amount up to 100% of their shareholdings.
They may tender to sell less than this number. If a Shareholder
tenders all or part of his or her Shareholding, such tender will,
subject to the terms and conditions of the Tender Offer, be
satisfied in full. The Tender Offer will be conditional upon, inter
alia, the Company receiving tenders in respect of no more than
60%.of the issued Ordinary Share capital of the Company. If the
Company receives tenders in respect of more than 60% of the issued
Ordinary Share capital of the Company, the Tender Offer will not
proceed and the Company shall, in due course, put proposals for the
winding up of the Company to Shareholders for their approval.
If the tender offer is successful, for those Shareholders that
elect not to tender all of their shareholdings, the Company will
adopt a new investment objective and investing policy in
conjunction with the appointment of an external investment manager,
being Terra Partners Asset Management Limited, a company owned by
three of the four directors, namely Howard Golden, Fillip Montfort
and Yarden Mariuma.
25 Contingent liabilities and Capital commitments
The Group had no outstanding capital commitments at 31 December
2011.
Under the terms of the Directors incentive plan approved at the
Extraordinary General Meeting held on 19 November 2010 the
Directors are entitled to a payment of 0.6% of amounts distributed
to shareholders. If all of the Company's investments were to be
disposed of at their fair values as at 31 December 2011, and the
net proceeds returned to shareholders then the directors would be
entitled to a payment of approximately US$598,000 and this amount
has been provided for in full in the financial statements.
As a result of a dispute with Jones Lang Lasalle (JLL) over its
claim for a commission on the sale of the AIA Tower, a claim the
Directors believe is unjustified, JLL filed suit in Hong Kong.
Since an attempt to settle has failed and the Directors believe
this dispute may come to trial, they have reserved the full amount
of the claim plus legal fees for defending the lawsuit in the total
amount of HK$3,539,000. No reserve has been made in the event of
losing the lawsuit and the Company is required to pay the legal
fees of the Plaintiff. Further, one of the tenants of the building,
Viva Airlines, went bankrupt and has appealed the lower court's
award of its security deposit in the amount of HK$285,000 to the
landlord based on a claim that the company was already bankrupt
when the forfeiture was declared and that the money has to be
returned to the bankrupt estate and the Landlord should then be a
general creditor of the bankruptcy estate. While the directors have
been advised that that this claim should fail, full provision,
including legal costs of HK$50,000 has been made for the
possibility of the appeals court granting this application since
there is little, if any, likelihood of any creditor of the bankrupt
estate receiving payment of its claims.
After extensive negotiations, the Company was able to limit the
contractual representations and warranties given to the purchaser
of the AIA Tower to HK$10 million and a requirement that any claim
must be commenced within 9 months of the closing date of the
transaction. It is not anticipated that any material claims will
arise as a result of these warranties and therefore no provision
has been made in these financial statements for this potential
claim.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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