TIDMPSPI
RNS Number : 3662H
Public Service Properties Inv Ltd
17 August 2016
17 August 2016
Public Service Properties Investments Limited
("PSPI", "the Company" or "the Group")
Interim Results for the six months ended 30 June 2016
PSPI (AIM: PSPI), the former specialist real estate investment
and financing company, announces unaudited results for the six
months ended 30 June 2016.
Highlights
A. Material transactions
-- In March 2016 the Company completed the sale of a German
investment property for a gross sale vale of EUR3.0 million.
-- In April 2016 the Company completed the sale of its three
remaining German investment properties for a gross sales value of
EUR10.0 million.
-- In June 2016 the Company announced a compulsory partial
redemption of 99 per cent. of the Company's issued share capital on
a pro-rata basis at a price of 51.0 pence per ordinary share. The
transaction completed in early July 2016 with the return of
approximately GBP11.5 million to shareholders.
B. Financial results
-- The profit from continuing and discontinued operations is
reported at GBP0.6 million for the six months ended 30 June 2016
compared to a loss GBP3.0 million for the first six months of
2015.
-- Administrative costs from continuing operations for the six
months ended 30 June 2016 were GBP0.3 million which was 33% lower
than the equivalent period in 2015.
-- The Company had cash balances of GBP12.9 million at 30 June
2016 (31 December 2015 - GBP6.1 million) and net assets of GBP12.7
million (31 December 2015 - GBP12.4 million).
-- The net asset value per share at 30 June 2016 was 55.8 pence
per share (31 December 2015 was 54.4 pence per share), which was
stated before the compulsory partial redemption of shares noted
above.
-- Adjusting the reported unaudited net assets at 30 June 2016
for the funds repaid to shareholders in July 2016 and using the
number of shares in issue today results in an adjusted net asset
value of approximately 531.5 pence per share. Please note that this
adjusted net asset value per share does not take into account any
costs incurred in excess of the accruals reflected in the unaudited
consolidated balance sheet at 30 June 2016.
Patrick Hall, the Chairman of PSPI, commented:
"The Company is pleased to announce the completion of the
disposal of the last investment properties during the first half of
the year. While the Company expects that it will be able to
complete a final return of capital before the end of the first
quarter 2017, it is exploring ways in which it can accelerate this
process. In the meantime, the Company has taken steps to minimise
operating costs going forward."
For further information please visit www.pspiltd.com or
call:
Dr. D. Srinivas Tom Griffiths
Ralph Beney Henry Willcocks
RP&C International Stockdale Securities
(Asset Manager) (Nomad and Broker)
020 7766 7000 020 7601 6100
Chairman's Statement
I am pleased to report the Group's unaudited consolidated
financial results for the six months ended 30 June 2016.
Update on strategic review
The Company completed the disposal of its remaining German
investment properties during the first half of 2016. The Company
also completed the return of approximately GBP11.5 million to
shareholders in early July 2016 through a compulsory redemption of
shares. This followed two similar transactions in 2015 that
returned approximately GBP21.6 million to shareholders.
Following completion of the most recent compulsory redemption of
shares, the Company has 227,655 shares in issue which, based on the
unaudited consolidated results at 30 June 2016 less the funds
returned to shareholders in July, reflect a net asset value per
share of approximately 531.5 pence per share(1).
Current operations
The Company is working through the voluntary winding up of its
now dormant subsidiaries. The Company has outstanding contingent
liabilities in respect of the sale of German assets in 2015 and
2016 at a maximum aggregate amount of EUR1.5 million. The Company
does not expect to receive any claims under representations and
warranties given as part of the sale of asset documentation.
While the Company expects that it will be able to complete a
final return of capital before the end of the first quarter of
2017, it is exploring ways in which it can accelerate this process.
In the meantime, the Company has taken steps to minimise operating
costs going forward.
The Asset Manager's Review below describes the financial results
for the first half of 2016 in more detail.
Patrick Hall
Chairman
17 August 2016
(1) Please note that this adjusted net asset value does not take
into account any costs incurred in excess of the accruals reflected
in the unaudited consolidated balance sheet at 30 June 2016.
Asset Manager's Review
Business Outlook
The Chairman has confirmed that the Company's remaining property
portfolio was sold during the first half of 2016 which has
substantially completed the objectives of the strategic review.
The Company has used the net proceeds received from the sales to
return approximately GBP33.1 million of capital to shareholders via
three partial compulsory redemption of share transactions which
completed in April 2015, November 2015 and July 2016.
As a result of these transactions, the Company is left with net
assets of approximately GBP1.2 million, some of which will be used
to settle various legal and administrative costs as the Company
liquidates its now dormant subsidiaries, subject to any legal
restrictions relating to the entities that made representations and
gave warranties under the various sale transaction
documentation.
The Company has taken steps to minimise operating costs going
forward as detailed below.
Financial Review
The comparative figures in the interim condensed consolidated
income statement have been re-stated to reflect the results of
discontinued operations. Please refer to note 12 of this report for
those items categorised as relating to discontinued operations.
