TIDMTCF
RNS Number : 5739I
Terra Catalyst Fund
10 December 2015
10 December 2015
TERRA CATALYST FUND
(the "Company")
Interim Financial Statements
Terra Catalyst Fund (AIM:TCF) announces its Unaudited Interim
Financial Statements for the six months to 30(th) September 2015
(the "Interim Financial Statements").
The full text of the Interim Financial Statements is set out
below.
ENQUIRIES TO:
Terra Catalyst Fund Tel: +44 (0)1624
Mike Haxby, Director 690 900
www.terracatalystfund.com
Smith & Williamson Corporate Tel: +44 (0)20
Finance Limited 7131 4000
Azhic Basirov
Investment Manager's Report
For the six months ended 30(th) September 2015
Portfolio Review and Investment Activity
The remaining asset in Terra Catalyst Fund ("TCF") is Spazio
Investments NV ("Spazio"). More information on Spazio can be found
at www.spazioinvestment.com. This externally managed, previously
AIM listed property fund specialises in investment in Italian
industrial real estate. Through a wholly-owned Italian regulated
property fund, Spazio Industriale ("The Fund"), Spazio owns a
portfolio of Italian industrial properties. The external manager is
Idea FIMIT, who replaced the former external manager, Prelios RE,
in May 2013. TCF indirectly holds a 26.7% interest in Spazio as at
31(st) March 2015. The investment manager, TCF and other funds
under the management of Laxey Partners together control 72.4% of
Spazio.
Spazio
Carrying value
The carrying value per share of Spazio in these financial
statements is EUR6.2695, being the audited Net Asset Value per
share of Spazio as at 31(st) December 2014.
Strategy and Market Update
The Fund invests in Italian property and continues to
concentrate on its strategic plan to improve the marketability of
the portfolio through asset refurbishment and re-leasing, with a
focus on (i) increasing rental income and extending lease duration
and (ii) selling vacant properties at the highest possible value in
order to release cash and improve the Fund's cash flow.
The Fund is currently negotiating with its banks the refinancing
of its outstanding loans (totalling EUR211.8m). The negotiation was
triggered by the need to renegotiate the smaller loan (EGP for
EUR32.8m) expiring in December 2015.
The Italian real-estate market
The first few months of the year saw continued improvements in
property investments in Italy (at EUR1.9bn). There was a 24%
contraction compared to volumes of the previous quarter, but this
was more than double the volume realised during the same period in
2014. Foreign investments of approximately EUR1.7bn, even though
down by 26% on the previous quarter, represent a significant
portion of recorded transactions (90% of the total invested).
The logistics sector also confirms renewed interest by
specialised operators, with close on EUR90m invested during the
first quarter of the year. The volume invested in the real-estate
portfolio during the first quarter of 2015 was 24%, down by 56% on
the previous quarter. This marks the gradual depletion of stock,
rather than a loss of interest by investors.
Portfolio
Spazio owns a portfolio of 169 properties of predominantly
industrial and logistics use, located throughout Italy and with a
total open market value (OMV) as 30(th) September 2015 of
EUR363.4m.
On 4(th) February 2014 the Fund signed a conditional preliminary
contract of sale with Eurospin Tirrenica S.p.A. for a property in
Portoferraio (LI), Corso Italia, for EUR2.65m; the conditions
precedent provided for in the contract must be fulfilled, in order
for the final deed to be signed no later than 31(st) December
2016.
In regards the lease contract currently being finalised with
Matica System S.p.A. for a portion of the property in Via Salvo
d'Acquisto in Turate, the Fund has granted the tenant an option to
purchase the leased portion (exercisable from 1(st) January 2016,
the date the lease becomes effective, until 31(st) December 2018),
for EUR7m (net of the rentals paid from the time the option is
exercised until the date the notarial deed is signed, and in any
case up to a maximum equalling 6 monthly instalments).
Bank financing
At the loan covenant testing date of 30(th) September 2015, the
net LTV of the Fund was 58.3%.
The Fund's debt facilities are shown below:
-- Jumbo Loan - EUR179.2m fixed until 31(st) October 2016 at an all in cost of 3.27%
-- EGP Loan - EUR32.6m fixed until 31(st) December 2015 at an all in cost of 3.1%
As previously reported, there is a cross collateralisation
provision, and cash sweeps have been put in place to reduce the LTV
ratio across both loans. A formula is in place so that a portion of
property sales proceeds are applied to pay down the loan to which
the property relates.
Future Prospects for TCF
As previously communicated, due to the cash sweeps in place,
since October 2013 there has not been any free cash for
distributions from the Fund up to Spazio, without substantial
property sales. Spazio has managed to return EUR3.38 per share to
shareholders to date, or 66% of the bid price but shareholders in
TCF should not expect further substantial returns in the short to
medium term.
Review Report by KPMG Audit LLC to Terra Catalyst Fund
For the six months ended 30(th) September 2015
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly report for the six
months ended 30(th) September 2015, which comprises the Statement
of Comprehensive Income, the Statement of Financial Position, the
Statement of Changes in Equity, the Statement of Cash Flows and the
related explanatory notes. We have read the other information
contained in the half-yearly report and considered whether it
contains any apparent misstatements or material inconsistencies
with the information in the condensed set of financial
statements.
This report is made solely to the Company in accordance with the
terms of our engagement. Our review has been undertaken so that we
might state to the Company those matters we are required to state
to it in this 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 for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for
preparing the half-yearly report in accordance with IAS 34 Interim
Financial Reporting and the AIM Rules.
