TIDMSQB
RNS Number : 0060T
Squarestone Brasil Limited
21 September 2010
21 September 2010
SQUARESTONE BRASIL LIMITED
("Squarestone Brasil" or "the Company")
INTERIM RESULTS
For the period 29 January 2010 to 30 June 2010
Squarestone Brasil Limited (AIM: SQB.L; SQBW.L), the Anglo-Brazilian real estate
development and investment company, today announces unaudited interim results
for the period 29 January 2010 to 30 June 2010.
Highlights
· Successful IPO and commenced trading on AIM on 12 April 2010
· Raised GBP39.5m (including GBP11.2m reinvested by original investors)
· A further GBP2.175m has been committed by management
· Acquired a 50 per cent. interest in an attractive mall development
project, Golden Square Mall, due to be completed in late 2011
· Loss per share (2.63)p - the loss arose due to changes in the fair value
of investment properties (GBP0.5m) due to the costs of acquisition being written
off and to the on-going administrative costs of the Company (GBP0.5m)
· The Company will continue to suffer operational losses through the
development period of Golden Square, though the Directors anticipate that this
will be offset by the increasing value of Golden Square as it proceeds to
completion
· Negotiations progressing well with BTG Pactual, Brazil's leading
investment bank, to potentially partner with the Company in the funding of its
current and future projects
· Active negotiations on four attractive pipeline deals to expand our
portfolio of shopping mall investments in Greater Sao Paulo region
· Moved majority of cash funds to Brazil to mitigate the foreign exchange
risk on future construction costs
James Morse, Chief Executive of Squarestone Brasil, commented:
"Since the commencement of trading on AIM, Squarestone Brasil has been seeking
to make progress on its first shopping mall acquisition, Golden Square Mall. Our
negotiations are progressing well with BTG Pactual, Brazil's leading investment
bank, to partner potentially with the Company in the funding of its current and
future projects and we look forward to reporting on further progress in due
course.
We remain convinced that the Brazilian shopping mall sector represents an
attractive growth investment opportunity. Squarestone Brasil has identified a
gap in this market for the growing 'B' and 'C' class malls and our strategy
remains to address this gap by introducing international standards in terms of
design, construction, operation and asset management and thus generate
significant value for our shareholders.
Squarestone Brasil continues to be well placed to take advantage of attractive
shopping mall development opportunities and the board remains confident of
delivering further growth and progress."
For further information contact:
+---------------------------------+------------------------------------+
| Squarestone Brasil | Tel: +44 (0)20 7074 1800 |
+---------------------------------+------------------------------------+
| James Morse, Chief Executive | |
| Robert Sloss, Executive | |
| Director | |
| Tim Barlow, Executive Director | |
+---------------------------------+------------------------------------+
| | |
+---------------------------------+------------------------------------+
| Liberum Capital (Nominated | Tel : +44 (0)20 3100 2000 |
| Adviser) | |
+---------------------------------+------------------------------------+
| Chris Bowman | |
| Ellen Francis | |
+---------------------------------+------------------------------------+
| | |
+---------------------------------+------------------------------------+
| Kreab Gavin Anderson (PR | Tel: +44 (0)20 7074 1800 |
| Adviser) | |
+---------------------------------+------------------------------------+
| James Benjamin | Email: |
| Natalie Biasin | squarestone@kreabgavinanderson.com |
+---------------------------------+------------------------------------+
Website: www.squarestone.com.br
Notes to Editors
Squarestone Brasil Limited (AIM: SQB.L; SQBW.L) is an Anglo-Brazilian real
estate investment and development company specialising in the Brazilian shopping
mall sector. The Company combines local real estate market knowledge with
international expertise in retailing, construction and development and is
focused on introducing to the Brazil shopping mall sector international
standards in terms of design, construction, operation and asset management.
Squarestone Brasil Limited is a Guernsey registered and domiciled company with
an operational headquarters in Sao Paulo and a London office. Its Ordinary
Shares and Warrants are traded on AIM where it was admitted to trading in April
2010. The business operated and pursued by Squarestone Brasil was co-founded in
2007 by James Morse, Tim Barlow and Robert Sloss.
The Company has acquired a 50 per cent interest in a shopping mall development
project, Golden Square Mall, located in Sao Paulo. This project will provide an
aggregate total net leasable area ("NLA") of 31,000 sq m on completion of
development works due in late 2011. In addition, the Company has identified a
pipeline of attractive potential shopping mall development opportunities which,
on completion, would provide a further total approximate 100,000 sq m NLA of
high quality mall space.