The Company is reporting a net profit of GBP0.6 million for the
six months ended 30 June 2016 compared to a loss of GBP3.0 million
for the first six months of 2015. The results are stated after net
gains on the movement of foreign exchange rates of GBP1.0 million
for the six months ended 30 June 2016 compared to net foreign
exchange rate losses of GBP1.6 million for the equivalent period in
2015. The gain arises from the weakening of sterling against the
Euro since the start of 2016, primarily as a result of the impact
of uncertainty leading up to the UK referendum on its membership of
the European Union.
The Company was able to convert the majority of its Euro net
proceeds from the sale of German assets after sterling had started
to weaken. As a result, the majority of the gain on changes in
foreign exchange rates has been crystallised with approximately 98%
of the Company's cash balances in sterling at 30 June 2016. The
cash retained in Euros is expected to be sufficient to meet future
expenses denominated in Euros.
Administration costs not allocated to discontinued operations
were GBP0.35 million for the six months ended 30 June 2016, 33%
lower than the corresponding period in 2015. Within the total of
administration costs, management fees were 65% lower than the
corresponding period in 2015 at GBP0.09 million and are expected to
be 50% lower in the second half than in the first half of the year.
Professional fees were largely unchanged at GBP0.18 million for the
first six months of 2016 and 2015; however, the costs for the
second half of 2016 should also be lower following the reduction
the number of Board members from five to three, a 50% reduction in
fees paid to the remaining Board members from 1 July 2016 and
reduced provisions for audit costs in the second half of 2016.
The Group had cash balances of GBP12.9 million at 30 June 2016,
of which GBP11.5 million was used to repay shareholders in early
July 2016 on completion of the third compulsory partial redemption
of shares. The Company had no debt at 30 June 2016 and had accrued
liabilities of approximately GBP0.23 million.
Total equity at 30 June 2016 was stated at GBP12.7 million
compared to GBP12.4 million at 31 December 2015. The Net Asset
Value per share(1) ("NAV") at 30 June 2016 was 55.8 pence per share
compared to 54.4 pence per share at 31 December 2015.
On 7 July 2016 the Company repurchased 99% of the outstanding
shares in the third compulsory partial redemption of shares. The
Company redeemed 22.5 million shares at a price of 51.0 pence per
share, which presented an 8.6% discount to the NAV at 30 June 2016.
As a result, adjusting the reported unaudited net asset value at 30
June 2016 for the funds repaid to shareholders in July 2016 and
using the number of shares in issue today results in an adjusted
net asset value per share of approximately 531.5 pence per share.
Please note that this adjusted net asset value per share does not
take into account any costs incurred in excess of the accruals
reflected in the unaudited consolidated balance sheet at 30 June
2016.
RP&C International
17 August 2016
(1) Total equity divided by the number of ordinary shares in
issue as at the balance sheet date.
INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE PERIODED 30 JUNE 2016
Period Ended Period Ended Year Ended
30 June 30 June 31 Dec
Note 2016 2015 2015
(restated)
GBP GBP GBP
(unaudited) (unaudited) (audited)
Continuing Operations
Revenue - - -
Administrative
expenses 5 (345,360) (513,755) (786,693)
Operating loss (345,360) (513,755) (786,693)
Finance income 6a 1,002,883 905 1,529
Finance costs 6b (653) (1,574,642) (1,138,219)
Profit/(loss) before
income tax 656,870 (2,087,492) (1,923,383)
Income tax expense - - -
656,870 (2,087,492) (1,923,383)
Profit/(loss) for the
period from continuing
operations
============= ============= ============
Discontinued Operations
12b (26,681) (904,677) (1,058,202)
Loss for the period
from discontinued operations
------------- ------------- ------------
Profit/(loss) for
the period 630,189 (2,992,169) (2,981,585)
Basic and diluted earnings/(loss)
per share (in pence)
From continuing
operations 7 2.89 (2.56) (3.35)
From discontinued
operations 7 (0.12) (1.11) (1.84)
From earnings/(loss)
for the period 7 2.77 (3.67) (5.19)
INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR THE PERIODED 30 JUNE 2016
Period Ended Period Ended
30 June 30 June Year Ended
2016 2015 31 Dec 2015
GBP GBP GBP
(unaudited) (unaudited) (audited)
Profit/(loss) for
the period/year 630,189 (2,992,169) (2,981,585)
Other comprehensive
income
Items that may be subsequently reclassified
to income statement:
Cash flow hedges 158,954 167,051 29,076
Recycle of cash flow hedging reserve
on disposal - - 117,249
Currency translation differences (474,772) 1,122,764 445,827
Other comprehensive (loss)/income
for the period/year (315,818) 1,289,815 592,152
Total comprehensive income/(loss)
for the period/year 314,371 (1,702,354) (2,389,433)
INTERIM CONDENSED CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2016
As at As at As at
30 June 30 June 31 Dec
Note 2016 2015 2015
GBP GBP GBP
(unaudited) (unaudited) (audited)
ASSETS
Non-current assets
Investment property 9 - 9,747,205 -
------------- ------------- -------------
- 9,747,205 -
Current assets
Receivables and prepayments 10 18,057 2,563,326 64,954
Restricted cash - 466,196 -
Cash and cash equivalents 12,881,169 5,830,593 6,119,892
------------- ------------- -------------
12,899,226 8,860,115 6,184,846
Assets of disposal
group classified as
held for sale 12a 27,291 3,811,406 10,315,710
