TIDMPSPI
RNS Number : 1110T
Public Service Properties Inv Ltd
24 March 2016
24 March 2016
Public Service Properties Investments Limited
("PSPI", "the Company" or "the Group")
Final results for the year ended 31 December 2015
PSPI (AIM: PSPI), the specialist real estate investment and
financing company, announces its audited results for the year ended
31 December 2015.
Highlights
A. Material transactions
-- In March 2015 the Group completed the disposal of its
investment in the UK healthcare sector with the sale of companies,
businesses and assets at a gross sale value of GBP34.5 million.
-- Two German care home properties were sold during 2015 at a
gross sale value of EUR7.9 million (GBP5.6 million).
-- The Group repaid borrowings and prepayment fees of GBP16.7
million from the proceeds of the sale of UK and German assets and
businesses.
-- In April and November 2015 the Company completed compulsory
partial redemptions for a total of 82.6 million shares on a
pro-rata basis at an average price of 26.19 pence per share,
returning GBP21.6 million to shareholders.
-- The Group owned four care homes in Germany at 31 December
2015. On 2 February 2016, the Company announced that it had sold
one property for EUR3.0 million (GBP2.2 million), which completed
in early March 2016. On 9 March 2016, the Group executed
conditional contracts to dispose of the remaining three care home
properties for an aggregate sale price of EUR10.0 million (GBP7.4
million). These sales are expected to complete by the end of April
2016 after re-registration of the properties in the appropriate
land registry and after registration of charges in favour of the
purchasers' lender.
-- The net proceeds from these sales are to be used for general
working capital purposes pending a proposed return of capital to
shareholders. A further announcement will be made in due
course.
B. Financial results
-- The loss from continuing and discontinued operations for the
year ended 31 December 2015 was GBP3.0 million (2014 - loss GBP14.8
million) after deducting losses on fair value adjustments on
investment properties of GBP1.4 million (2014 - GBP3.4 million) and
losses on the sale of assets of GBP0.7 million (2014 - GBP16.1
million).
-- Administrative costs from continuing operations were GBP0.8
million which was 17% lower than in 2014.
-- The Company had cash balances of GBP6.1 million at 31
December 2015 (2014 - GBP4.1 million) and assets classified as held
for sale of GBP10.5 million (2014 - GBP40.0 million).
-- The Net Asset Value per share at 31 December 2015 was 54.4
pence per share (2014 - 34.6 pence per share) which was stated
before the compulsory partial redemption of shares noted above.
Patrick Hall, the Chairman of PSPI, commented:
"The Company is pleased to announce the disposal of the last
investment properties after a period of careful negotiation. The
Board will consider making further distributions to shareholders
once the outstanding transactions have completed."
For further information please visit www.pspiltd.com or
call:
Dr. D. Srinivas Ben Mingay Tom Griffiths
Ralph Beney Sylvester Oppong Henry Willcocks
RP&C International Smith Square Partners Stockdale Securities
(Asset Manager) (Financial Adviser) (Nomad and Broker)
020 7766 7000 0203 696 7260 020 7601 6100
CHAIRMAN'S STATEMENT
I am pleased to report the Group's audited consolidated
financial results for the year ended 31 December 2015.
Update on strategic review
The Company made significant progress in disposing of its assets
and businesses during 2015 and this process continued into the
first quarter of 2016.
The Company disposed of its entire exposure to the UK care home
market and ancillary businesses on 4 March 2015 for approximately
GBP34.5 million. The Company owned six German care homes at the
beginning of 2015. Two of these properties were sold in 2015 for a
combined gross selling price of EUR7.9 million. The Company repaid
GBP16.7 million of borrowings and prepayment fees during 2015.
Following completion of the sales in 2015, the Board approved
two mandatory partial redemptions of ordinary shares of 67.4
million shares in April 2015 for GBP16.1 million and 15.2 million
shares in November 2015 for GBP5.5 million. Thus the Company
returned GBP21.6 million to shareholders during the year.
A further German property was sold in February 2016 for EUR3.0
million which completed in early March 2016. The Group executed
conditional contracts to dispose of the remaining three German
properties on 9 March 2016 at a gross selling price of EUR10.0
million. These sales are expected to close by the end of April
2016. Approximately EUR4.1 million of the sale proceeds will be
used to repay the remaining senior debt owed by the Group with a
further EUR0.6 million to be used to pay interest rate swap
breakage costs and transaction fees with the balance added to the
Group's working capital.
Following the completion of these sales the Group will have
completed the sale of all its investment properties.
The Directors do not recommend the payment of a final dividend
for the year ended 31 December 2015 (2014 - nil).
The Asset Manager's Review describes the financial results for
2015 in more detail.
Other matters
Now that the Company has announced the conditional disposal of
its last investment properties the Board will consider a further
return of capital to shareholders once these transactions have
completed. A further announcement will be made in due course.