Further information on Squarestone Brasil is available from the Company's
website www.squarestone.com.br
Chairman's Statement
This is my first statement since the commencement of trading of Squarestone
Brasil Limited in April this year. When Squarestone Brasil started trading on
AIM, we stated that we saw an opportunity to generate superior returns for our
shareholders through the development and accumulation of a portfolio of quality
shopping mall developments in Brazil. We remain convinced that the Brazilian
shopping mall sector represents an attractive growth investment opportunity. The
Directors further believe that the strategy being pursued by the Company is
underpinned by current favourable macro-economic, demographic, consumer and real
estate factors in Brazil.
Squarestone Brasil combines local real estate market knowledge with
international expertise in retailing, construction and development. We will
continue to introduce international standards in terms of design, construction,
operation and asset management to the Brazilian shopping mall sector.
Having acquired a 50% stake in Golden Square shopping mall in Sao Bernado, we
have made a positive start to progressing our first shopping centre acquisition.
As we mentioned at the time of Listing, we received a letter of intent from BTG
Pactual, Brazil's leading investment bank, to partner potentially with the
Company in the funding of its current and future projects at an asset level.
Our negotiations are progressing well with BTG Pactual and we look forward to
reporting on further progress in due course.
Results and Operations
Squarestone Brasil reported a net loss of GBP1.1m during the period from 29
January to 30 June 2010, representing a loss per ordinary share of 2.63p. The
loss arose due to changes in the fair value of the investment property at 30
June 2010 with incidental development and acquisition costs (GBP0.5m) being
written off, and to the on-going administrative costs of the Company (GBP0.5m).
The Company will continue to suffer operational losses through the development
period of Golden Square, though the Directors' anticipate that this will be
offset by the increasing value of Golden Square as it proceeds to completion.
The consolidated net asset value of the Company at 30 June 2010, excluding
non-controlling interest, was GBP36.6m representing GBP0.93 per ordinary share.
Overview
The Brazilian mall sector is still underpenetrated and fragmented compared to
other markets (47 sq m gross lettable area per 1,000 habitants). The Q410 BMI
Brazil Retail report forecasts that the country's retail sales will grow from
BRL1,258.88bn (US$685.47bn) in 2010 to BRL1,841.11bn (US$1,002.50bn) by 2014.
Generally positive trends in underlying economic growth, an enormous and growing
population and rising disposable income are key factors behind the forecast
growth in Brazil's retail sales. Easier access to credit and the emergence of a
wealthier middle class are also likely to help the value of the retail segment
increase during the forecast period and expand the opportunities to develop
popular malls.
With the population increasing from around 195m in 2010 to an estimated 201m by
2014, GDP per capita is forecast to rise by 45.9% by the end of the forecast
period, reaching US$13,721. The national monthly minimum wage increased by 26%
in real terms between 2003 and 2006, and in 2010 the average annual salary is
expected to be US$10,554.
The non-grocery sector is outperforming the food sector as consumers increase
their spending on household items and durable goods such as furniture, domestic
appliances, cars and clothes. This is the area of the market Squarestone Brasil
concentrates on. Easier access to credit is also increasing credit card
transactions. There were 118m credit cards in Brazil in 2007, up from 44m in
2003, according to Banco Central do Brasil (BCB).
Events after the Period End
On 8 July 2010, the Company acquired the entire non-controlling interest held in
SB Brast Participacoes S.A., the Company's subsidiary that holds a 50% interest
in the Golden Square development. On 3 September, the Company also acquired 100%
interest, save for a single share, in Squarestone Brasil Administracao E
Participacoes S.A., the management company that Squarestone Brasil previously
retained to manage its operations in Brazil. Further information is provided on
both of these acquisitions in note 6 to the interim financial statements shown
below.
Following the period end, the Company moved the majority of its cash funds to
Brasil and as at 31 August held GBP18.8m with Banco Santander, in order to
mitigate the foreign exchange risk on future construction costs. These funds
are invested in low risk bonds which track the benchmark SELIC rate and provide
some protection against expected construction cost inflation.