------------- ------------- -------------
12,926,517 12,671,521 16,500,556
-------------
Total assets 12,926,517 22,418,726 16,500,556
============= ============= =============
EQUITY
Capital and reserves
Share capital 11 130,836 218,060 130,836
Share premium 11 68,573,102 74,023,893 68,573,102
Cash flow hedging
reserve - (138,228) (158,954)
Translation reserve 592,442 1,744,151 1,067,214
Retained earnings (56,595,368) (57,236,141) (57,225,557)
------------- ------------- -------------
Total equity 12,701,012 18,611,735 12,386,641
------------- ------------- -------------
LIABILITIES
Non-current liabilities
Borrowings - 2,771,653 -
Derivative financial
instruments - 138,228 -
------------- ------------- -------------
- 2,909,881 -
Current liabilities
Borrowings - 190,570 -
Trade and other payables 6,682 61,302 46,272
Current income tax
liabilities - 303,000 -
Accruals 92,726 333,017 132,205
------------- ------------- -------------
99,408 887,889 178,477
Liabilities of disposal
group classified as
held for sale 12a 126,097 9,221 3,935,438
------------- ------------- -------------
225,505 897,110 4,113,915
------------- ------------- -------------
Total liabilities 225,505 3,806,991 4,113,915
Total equity and liabilities 12,926,517 22,418,726 16,500,556
============= ============= =============
INTERIM CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIODED 30 JUNE 2016
Period ended Period ended Year ended
30 June 30 June 31 Dec
Note 2016 2015 2015
GBP GBP GBP
(unaudited) (unaudited) (audited)
Profit/(loss) for the period
attributable to equity holders 630,189 (2,992,169) (2,981,585)
Adjustments for non-cash
items
Interest expense 40,681 75,423 131,741
Net foreign exchange
(gains)/losses 6a (988,109) 1,573,664 1,137,905
Changes in fair value
of investment property 9 - 864,815 1,442,732
Interest income 6a (14,774) (972) (1,612)
Income tax expense 14,778 9,509 (86,937)
Proceeds from finance
lease - - -
Loss on disposal of
subsidiary - 493,276 (67,822)
Amortisation of debt
issue costs - 5,425 67,168
Changes in workings
capital:
Changes in receivables
and prepayments 46,897 452,633 451,005
Changes in trade and
other payables (39,590) (213,749) (228,779)
Changes in accruals 180,060 767,249 1,296,556
------------- ------------- -------------
Cash generated/(used)
from operations (129,868) 1,035,104 1,160,372
Cash flow from operating
activities
Interest paid (40,681) (178,561) (298,101)
Income tax paid (14,778) (322,439) (663,444)
------------- ------------- -------------
Net cash generated/(used) by
operating activities (185,327) 534,104 198,827
Cash flow from investing
activities
Change in restricted
cash - 36,397 2,519
Proceeds from sale of subsidiaries
- net of costs - 30,813,652 33,342,049
Proceeds from sale of investment
property - net of costs 9,605,184 1,591,464 5,344,012
Interest received 14,774 972 1,611
------------- ------------- -------------
Net cash generated by investing
activities 9,619,958 32,442,485 38,690,191
Cash flow from financing
activities
Compulsory partial
capital redemption - (16,099,872) (21,637,887)
Costs associated with
new borrowings - - -
Repayments of borrowings (2,958,005) (16,762,512) (16,699,976)
------------- ------------- -------------
Net cash used by financing activities (2,958,005) (32,862,384) (38,337,863)
Increase in cash and cash equivalents 6,476,626 114,205 551,155
Movement in cash and cash
equivalents
At start of period/year 6,327,856 5,968,761 5,968,761
Increase in period/year 6,476,626 114,205 551,155
Foreign currency translation
adjustments 76,687 (252,373) (192,060)
At end of period/year 12,881,169 5,830,593 6,327,856
Cash and cash equivalents 12,881,169 5,830,593 6,119,892
Cash and cash equivalents
- discontinued - - 207,964
12,881,169 5,830,593 6,327,856
PUBLIC SERVICE PROPERTIES INVESTMENTS LIMITED
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
SHAREHOLDERS' EQUITY
FOR THE PERIODED 30 JUNE 2016
Attributable to equity holders of the Company
Share Share Cashflow Translation Retained Total
capital premium hedging reserve earnings equity
reserve
GBP GBP GBP GBP GBP GBP
Balance as of 1 January 2015
(audited) 605,722 89,736,103 (305,279) 621,387 (54,243,972) 36,413,961
Comprehensive income
Loss for the period - - - - (2,992,169) (2,992,169)
Other comprehensive income
Cash flow hedges - net of tax - - 167,051 - - 167,051
Foreign currency translation - - - 1,122,764 - 1,122,764
---------- ------------- ---------- ------------ ------------- -------------
Total comprehensive income - - 167,051 1,122,764 (2,992,169) (1,702,354)
Transactions with owners
Compulsory partial capital
reduction (387,662) (15,712,210) - - - (16,099,872)
Balance as of 30 June 2015 and
1 July 2015 (unaudited) 218,060 74,023,893 (138,228) 1,744,151 (57,236,141) 18,611,735
---------- ------------- ---------- ------------ ------------- -------------
Comprehensive income
Profit for the period - - - - 10,584 10,584
Other comprehensive income
Cash flow hedges - net of tax - - (20,726) - - (20,726)
Foreign currency translation - - - (676,937) - (676,937)
---------- ------------- ---------- ------------ ------------- -------------
Total comprehensive income - - (20,726) (676,937) 10,584 (687,079)
Transactions with owners
Compulsory partial capital
reduction (87,224) (5,450,791) - - - (5,538,015)
---------- ------------- ---------- ------------ ------------- -------------
Balance as of 31 December 2015
and 1 January 2016 (audited) 130,836 68,573,102 (158,954) 1,067,214 (57,225,557) 12,386,641
Comprehensive income
Profit for the period - - - 630,189 630,189