Patrick Hall
Chairman
23 March 2016
ASSET MANAGER'S REVIEW
Preparation of the financial statements
Due to the matters referred to in the Chairman's statement, a
significant portion of the Company's income and expenses are
included in the loss for the year from discontinued operations in
the consolidated income statement for the year ended 31 December
2015 and for the comparative period. Similarly, the majority of the
Group's assets, excluding cash and a majority of the liabilities
are classified as available for sale in the Company's consolidated
balance sheet at 31 December 2015. A detailed breakdown of the
income and expense items, as well as these assets and liabilities
are shown in note 15 of the financial statements.
UK disposals
The Group's entire investment in the UK care home sector was
sold during the first quarter of 2015 to the Embrace Group for a
gross consideration of GBP34.5 million. The Company received
initial net proceeds of GBP14.2 million, after repayment of debt
secured against the UK assets of GBP16.3 million, taxation and
transaction costs. GBP2.5 million of the consideration was deferred
at the time of the transaction, but was received on 31 December
2015.
Germany
On 1 January 2015, the Group owned six care home properties in
Germany with three different tenants which generated a gross rental
income at the rate of EUR2.3 million per annum. The Group sold two
of the properties during 2015 at an aggregate gross sale price of
EUR7.9m. The Group repaid EUR1.9 million of bank financing secured
against the assets sold, EUR0.2 million in interest rate swap
breakage costs, prepayment penalties and related professional
fees.
Repayment of capital to shareholders
On 27 April 2015 the Company completed the compulsory partial
redemption of 67,434,020 ordinary shares at 23.875p per ordinary
share redeemed, repaying GBP16,099,871.93 to shareholders. The
Company's share capital after the partial redemption comprised
37,931,697 ordinary shares of $0.01 each.
On 9 November 2015 the Company completed a further compulsory
partial redemption of 15,172,643 shares at 36.50p per ordinary
share redeemed, repaying a further GBP5,538,014.70 to shareholders.
The Company's share capital after the partial redemption, and as at
31 December 2015, comprises 22,759,054 ordinary shares of $0.01
each.
Business Overview
The Company continued to own four investment properties in
Germany at 31 December 2015. Three properties were leased to
Marseille Kliniken AG ("MK") and the one other property, Brakel,
was leased to a separate third party operator.
On 2 February 2016, the Company announced that it had exchanged
contracts to dispose of its Brakel care home property for a gross
price of EUR3.0 million (GBP2.2 million). The sale was executed
with a company owned by the same beneficial owner as the tenant at
Brakel and completed on 4 March 2016. The property is included at
its sale value in the Company's audited consolidated results as at
31 December 2015. There was no debt secured against the property
and transaction costs were estimated at EUR0.1 million and will be
settled from the sale proceeds.
On 9 March 2016, the Company exchanged conditional contracts to
dispose of its three remaining properties leased to MK for an
aggregate gross price of EUR10.0 million (GBP7.4 million). The
sales were executed with subsidiaries of MK and are expected to
close by the end of April 2016 after completion of re-registration
of the properties in the appropriate land registry and after
registration of charges in favour of the purchasers' lender. The
properties are included at their sale value in the Company's
audited consolidated results at 31 December 2015. Approximately
EUR4.1 million (GBP3.0 million) of the sale proceeds will be used
to repay senior debt secured against the three properties and
approximately EUR0.2 million will be used to settle prepayment
penalties under an interest rate swap agreement with the senior
lender. The Group will apply the net sale proceeds to settle
transaction costs, estimated at EUR0.4 million, with the balance to
be used for general working capital purposes.
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The Company has now completed the sale of its remaining
investment properties held in all jurisdictions and the balance of
funds from these sales, after repayment of debt and associated
costs, are to be used for general working capital purposes pending
a proposed return of capital to shareholders.
Financial Review for 2015
The comparative figures in the consolidated income statement
have been re-stated to reflect the results of the German assets
under discontinued operations. All revenue derived from investment
properties is reflected in the net loss from discontinued
operations as described in note 15 to the consolidated financial
statements.
Administration costs within continuing operations, consisting of
central group costs, were GBP0.8 million for the year ended 31
December 2015, 17% lower than the than the previous year ended 31
December 2014.
Finance costs were stated at GBP1.1 million (2014 - GBP1.1
million) primarily reflecting the impact of changes in foreign
exchange rates on intra-group funding in Euros, offset by exchange
rate differences of GBP1.0 million deducted from the carrying value
of investment properties. Overall, the Company reported a positive
increase in the Company's translation reserve of GBP0.4 million at
31 December 2015.
Total annual rental income for 2015 from discontinued operations
was GBP1.5 million. The Group's property portfolio throughout the
year was fully let and all rental income was paid in full.
The Group's investment property assets at 31 December 2015,
consisted of four German properties classified as available for
sale at a total value of GBP9.6 million (EUR13.0 million). The
Group also reflected cash and cash equivalents and restricted cash
of GBP0.5 million as assets held for sale.