The annual financial statements of the Company are prepared in
accordance with IFRSs as adopted by the EU. The condensed set of
financial statements included in this half-yearly report has been
prepared in accordance with IAS 34 Interim Financial Reporting.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly report
based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Emphasis of matter - valuation of investment in Spazio
Investment NV
In forming our opinion on the condensed set of financial
statements, which is not modified, we have considered the adequacy
of the disclosures made in note 7 to the financial statements
concerning the valuation of the holding in Spazio Investment NV
("Spazio) of GBP28,314,924. This is stated at Directors' valuation,
with the advice of the Investment Manager, in the absence of a
readily ascertainable and reliable market value and is based on the
net asset value per share of Spazio, per its last audited accounts
as at 31(st) December 2014. As further referred to in Note 7,
Spazio is dependent on the successful outcome of negotiations to
extend or replace financing facilities. These negotiations indicate
a material uncertainty which may cast significant doubt over
Spazio's ability to continue as a going concern. Due to the
inherent uncertainty associated with the determination of the
valuation, the amount realised on its disposal may differ
materially from the amount at which it is stated in the financial
statements. The impact of such uncertainty cannot be
quantified.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly report for the six months ended 30(th) September
2015 is not prepared, in all material respects, in accordance with
IAS 34 and the AIM Rules.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man IM99 1HN
9 December 2015
Statement of Comprehensive Income (Unaudited)
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For the six months ended 30(th) September 2015
(Note
5)
(Unaudited) (Unaudited)
2015 2014
GBP GBP
Income
Distributions on long equity
securities and investment funds - 72,461
Interest
- Cash balances 1,129 1,113
Net realised gains/(losses)
on financial assets and liabilities
at fair value through profit
or loss
- Cash balances (1,364) (3,262)
- Equities and Funds - 478,931
Net unrealised gains/(losses)
on financial assets and liabilities
other than currency forwards
at fair value through profit
or loss
- Cash balances 1,665 (11,993)
- Equities and Funds 516,577 (1,938,295)
Total net investment income/(expense) 518,007 (1,401,045)
------------------ --------------------
Expenses
Investment management fee 88,663 178,751
Administration fees 23,705 20,481
Audit fees 6,250 6,420
Other expenses 112,031 94,404
Interest expense
- Cash balances 14,892 19,010
Total expenses 245,541 319,066
------------------ --------------------
Gain/(loss) for the period 272,466 (1,720,111)
------------------ --------------------
Other comprehensive income - -
Total comprehensive gain/(loss)
for the period 272,466 (1,720,111)
================== ====================
Earnings/ (Loss) per ordinary
share
(GBP
Basic and fully diluted GBP0.02 0.10)
------------------ --------------------
Statement of Financial Position
As at 30(th) September 2015
(Note
5)
(Unaudited) (Audited)
30(th) 31(st)
September March
2015 2015
GBP GBP
Current Assets
Cash at bank and brokers 1,560,236 1,732,602
Equities - long at fair value
through profit or loss 28,314,924 27,798,347
Other debtors and accrued income 269 4,686
Total Assets 29,875,429 29,535,635
========================= =============
Equity
Share capital 155,048 155,048
Share premium 52,935,499 52,935,499
Retained losses (23,446,689) (23,719,155)
------------------------- -------------
Total Equity 29,643,858 29,371,392
------------------------- -------------
Liabilities
Overdrawn balances at brokers 1,321 0
Other creditors and accrued
expenses 230,250 164,243
------------------------- -------------
Total liabilities 231,571 164,243
Total liabilities and equity 29,875,429 29,535,635
========================= =============
Net asset value per ordinary
share 1.91 1.89
========================= =============
Statement of Changes in Equity (Unaudited)
For the six months ended 30(th) September 2015
Share Share Retained
Capital Premium losses Total
GBP GBP GBP GBP
Balance at 1(st)
April 2014 176,051 55,214,300 (18,828,293) 36,562,058
Total comprehensive
income
Loss for the period - - (1,720,111) (1,720,111)
Transaction with
owners recorded
directly
in equity:
Contributions by
and distributions
to owners
Repurchase of shares (21,003) (2,278,804) - (2,299,807)
Balance at 30(th)
September 2014 155,048 52,935,496 (20,548,404) 32,542,140
================== ======================== ======================== ==================
Share Share Retained
Capital Premium losses Total
GBP GBP GBP GBP
Balance at 1(st)
April 2015 155,048 52,935,499 (23,719,155) 29,371,392
Total comprehensive
income
Gain for the period - - 272,466 272,466
Balance at 30th
September 2015 155,048 52,935,499 (23,446,689) 29,643,858
================== ======================== ======================== ==================
Statement of Cash Flows (Unaudited)
For the six months ended 30(th) September 2015
(Note 5)
(Unaudited) (Unaudited)
2015 2014
GBP GBP
Cash flows from operating
activities:
Dividends received - 176,147
Interest received 1,161 552
Prepaid expenses 69 (5,261)
Management fee paid (4,785) (10,872)
Administration fee paid (23,635) (18,162)
Other expenses paid (146,497) (123,289)
Interest paid - (19,010)
Proceeds from sales of
investments - 3,680,228
Net cash flow from operating
activities (173,687) 3,680,333
------------------------------- -----------------------------
Cash flows from financing
activities:
Distribution paid - (2,299,807)
Net cash flow from financing
activities - (2,299,807)
------------------------------- -----------------------------
(Decrease)/increase in
cash and cash equivalents (173,687) 1,380,526
=============================== =============================
Opening cash and cash equivalents 1,732,602 721,781
Closing cash and cash equivalents 1,558,915 2,102,307
=============================== =============================
Notes to the financial statements
For the six months ended 30(th) September 2015
1. General
The Company was incorporated in the Cayman Islands on 21(st)
December 2007 and its shares were admitted to AIM, a market
operated by London Stock Exchange plc, on 25(th) February 2008.
2. Basis of preparation
(a) Statement of compliance
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