Other comprehensive income
Cash flow hedges - net of tax - - 158,954 - - 158,954
Foreign currency translation - - - (474,772) - (474,772)
---------- ------------- ---------- ------------ ------------- -------------
Total comprehensive income - - 158,954 (474,772) 630,189 314,371
Transactions with owners
None - - - - - -
Balance as of 30 June 2016 130,836 68,573,102 - 592,442 (56,595,368) 12,701,012
(unaudited)
---------- ------------- ---------- ------------ ------------- -------------
INTERIM CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE PERIODED 30 JUNE 2016
1. GENERAL INFORMATION
Public Service Properties Investments Limited was incorporated
in 2001, is domiciled in the British Virgin Islands (registered
office at Nerine Chambers, Road Town, Tortola, British Virgin
Islands) and is the parent company of the PSPI Group. Public
Service Properties Investments Limited and its subsidiaries
(together "the Group" or "the Company"), was an investment property
group with a portfolio in Germany. At 31 December 2015 the Group
owned four investment properties in Germany which were presented as
held for sale and their results for the year treated as
discontinued operations. During the six months ended 30 June 2016
these sales successfully completed and, as such, the Group holds no
investment properties at 30 June 2016. The Group has given a number
of representations and warranties in respect of the various sale
transactions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of
these interim condensed consolidated financial statements have been
consistently applied to all the periods presented, unless otherwise
stated.
2.1 Basis of preparation
The interim condensed consolidated financial statements of the
Group have been prepared in accordance with IAS 34 "Interim
Financial Reporting", published by the International Accounting
Standards Board (IASB). The interim condensed consolidated
financial statements are reported in Pound Sterling unless
otherwise stated.
These interim condensed financial statements do not include all
the information and disclosures required in the annual financial
statements and should be read in conjunction with the Group's
Annual Financial Statements for the year ended 31 December 2015,
which have been prepared in accordance with International Financial
Reporting Standards ('IFRS'). These condensed consolidated interim
financial statements for the six months ended 30 June 2016 and the
comparative figures for the six months ended 30 June 2015 are
unaudited. The extracts from the Group's Annual Financial
Statements for the year ended 31 December 2015 represent an
abbreviated version of the Group's full accounts for that year, on
which the Auditors issued an unqualified audit report.
Comparative information in the interim condensed consolidated
income statement for the period ended 30 June 2015 has been
restated in order to be consistent with the presentation of certain
items as discontinued in 2016 as detailed in Note 12.
The interim condensed consolidated financial statements are
prepared under the historical cost convention as modified by the
revaluation of investment properties, other financial assets and
financial liabilities (including derivative instruments) at fair
value through profit or loss. The preparation of financial
statements in conformity with IFRS requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results can differ from those estimates. Critical
judgments made by management in the application of IFRS and key
sources of estimation uncertainties were the same as those that
applied to the consolidated financial statements for the year ended
31 December 2015. Income tax expense, if applicable, is recognised
based upon the best estimate of the weighted average annual income
tax rate expected for the financial year.
The accounting policies and valuation principles adopted are
consistent with those of the previous financial year.
The Group has adopted the following, new standards, amendments
to standards and interpretations annual improvements for the six
months ended 30 June 2016, which do not have significant impact on
the interim consolidated financial statements.
Annual improvements 2010-2012 (effective 1 July 2014)
Annual improvements 2011-2013 (effective 1 July 2014)
Amendment to IAS 19, 'Employee benefits', on defined benefit
plans (effective 1 July 2014)
The Group is not exposed to seasonal variation in its
operations.
2.2 Principles of consolidation
2.2.1 Subsidiaries
Subsidiaries are entities over which the Group has the power to
govern the financial and operating policies generally accompanying
a shareholding of more than one half of the voting rights. The
Group also assesses existence of control where it does not have
more than 50% of the voting power but is able to govern the
financial and operating policies by virtue of de-facto control.
De-facto control may arise in circumstances where the size of the
Group's voting rights relative to the size and dispersion of
holdings of other shareholders give the Group the power to govern
the financial and operating policies, etc. Subsidiaries are fully
consolidated from the date on which control is transferred to the
Group. They are de-consolidated from the date that control
ceases.
Accounting for business combinations under IFRS 3 only applies
if it is considered that a business has been acquired. The Group
may invest in subsidiaries that hold properties but do not
constitute a business. These transactions are therefore treated as
asset acquisitions rather than business combinations.