Outlook
We remain convinced that the Brazilian shopping mall sector represents an
attractive growth investment opportunity. Squarestone Brasil has identified a
gap in this market for the growing 'B' and 'C' class malls and our strategy
remains to address this gap by introducing international standards in terms of
design, construction, operation and asset management and thus generate
significant value for our shareholders.
Squarestone Brasil continues to be well placed to take advantage of attractive
shopping mall development opportunities and the board remains confident of
delivering further growth and progress.
Consolidated Income Statement (Unaudited)
+------------------------------------+------+----------+------+----------+------------------------+
| | | | Note | | Period |
| | | | | | 29.1.10 |
| | | | | | to |
| | | | | | 30.06.10 |
+------------------------------------+------+----------+------+----------+------------------------+
| | | | | | GBP |
+------------------------------------+------+----------+------+----------+------------------------+
| Gross rental Income | | | | | |
| | | | | | - |
+------------------------------------+------+----------+------+----------+------------------------+
| Property operating expenses | | | | | (72,976) |
+------------------------------------+------+----------+------+----------+------------------------+
| Net rental cost | | | | | (72,976) |
+------------------------------------+------+----------+------+----------+------------------------+
| Total administrative expenses | | | | | (478,217) |
+------------------------------------+------+----------+------+----------+------------------------+
| Changes in fair value of | | | | | (523,630) |
| investment property | | | | | |
+------------------------------------+------+----------+------+----------+------------------------+
| Loss from operations | | | | | (1,074,823) |
+------------------------------------+------+----------+------+----------+------------------------+
| | | | | | |
+------------------------------------+------+----------+------+----------+------------------------+
| Finance income | | | | | 19,324 |
+------------------------------------+------+----------+------+----------+------------------------+
| Finance expense | | | | | (984) |
+------------------------------------+------+----------+------+----------+------------------------+
| Net finance income | | | | | 18,340 |
+------------------------------------+------+----------+------+----------+------------------------+
| | | | | | |
+------------------------------------+------+----------+------+----------+------------------------+
| Loss before and after taxation | | | | | (1,056,483) |
+------------------------------------+------+----------+------+----------+------------------------+
| | | | | | |
+------------------------------------+------+----------+------+----------+------------------------+
| | | | | | |
+------------------------------------+------+----------+------+----------+------------------------+
| | | | | | |
+------------------------------------+------+----------+------+----------+------------------------+
| Loss for the period attributable | | | | | |
| to: | | | | | |
+------------------------------------+------+----------+------+----------+------------------------+
| Owners of the parent | | | | | (1,040,646) |
+------------------------------------+------+----------+------+----------+------------------------+
| Non-controlling interest | | | | | (15,837) |
+------------------------------------+------+----------+------+----------+------------------------+
| | | | | | |
+------------------------------------+------+----------+------+----------+------------------------+
| Earnings per share for profit | | | | | |
| attributable to the ordinary | | | | | |
+------------------------------------+------+----------+------+----------+------------------------+
| equity holders of the parent | | | | | p |
| during the period | | | | | |
+------------------------------------+------+----------+------+----------+------------------------+
| Basic and diluted (pence) | | | 1 | | (2.63) |
+------------------------------------+------+----------+------+----------+------------------------+
Consolidated Statement of Comprehensive Income (Unaudited)
+------------------------------------+----+----------+-------+--+-------------+
| | | | | | Period |
| | | | | | 29.1.10 |
| | | | | | to |
| | | | | | 30.06.10 |
+------------------------------------+----+----------+-------+--+-------------+
| | | | | | GBP |
+------------------------------------+----+----------+-------+--+-------------+
| Group | | | | | |
+------------------------------------+----+----------+-------+--+-------------+
| Loss for the period | | | | | (1,056,483) |
+------------------------------------+----+----------+-------+--+-------------+
| | | | | | |
+------------------------------------+----+----------+-------+--+-------------+
| Other comprehensive income | | | | | |
+------------------------------------+----+----------+-------+--+-------------+
| Foreign currency translation | | | | | 39,761 |
+------------------------------------+----+----------+-------+--+-------------+
| | | | | | |
+------------------------------------+----+----------+-------+--+-------------+
| Total comprehensive expense | | | | | (1,016,722) |
| relating to the period | | | | | |
+------------------------------------+----+----------+-------+--+-------------+
| | | | | | |
+------------------------------------+----+----------+-------+--+-------------+
| Attributable to: | | | | | |
+------------------------------------+----+----------+-------+--+-------------+
| Owners of the parent | | | | | (1,002,092) |
+------------------------------------+----+----------+-------+--+-------------+
| Non-controlling interest | | | | | (14,630) |
+------------------------------------+----+----------+-------+--+-------------+
Consolidated Statement of Financial Position (Unaudited)
+-----------------------------------------+--------+--+------------------+
| | Note | | As At |
| | | | 30.06.10 |
+-----------------------------------------+--------+--+------------------+
| Assets | | | |
+-----------------------------------------+--------+--+------------------+
| Non-current assets | | | |
+-----------------------------------------+--------+--+------------------+
| Investment property | 2 | | 18,175,501 |
+-----------------------------------------+--------+--+------------------+
| Total non-current assets | | | 18,175,501 |
+-----------------------------------------+--------+--+------------------+
| | | | |
+-----------------------------------------+--------+--+------------------+
| Current assets | | | |
+-----------------------------------------+--------+--+------------------+
| Trade and other receivables | | | 461,937 |
+-----------------------------------------+--------+--+------------------+
| Cash and cash equivalents | | | 20,429,608 |
+-----------------------------------------+--------+--+------------------+
| Total current assets | | | 20,891,544 |
+-----------------------------------------+--------+--+------------------+
| | | | |
+-----------------------------------------+--------+--+------------------+
| Total assets | | | 39,067,045 |
+-----------------------------------------+--------+--+------------------+
| | | | |
+-----------------------------------------+--------+--+------------------+
| Liabilities | | | |
+-----------------------------------------+--------+--+------------------+
| Non-current liabilities | | | |
+-----------------------------------------+--------+--+------------------+
| Other non-current liabilities | | | 936,139 |
+-----------------------------------------+--------+--+------------------+
| Total non-current liabilities | | | 936,139 |
+-----------------------------------------+--------+--+------------------+
| | | | |
+-----------------------------------------+--------+--+------------------+
| Current liabilities | | | |
+-----------------------------------------+--------+--+------------------+
| Trade and other payables | | | 1,284,567 |
+-----------------------------------------+--------+--+------------------+
| Total current liabilities | | | 1,284,567 |
+-----------------------------------------+--------+--+------------------+
| | | | |
+-----------------------------------------+--------+--+------------------+
| Total liabilities | | | 2,220,706 |
+-----------------------------------------+--------+--+------------------+
| | | | |
+-----------------------------------------+--------+--+------------------+
| TOTAL NET ASSETS | | | 36,846,339 |
+-----------------------------------------+--------+--+------------------+
| | | | |
+-----------------------------------------+--------+--+------------------+
| Equity | | | |
+-----------------------------------------+--------+--+------------------+
| Share capital | 5 | | |
| | | | - |
+-----------------------------------------+--------+--+------------------+
| Share premium reserve | | | 32,500,802 |
+-----------------------------------------+--------+--+------------------+
| Warrants reserve | | | 5,045,727 |
+-----------------------------------------+--------+--+------------------+
| Foreign exchange reserve | | | 38,554 |
+-----------------------------------------+--------+--+------------------+
| Share option reserve | | | 41,362 |
+-----------------------------------------+--------+--+------------------+
| Retained earnings | | | (1,040,646) |
+-----------------------------------------+--------+--+------------------+
| | | | 36,585,799 |
+-----------------------------------------+--------+--+------------------+
| | | | |
+-----------------------------------------+--------+--+------------------+
| Non-controlling interest | 6 | | 260,540 |
+-----------------------------------------+--------+--+------------------+
| | | | |
+-----------------------------------------+--------+--+------------------+
| TOTAL EQUITY | | | 36,846,339 |
+-----------------------------------------+--------+--+------------------+
Consolidated Statement of Changes in Equity (Unaudited)
for the period 29 January to 30 June 2010
+------------------+--------------------------------------------+-------+-------+
| | Attributable to equity shareholders | | |
+------------------+--------------------------------------------+-------+-------+
+--------------+---------+-------------+-----------+------------+-----------+-------------+---------------+-------------+--------------+
| | Share | Share | | Foreign | Share | Retained | | Non- | Total |
| | | | | Exchange | option | | | Controlling | |
| | | | | | | | | | |
| | | | Warrants | | | | | | |
+--------------+---------+-------------+-----------+------------+-----------+-------------+---------------+-------------+--------------+
| | capital | premium | reserve | reserve | reserve | earnings | Total | Interest | Equity |
| | | | | | | | | | |
+--------------+---------+-------------+-----------+------------+-----------+-------------+---------------+-------------+--------------+
| | GBP | GBP | | GBP | GBP | GBP | GBP | GBP | GBP |
+--------------+---------+-------------+-----------+------------+-----------+-------------+---------------+-------------+--------------+
| | | | | | | | | | |
+--------------+---------+-------------+-----------+------------+-----------+-------------+---------------+-------------+--------------+
| 29 January | | | - | | | | | | |
| 2010 | - | - | | - | - | - | - | - | - |
+--------------+---------+-------------+-----------+------------+-----------+-------------+---------------+-------------+--------------+
| | | | | | | | | | |