For acquisitions meeting the definition of a business
combination, the acquisition method of accounting is used. The
consideration transferred for the acquisition of a subsidiary is
the fair values of the assets transferred, the liabilities incurred
to the former owners of the acquiree and the equity interests
issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent
consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The Group recognises any non-controlling interest
in the acquiree on an acquisition-by-acquisition basis, either at
fair value or at the non-controlling interest's proportionate share
of the recognised amounts of acquiree's identifiable net assets.
Acquisition-related costs are expensed as incurred.
Goodwill is initially measured as the excess of the aggregate of
the consideration transferred and the fair value of non-controlling
interest over the net identifiable assets acquired and liabilities
assumed. If this consideration is lower than the fair value of the
net assets of the subsidiary acquired, the difference is recognised
in profit or loss.
For acquisitions of subsidiaries not meeting the definition of a
business, the Group allocates the cost between the individual
identifiable assets and liabilities in the Group based on their
relative fair values at the date of acquisition. Such transactions
or events do not give rise to goodwill.
Inter-company transactions, balances, income and expenses on
transactions between Group companies are eliminated. Profits and
losses resulting from intercompany transactions that are recognised
in assets are also eliminated. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the
policies adopted by the Group.
All the Group companies have 31 December as their year-end.
Consolidated financial statements are prepared using uniform
accounting policies for like transactions. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
2.2.2 Changes in ownership interests in subsidiaries without
change in control
Transactions with non-controlling interests that do not result
in loss of control are accounted for as equity transactions - that
is, as transactions with the owners in their capacity as owners.
The difference between fair value of any consideration paid and the
relevant share acquired of the carrying value of net assets of the
subsidiary is recorded in equity. Gains or losses on disposals to
non-controlling interests are also recorded in equity.
2.2.3 Disposal of subsidiaries
When the Group ceases to have control, any retained interest in
the entity is remeasured to its fair value at the date when control
is lost, with the change in carrying amount recognised in profit or
loss. The fair value is the initial carrying amount for the
purposes of subsequently accounting for the retained interest as an
associate, joint venture or financial asset. In addition, any
amounts previously recognised in other comprehensive income in
respect of that entity are accounted for as if the Group had
directly disposed of the related assets or liabilities. This may
mean that amounts previously recognised in other comprehensive
income are reclassified to profit or loss.
2.3 Amendments to accounting and valuation principles
There have been no amendments to accounting or valuation
principles during the period ended 30 June 2016.
3. FINANCIAL RISK MANAGEMENT
3.1 Financial risk factors
The Group's activities expose it to a variety of financial
risks: market risk (including currency and price risk), cash flow
and fair value interest rate risk, credit risk and liquidity rate
risk. The Group's overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimize
potential adverse effects on the Group's financial performance. The
Group uses derivative financial instruments to hedge certain risk
exposures.
Risk management is carried out by the senior management of the
asset manager under policies approved by the board of directors.
Senior management identifies, evaluates and hedges financial risks.
The board provides principles for overall risk management, as well
as policies covering specific areas, such as foreign exchange risk,
interest rate risk, credit risk, use of derivative financial
instruments and non-derivative financial instruments and investment
of excess liquidity.
The interim condensed consolidated financial statements do not
include all financial risk management information and disclosures
required in the annual financial statements, and should be read in
conjunction with the Group's annual financial statements as at 31
December 2015. There have been no significant changes in the risk
management policies since prior year end.
3.2 Liquidity risk
Prudent liquidity risk management implies maintaining sufficient
cash and the availability of funding through an adequate amount of
committed credit facilities. Management monitors rolling forecasts
of the Group's liquidity reserve on the basis of expected cash
flow.
3.3 Fair value estimation
In 2016, there were no significant changes in the business or
economic circumstances that affect the fair value of the Group's
financial assets and financial liabilities. In 2016, there were no
reclassifications of financial assets or liabilities. During the
period there have not been transfers between levels.
4. FOREIGN EXCHANGE RATES
Balance Sheet
Income Statement
and Cash Flow
Statement
YTD YTD
average average
30 June 30 June
2016 2015 2016 2015
GBP GBP GBP GBP
EUR 1.00 1.206 1.417 1.282 1.365
5. ADMINISTRATIVE EXPENSES
30 June 30 June 31 Dec
2016 2015 2015
GBP (restated) GBP
GBP
Third party company administration 37,386 35,353 76,932
Management fees 85,290 247,157 340,683
Professional fees (including
audit fees) 181,211 202,464 319,735
Insurance and general expenses 41,473 28,781 49,343
345,360 513,755 786,693
========= ============= ========
6. a) FINANCE INCOME
30 June 30 June 31 Dec
2016 2015 2015
GBP (restated) GBP
GBP
Interest income - other third
party 14,774 905 1,529
Net exchange gains 988,109 - -
1,002,883 905 1,529
b) FINANCE COSTS
30 June 30 June 31 Dec
2016 2015 2015
GBP (restated) GBP
GBP
Other interest and borrowing
expenses 653 978 314
Net exchange losses - 1,573,664 1,137,905
653 1,574,642 1,138,219
7. EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net
profit/(loss) attributable to shareholders by the weighted average
number of ordinary shares outstanding during the period.