+--------------+---------+-------------+-----------+------------+-----------+-------------+---------------+-------------+--------------+
| Amount | | | | | | | | 275,170 | 275,170 |
| arising on | - | - | - | - | - | - | - | | |
| acquisition | | | | | | | | | |
+--------------+---------+-------------+-----------+------------+-----------+-------------+---------------+-------------+--------------+
| Loss for the | | | | - | | (1,040,646) | (1,040,646) | (15,837) | (1,056,483) |
| period | - | - | - | | | | | | |
+--------------+---------+-------------+-----------+------------+-----------+-------------+---------------+-------------+--------------+
| Foreign | - | - | | 38,554 | - | - | 38,544 | 1,207 | 39,761 |
| exchange | | | - | | | | | | |
| movement | | | | | | | | | |
+--------------+---------+-------------+-----------+------------+-----------+-------------+---------------+-------------+--------------+
| Ordinary | | 34,455,233 | | | | | 34,455,233 | | 34,455,233 |
| shares | - | | | - | - | - | | - | |
| issued | | | | | | | | | |
+--------------+---------+-------------+-----------+------------+-----------+-------------+---------------+-------------+--------------+
| Warrants | - | - | | - | - | - | 5,045,727 | - | 5,045,727 |
| reserve | | | 5,045,727 | | | | | | |
+--------------+---------+-------------+-----------+------------+-----------+-------------+---------------+-------------+--------------+
| Issue costs | | (1,954,431) | | | | | (1,954,431) | | (1,954,431) |
| | - | | - | - | - | - | | - | |
+--------------+---------+-------------+-----------+------------+-----------+-------------+---------------+-------------+--------------+
| Share based | | | | | 41,362 | | 41,362 | | 41,362 |
| payment | - | - | - | - | | - | | - | |
+--------------+---------+-------------+-----------+------------+-----------+-------------+---------------+-------------+--------------+
| | | | | | | | | | |
+--------------+---------+-------------+-----------+------------+-----------+-------------+---------------+-------------+--------------+
| 30 June 2010 | | 32,500,802 | | 38,554 | 41,362 | (1,040,646) | 36,585,799 | 260,540 | 36,846,339 |
| | - | | 5,045,727 | | | | | | |
+--------------+---------+-------------+-----------+------------+-----------+-------------+---------------+-------------+--------------+
Consolidated Statement of Cash Flows (Unaudited)
+--------------------------------------+----------+----------+-------+-+---------------------+
| | | | Note | | Period |
| | | | | | 29.1.10 |
| | | | | | to |
| | | | | | 30.06.10 |
+--------------------------------------+----------+----------+-------+-+---------------------+
| | | | | | GBP |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Cash flows from operating activities | | | | | |
| | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Loss after tax for the period | | | | | (1,056,483) |
+--------------------------------------+----------+----------+-------+-+---------------------+
| | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Adjusted for: | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Change in value of investment | | | | | 523,630 |
| properties | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Finance income | | | | | (19,324) |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Finance expense | | | | | 984 |
+--------------------------------------+----------+----------+-------+-+---------------------+
| | | | | | (551,193) |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Increase in trade and other | | | | | (420,575) |
| receivables | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Increase in trade and other payables | | | | | 122,998 |
| | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Net cash flows from operating | | | | | (848,770) |
| activities | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Cash flows from investing activities | | | | | |
| | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Cash acquired on purchase of | | | | | 848,812 |
| subsidiary | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Acquisition of investment property | | | | | (5,708,638) |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Expenditure on investment property | | | | | (185,503) |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Interest received | | | | | 19,324 |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Net cash flows from investing | | | | | (5,026,005) |
| activities | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Cash flows from financing activities | | | | | |
| | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Proceeds from the issue of shares | | | 5 | | 27,168,000 |
| and warrants | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Issue costs paid on issue of | | | | | (861,471) |
| ordinary shares and warrants | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Interest paid | | | | | (984) |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Net cash flows from financing | | | | | 26,305,545 |
| activities | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Net decrease in cash and cash | | | | | |
| equivalents | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Cash and cash equivalents at the | | | | | |
| begining of the period | | | | | - |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Effect of exchange rates on cash and | | | | | (1,162) |
| cash equivalents | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
| Cash and cash equivalents at the end | | | | | 20,429,608 |
| of the period | | | | | |
+--------------------------------------+----------+----------+-------+-+---------------------+
Notes to the Consolidated Financial Statements
The accompanying notes form an integral part of these unaudited half yearly
financial statements. These financial statements are unaudited and are not the
Company's statutory financial statements.
1. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the Company by weighted average number of shares in issue
during the period.
+--------------------------+-------+--------+-------+-------------+
| | | | | Period |
| | | | | 29.1.10 |
| | | | | to |
| | | | | 30.06.10 |
+--------------------------+-------+--------+-------+-------------+
| | | | | GBP |
+--------------------------+-------+--------+-------+-------------+
| | | | | |
+--------------------------+-------+--------+-------+-------------+
| Loss attributable to | | | | (1,040,646) |
| Ordinary Shareholders | | | | |
+--------------------------+-------+--------+-------+-------------+
| Weighted average number of | | | 39,500,960 |
| ordinary shares in issue | | | |
+----------------------------------+--------+-------+-------------+
| | | | | p |
+--------------------------+-------+--------+-------+-------------+
| Basic and diluted loss | | | | (2.63) |
| per share | | | | |
+--------------------------+-------+--------+-------+-------------+
The diluted loss for the period to 30 June 2010 has been restricted to a loss of
2.63p per share, as the loss per share cannot be reduced by dilution in
accordance with IAS 33, Earnings per Share. At 30 June 2010, there were 200,000
share options and 26,333,983 warrants which could potentially dilute earnings in
the future.
2. Investment Property
+--------------------------+-------+--------+-------+----------------+
| | | | | Period |
| | | | | 29.1.10 |
| | | | | to |
| | | | | 30.06.10 |
+--------------------------+-------+--------+-------+----------------+
| | | | | GBP |
+--------------------------+-------+--------+-------+----------------+
| | | | | |
+--------------------------+-------+--------+-------+----------------+
| At 29 January 2010 | | | | |
| | | | | - |
+--------------------------+-------+--------+-------+----------------+
| Property acquired with | | | | 18,472,704 |
| subsidiary | | | | |
+--------------------------+-------+--------+-------+----------------+
| Capital expenditure | | | | 185,503 |
| during the period | | | | |
+--------------------------+-------+--------+-------+----------------+
| Foreign exchange rate | | | | 40,923 |
| movements | | | | |
+--------------------------+-------+--------+-------+----------------+
| Change in fair value | | | | (523,630) |
+--------------------------+-------+--------+-------+----------------+
| At 30 June 2010 | | | | 18,175,501 |
+--------------------------+-------+--------+-------+----------------+
The Company owns 50% of the Golden Condominium Shopping Centre. The Directors
have valued this property on an open market basis at GBP57.8m. The value of the
Company's 50% share is GBP28.9m. The terms of the joint venture agreement
require the Company to contribute more than 50% of the total construction costs
of the development. The Directors have calculated this additional contribution
as GBP10.7m. The Directors have adjusted their share of the value of the
property to reflect these anticipated additional future contributions to the
construction costs of the development. The Directors believe that this
adjustment is necessary to reflect the open market value of their interest in
the property.
3. Acquisitions
On 12th April 2010, pursuant to a series of sale and purchase agreements dated
6th April 2010, Squarestone Brasil Limited, through its wholly owned subsidiary
Squarestone General Partner Limited, acquired 100% of the share capital of three
Luxembourg holding companies and the right to redeem convertible bonds or loan
notes plus accrued interest issued by such Luxembourg companies.