As of As of As of
30 June 30 June 31 Dec
2016 2015 2015
(restated)
GBP GBP GBP
Profit / (loss) from continuing
operations attributable to
shareholders 656,870 (2,087,492) (1,923,383)
Profit / (loss) from discontinued
operations attributable to
shareholders (26,681) (904,677) (1,058,202)
Total 630,189 (2,992,169) (2,981,585)
Weighted average number of
ordinary shares outstanding 22,759,054 81,521,644 57,385,592
Basic and diluted earnings/(loss)
per share (pence per share)
-continued operations 2.89 (2.56) (3.35)
Basic and diluted earnings/(loss)
per share (pence per share)
- discontinued operations (0.12) (1.11) (1.84)
Total 2.77 (3.67) (5.19)
ADJUSTED EARNINGS PER SHARE - NON GAAP
The Directors have chosen to disclose "adjusted earnings per
share" in order to provide an indication of the Group's underlying
business performance. Accordingly, it excludes the effect of the
items as detailed below:
As of As of As of
30 June 30 June 31 Dec
2016 2015 2014
Note GBP GBP GBP
Net profit/(loss) attributable
to shareholders 630,189 (2,992,169) (2,981,585)
Loss on disposal of subsidiaries - 493,276 437,435
Fair value loss on investment
properties 9 - 864,815 1,442,732
Deferred income tax liability
movement - (12,688)
Amortisation of debt issue
costs - 5,425 10,748
Impairment of loan - -
Repayment penalty - - 290,381
Recycling of cash flow hedging
reserve 16,852 114,320 113,249
Non-recurring transaction
fees 124,877 - 752,924
Current income tax expense 14,778 22,197 86,937
Foreign exchange (gains)/losses 6b (988,109) 1,573,664 1,137,905
Total adjusted earnings (201,413) 68,840 1,290,726
Weighted average number
of ordinary shares outstanding 22,759,054 81,521,644 57,385,592
Basic adjusted and diluted
earnings/(loss) per share
(pence per share) (0.08) 0.08 0.22
8. DIVIDS
No dividends have been paid during the period ended 30 June
2016, or in the year ended 31 December 2015. See Note 11 for
details of Compulsory Partial Redemptions of Ordinary Shares
made.
9. INVESTMENT PROPERTY
30 June 30 June 31 Dec
2016 2015 2015
(restated)
GBP GBP GBP
Beginning of the period/year - 15,954,390 15,954,390
Net (loss)/gain on fair value adjustment
- discontinued - (864,815) (1,442,732)
Disposals - - (3,933,853)
Transferred to disposal group classified
as held for sale - (3,811,406) (9,580,381)
Net changes in fair value adjustments
due to exchange differences - (1,530,964) (997,424)
End of the period/year - 9,747,205 -
Disposal of investment property and investment property held for
sale
On 2 February 2016 the Group announced it had exchanged binding
contracts to dispose of the Brakel property for a gross price of
EUR3 million. On 10 March 2016 the Group announced the sale of the
three remaining assets leased to Marseille Kliniken for a gross
price of EUR10 million. After these sales the Group has disposed of
all investment property held in all jurisdictions. Prior to the
transfer to the disposal group classified as held for sale, these
properties were written down to their estimated sales values.
Included in investment property held for sale as at 31 December
2015 are the four remaining investment properties held at this date
by the Company in Germany (Brakel, Buren, Arnsberg and
Kreuztal-Kromabch); these were approved for sale in 2015. At 30
June 2015 these investment properties were valued by Colliers
International Property Consultants Limited ("Colliers"). The
valuation basis is market value and conforms to international
valuation standards. The main inputs in the model are the annual
net rental and the average capitalisation rate of 11.7%. The
capitalisation rate is based on properties in similar conditions
and reflects the expectations on future incomes. Given the
unobservable inputs used for the valuation, the fair value is of
level 3. Colliers is a qualified independent valuer who holds
recognised and relevant professional qualifications and has recent
experience in the relevant locations and category of properties
being valued. The valuations were presented before estimated
purchasers' costs; however, sellers' costs are not included.
.
Included in investment property held for sale as at 30 June 2015
is one property in Germany (Huttenstrasse, Berlin). The Directors
approved the sale of this property prior to 30 June 2015 and the
Group announced its sale on 9 July 2015 for a gross sale price of
EUR5.4 million (GBP3.9 million). Prior to transfer to the disposal
group classified as held for sale, this property was written down
to its sale value.
Disposals during the year ended 31 December 2015 relate to the
sale of one care home in Germany (Huttenstrasse, Berlin). This
property was written down to its sales value of EUR5.4 million
(GBP3.9 million) prior to disposal. In doing so the Group
recognised a loss of EUR0.6 million (GBP0.4 million) which is
included in the net losses on fair value adjustments of GBP1.4
million in the table above.
10. RECEIVABLES AND PREPAYMENTS
30 June 30 June 31 Dec
2016 2015 2015
GBP GBP GBP
Deferred consideration - 2,500,000 -
Prepayments 18,057 63,326 64,954
18,057 2,563,326 64,954
======== ========== =======
Included in receivables and prepayments as at 30 June 2015 is an
amount of GBP2.5 million in relation to the disposal of the
Wellcare portfolio of UK properties and businesses, which was
concluded on 4 March 2015. The total consideration for the sale of
the Wellcare portfolio was GBP34.5 million of which GBP2.5 million
was deferred until 31 December 2015 and payable if Embrace was
successful in tendering for certain ongoing domiciliary care
contracts. On 30 April 2015 the Company was notified by Embrace
that it had been successful in tendering. Accordingly, the deferred
amount was received on 31 December 2015.