Details of the identifiable assets and liabilities acquired and the purchase
consideration are as follows;
+--------------------------+-------+--------+-------+--------------+
| | | | | Amount |
+--------------------------+-------+--------+-------+--------------+
| | | | | GBP |
+--------------------------+-------+--------+-------+--------------+
| | | | | |
+--------------------------+-------+--------+-------+--------------+
| Investment Properties | | | | 18,472,704 |
+--------------------------+-------+--------+-------+--------------+
| Trade and other | | | | 469,251 |
| receivables | | | | |
+--------------------------+-------+--------+-------+--------------+
| Cash | | | | 848,812 |
+--------------------------+-------+--------+-------+--------------+
| Current Liabilities | | | | (908,657) |
+--------------------------+-------+--------+-------+--------------+
| Non-current Liabilities | | | | (1,414,577) |
+--------------------------+-------+--------+-------+--------------+
| Less: minority interest | | | | (275,170) |
+--------------------------+-------+--------+-------+--------------+
| | | | | 17,192,363 |
+--------------------------+-------+--------+-------+--------------+
| | | | | |
+--------------------------+-------+--------+-------+--------------+
| Cash | | | | 5,952,363 |
+--------------------------+-------+--------+-------+--------------+
| Ordinary shares 100p | | | | 11,240,000 |
+--------------------------+-------+--------+-------+--------------+
| Total Consideration | | | | 17,192,363 |
+--------------------------+-------+--------+-------+--------------+
In accordance with the accounting policy, the acquisition has been treated as an
asset acquisition and not a business combination under IFRS 3, Business
Combinations.
4. Subsidiaries
The principal subsidiary of Squarestone Brasil Ltd, which has been included in
these consolidated financial statements, is as follows:
+--------------------------+-------+---------------+-------+------------+
| | | Country | | Proportion |
| | | of | | of |
+--------------------------+-------+---------------+-------+------------+
| Name | | incorporation | | ownership |
| | | | | |
+--------------------------+-------+---------------+-------+------------+
| | | | | |
+--------------------------+-------+---------------+-------+------------+
| SB Brast Participacoes | | Brasil | | 97.8% |
| S.A. | | | | |
+--------------------------+-------+---------------+-------+------------+
The shares held by the minority shareholder in SB Brast Participacoes S.A. rank
pari passu with the shares held by Squarestone Brasil Limited.
5. Share Capital
+--------------------------+-------+--------+-------------+--------+
| | | | Number | GBP |
+--------------------------+-------+--------+-------------+--------+
| Ordinary Shares of no | | | 39,500,960 | |
| par value | | | | - |
+--------------------------+-------+--------+-------------+--------+
The Group has issued 26,333,983 warrants to holders of ordinary shares on a 2
for 3 basis, which can be exercised before the third anniversary of admission at
a price of 120p. Of the shares and warrants that were issued for a total
consideration of GBP39,500,960, GBP1,092,960 shares and warrants were issued to
advisers in return for services in raising funds and GBP11,240,000 were issued
in relation to the acquisition (note 3).
6. Events arising after the period end
The minority share holding in SB Brast Participacoes S.A. at 30 June 2010 was
held by Versazca Participacoes Ltda. This share holding was acquired by
Squarestone Brasil II FIP, a wholly owned subsidiary of Squarestone Brasil
Limited, at par value of GBP361,902 (R$975,000) on 8 July 2010. Pursuant to the
subscription agreement between Versazca Participacoes Ltda and Squarestone
Brasil Limited dated 8 July 2010 an amount of GBP200,000, denominated in
sterling, is to be reinvested in ordinary shares of Squarestone Brasil Limited
at the placing price. Versazca Participacoes Ltda. will also receive warrants
issued on a two for three basis.
On 15 September 2010 Squarestone Brasil II FIP, a wholly owned subsidiary of
Squarestone Brasil Limited, acquired 38,153 ordinary shares of Squarestone
Brasil Administracao E Participacoes S.A. for GBP1,250,000, which represents
100% of the ordinary share capital save for one share held by Squarestone
Property Investment Management Limited. Pursuant to the subscription agreements
dated 1 April 2010, Squaretone Property Invesment Management Limited and Blaen
Coed Participacoes e servicos Ltda are to reinvest GBP600,000 and GBP275,000
respectively in ordinary shares of Squarestone Brasil Limited at the placing
price. The shares acquired will also entitle the purchaser to warrants issued on
a two for three basis.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LMMTTMBITTIM
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