The maximum exposure to credit risk at the reporting date is the
fair value of each class of receivable and prepayment mentioned
above.
None of the receivables and prepayments are impaired.
11. SHARE CAPITAL
30 June 30 June 31 Dec
2016 2015 2015
GBP GBP GBP
Authorised:
Equity interests:
500,000,000 Ordinary shares
of $0.01 each 2,569,974 2,569,974 2,569,974
Allotted, called up and fully
paid:
Equity interests:
105,365,717 Ordinary shares - - -
of $0.01 each
37,931,697 Ordinary shares - 218,060 -
of $0.01 each
22,759,054 Ordinary shares
of $0.01 each 130,836 - 130,836
Number Ordinary Share premium Total
of shares shares GBP
GBP GBP
At 31 December 2014 105,365,717 605,722 89,736,103 90,341,825
Compulsory partial redemption
- 27 April 2015 (67,434,020) (387,662) (15,712,210) (16,099,872)
At 30 June 2015 37,931,697 218,060 74,023,893 74,241,953
Compulsory partial redemption
- 9 November 2015 (15,172,643) (87,224) (5,450,791) (5,538,015)
At 31 December 2015 and
30 June 2016 22,759,054 130,836 68,573,102 68,703,938
Compulsory Partial Redemption of Ordinary Shares
On 14 April 2015 the Company announced the Compulsory Partial
Redemption of 67,434,020 ordinary shares at 23.875p per ordinary
share redeemed. On 27 April 2015, the Company completed the
redemption of these shares for a total consideration of
approximately GBP16.1 million. The Company's share capital after
the partial redemption comprised 37,931,697 ordinary shares of
$0.01 each.
On 26 October 2015 the Company announced a further Compulsory
Partial Redemption of 15,172,643 shares at 36.50p per ordinary
share redeemed. On 9 November 2015, the Company completed the
redemption of these shares for a total consideration of
approximately GBP5.5 million. The Company's share capital after the
partial redemption comprised 22,759,054 ordinary shares of $0.01
each.
Following the completion of the sales of the Group's remaining
investment properties in the six months to 30 June 2016 (as
outlined in Note 9), the Company announced a further Compulsory
Partial Redemption on 23 June 2016 of approximately 22.5 million
shares which was completed on 7 July 2016. (See Note 15).
12. NON-CURRENT ASSETS HELD FOR SALE, DISCONTINUED OPERATIONS
AND OTHER TRANSACTIONS
a) Non-current assets held for sale
As at 31 December 2015, the assets and liabilities directly
associated with the four remaining German investment properties
held by the group were presented as held for sale and written down
to their anticipated sales value following the approval for their
disposal in 2015.
As at 31 December 2015, the properties were available for
immediate sale and being actively marketed, with negotiations with
potential buyers at an advanced stage. Other assets and liabilities
directly associated with the investment properties which will be
disposed of in the same transaction have also been presented in
this disposal group.
The sale of the four remaining properties was completed by two
transactions in February and March 2016 (see Note 9) after which
the Group held no investment property. Borrowings secured on these
assets were repaid from proceeds received.
As at 30 June 2016 any assets and liabilities directly
associated with these properties, have been presented in the
disposal group and classified as held for sale for consistency of
presentation. These relate to taxation receivable and accruals in
relation to unpaid transaction fees.
As at 30 June 2015, one investment property in Germany
(Huttenstrasse) has been presented as available for sale. This
property was approved for sale prior to 30 June 2015 and the Group
announced its sale on 9 July 2015 for a gross sale price of EUR5.4
million (GBP3.8 million).
Assets of disposal group classified as held for sale:
30 June 30 June 31 Dec
2016 2015 2015
GBP GBP GBP
Investment property - 3,811,406 9,580,381
Receivables and prepayments 27,291 - 27,291
Cash and cash equivalents - - 207,964
Restricted cash - - 500,074
27,291 3,811,406 10,315,710
======== ========== ===========
Liabilities of disposal group classified as held for sale:
30 June 30 June 31 Dec
2016 2015 2015
GBP GBP GBP
Borrowings - - 3,055,556
Deferred income tax - 9,221 -
Accruals 126,097 - 720,928
Derivative financial instruments - - 158,954
126,097 9,221 3,935,438
======== ======== ==========
12. NON-CURRENT ASSETS HELD FOR SALE, DISCONTINUED OPERATIONS
AND OTHER TRANSACTIONS (Continued)
b) Discontinued operations
In the year ended 31 December 2015, the results of the German
segment of the business were treated as discontinued operations as
it represents a significant segment of the business and the four
remaining investment properties were presented as available for
sale at 31 December 2015.
As mentioned in Note 12 a) the sales of the final four
investment properties owned by the Group completed in February and
March 2016. The result of the German segment to the point of
disposal has been treated as discontinued in the period to 30 June
2016.
The comparative information for the period ended 30 June 2015
has been restated to reflect this treatment in the table below:
30 June 30 June 31 Dec
2016 2015 2015
(restated)
GBP GBP GBP
Revenue 352,970 816,929 1,469,151
Net loss from fair value adjustments
on investment properties - (864,815) (1,442,732)
Gain/(loss) on disposal of subsidiaries
- UK - (519,969) 67,822
Gain/(loss) on disposal of subsidiaries
- Germany (129,076) - (701,484)
Administrative expenses (175,767) (131,415) (215,560)
Finance income - 67 83
Finance costs (60,030) (195,965) (322,419)
Income tax expense (14,778) (9,509) 86,937
Gain/(loss) for the year from
discontinued operations (26,681) (904,677) (1,058,202)
========== ============ ============
13. SEGMENT INFORMATION Income
Statement
disclosures Continuing Operations Discontinued Operations
Central
Costs Germany Total UK Germany Total
Period ended 30 June 2016 GBP GBP GBP GBP GBP GBP
Revenue - - - - 352,970 352,970
Net gain or (loss) from fair value
adjustments on investment property
(Note 9) - - - - - -
Profit/(loss) for the period 656,870 - 656,870 - (26,681) (26,681)
Period ended 30 June 2015 (restated)
Revenue - - - 2,613 814,316 816,929
Net gain or (loss) from fair value
adjustments on investment property
(Note 9) - - - - (864,815) (864,815)
Profit/(loss) for the period (2,087,492) - (2,087,492) (493,276) (411,401) (904,677)
Year ended 31 December 2015
Revenue - - - - 1,469,151 1,469,151
Net gain or (loss) from fair value
adjustments on investment property
(Note 9) - - - - (1,442,732) (1,442,732)
(Loss)/profit for the year (1,923,382) - (1,923,382) 170,855 (1,229,057) (1,058,202)
German segment revenues derive from external customers. Amounts
for the Company are included in the Central Costs column.
13. SEGMENT INFORMATION
Continuing Operations Disposal group classified as held
for sale
Central Germany Total UK Germany Total
Costs
Period ended 30 June 2016 GBP GBP GBP GBP GBP GBP
Assets
Investment properties (Note - - - - - -
9) (including capital expenditure)
Cash and cash equivalents 12,881,169 - 12,881,169 - - -
Restricted cash - - - - - -
Segment assets for reportable
segments 12,881,169 - 12,881,169 - - -
Liabilities
Total borrowings - - - - - -
Segment liabilities for reportable - - - - - -
segments
Year ended 31 December 2015
Assets
Investment properties (Note
9) - - - - 9,580,381 9,580,381
Cash and cash equivalents 6,119,892 - 6,119,892 - 207,967 207,967
Restricted cash - - - - 500,074 500,074
-
Segment assets for reportable
segments 6,119,892 - 6,119,892 - 10,288,422 10,288,422
Liabilities
Total borrowings - - - - 3,055,566 3,055,566
Segment liabilities for reportable
segments - - - - 3,055,566 3,055,566
German segment revenues derive from external customers. Amounts
for the Company are included in the "Central Costs" column.
13. SEGMENT INFORMATION (Continued)
Reportable segments' assets are reconciled to total assets as
follows:
30 June 30 June 31 Dec
2016 2015 2015
GBP GBP GBP
Total segment assets 12,881,169 16,043,994 6,119,892
Receivable from finance lease - - -
Restricted cash - - -
Investments - - -
Loans and receivables - - -
Receivables and prepayments 18,057 2,563,326 64,954
----------- ----------- -----------
Total continuing assets per balance
sheet 12,899,226 18,607,320 6,184,846
Assets of disposal group classified
as held for sale 27,291 3,811,406 10,315,710
Total assets per balance sheet 12,926,517 22,418,726 16,500,556
=========== =========== ===========
Reportable segments' liabilities are reconciled to total assets
as follows:
30 June 30 June 31 Dec
2016 2015 2015
GBP GBP GBP
Total segment liabilities - 2,962,223 -
Current taxation - 303,000 -
Derivatives - 138,228 -
Trade payables and accruals 99,408 394,319 178,477
-------- ---------- ----------
Total continuing liabilities
per balance sheet 99,408 3,797,770 178,477
Liabilities of disposal group
classified as held for sale 126,097 9,221 3,935,438
Total liabilities per balance
sheet 225,505 3,806,991 4,113,915
======== ========== ==========
14. CONTINGENT LIABILITIES
The Company has outstanding contingent liabilities in respect of
the sale of German assets in 2015 and 2016 at a maximum aggregate
amount of EUR1.5 million. The Company does not expect to receive
any claims under representations and warranties given as part of
the sale of asset documentation.
15. SUBSEQUENT EVENTS
On 23 June 2016 the Company announced the Compulsory Partial
Redemption of approximately 22.5 million ordinary shares to
shareholders of the Company on the register on 6 July 2016 at 51.0p
per ordinary share redeemed. Effective 7 July 2016, the Company
compulsorily redeemed 22,531,399 ordinary shares for a total
consideration of GBP11,491,013.50. Subsequent to this transaction
the Company's issued share capital comprises 227,655 ordinary
shares of $0.01 each.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR MMGMRRVLGVZM
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August 17, 2016 02:00 ET (06:00 GMT)
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