Liabilities directly associated with the assets classified as
available for sale of GBP3.9 million consist of senior debt secured
against three of these properties of approximately GBP3.0 million
(EUR4.1 million), before amortisation of debt issue costs, and
accruals and other payables of GBP0.9 million. These predominately
relate to breakage costs on interest rate swap agreements and other
transactions costs.
The Company had a contingent liability to fund up to EUR1.5
million should one of the MK operated properties require
redevelopment, however this contingent liability will be eliminated
on completion of the sale transactions noted above. The Group has
given certain warranties in respect of the various sale
transactions in the UK and Germany, the majority of which will
expire during the course of 2016.
The Company will maintain sufficient cash balances to meet any
claims under the warranties given, although none are expected to
arise.
The Group had cash balances of GBP6.1 million at 31 December
2015 compared to GBP4.1m as at 31 December 2014.
The Company repaid debt of GBP17.6 million from the sale of UK
and German assets during 2015 and returned GBP21.6 million to
shareholders, as described in more detail above.
Total equity at 31 December 2015 was GBP12.3 million compared to
GBP36.4 million at 31 December 2014. The Net Asset Value per
share(2) at 31 December 2015 was 54.4 pence per share compared to
34.6 pence per share at 31 December 2014.
RP&C International
23 March 2016
Notes:
(1) Figures in Euros at 31 December 2015 are reflected at an
exchange rate of EUR1.3572:GBP1
(2) Total equity divided by the number of ordinary shares in
issue as at the balance sheet date.
PUBLIC SERVICE PROPERTIES INVESTMENTS LIMITED
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2015
Note 2015 2014
(restated)
Continuing Operations GBP GBP
Revenue 6 - -
Net loss from fair value
adjustments on investment
properties 11 - -
Impairment of investments
and loans - (2,000)
Administrative expenses 7 (786,693) (1,078,956)
Operating loss (786,693) (1,080,956)
Finance income 1,529 718
Finance costs 8 (1,138,219) (1,061,722)
Loss before income tax expense (1,923,383) (2,141,960)
Income tax expense 21 - -
Loss for the year from continuing
operations (1,923,383) (2,141,960)
Discontinued operations
Loss for the year from discontinued
operations 15 (1,058,202) (12,674,059)
Loss for the year (2,981,585) (14,816,019)
Basic and diluted loss per share (in
pence)
From continuing operations 9 (3.35) (2.03)
From discontinued operations 9 (1.84) (12.03)
From loss for the year (5.19) (14.06)
PUBLIC SERVICE PROPERTIES INVESTMENTS LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2015
2015 2014
GBP GBP
Loss for the year (2,981,585) (14,816,019)
Other comprehensive income
Items that may be subsequently transferred
to the income statement
Cash flow hedges 29,076 (697,813)
Recycle of cash flow hedging
reserve on disposal 117,249 516,569
Recycle of translation reserve
on disposal - (443,494)
Currency translation differences 445,827 44,994
------------ -------------
Other comprehensive (loss)/income
for the year 592,152 (579,744)
Total comprehensive loss for
the year (2,389,433) (15,395,763)
PUBLIC SERVICE PROPERTIES INVESTMENTS LIMITED
CONSOLIDATED BALANCE SHEET
FOR THE YEAR ENDED 31 DECEMBER 2015
Note 2015 2014
GBP GBP
ASSETS
Non current assets
Investment property 11 - 15,954,390
------------- -------------
- 15,954,390
Current assets
Receivables and prepayments 17 64,954 62,293
Restricted cash 17 - 502,593
Cash and cash equivalents 6,119,892 4,094,701
6,184,846 4,659,587
------------- -------------
Assets classified as held for sale 15 10,315,710 40,031,308
16,500,556 44,690,895
Total assets 16,500,556 60,645,285
============= =============
EQUITY
Capital and reserves
Share capital 18 130,836 605,722
Share premium 18 68,573,102 89,736,103
Cashflow hedging reserve (158,954) (305,279)
Translation reserve 1,067,214 621,387
Retained earnings (57,225,557) (54,243,972)
Total equity 12,386,641 36,413,961
------------- -------------
LIABILITIES
Non-current liabilities
Borrowings 19 - 3,172,517
Derivative financial instruments 16 - 251,410
Deferred income tax liability 20 - 23,765
------------- -------------
- 3,447,692
Current liabilities
Borrowings 19 - 211,269
Trade and other payables 22 46,272 147,512
Current income tax liabilities - -
Accruals 23 132,205 463,393
------------- -------------
178,477 822,174
------------- -------------
Liabilities directly associated with
assets classified as held for sale 15 3,935,438 19,961,458
4,113,915 20,783,632
Total liabilities 4,113,915 24,231,324
Total equity and liabilities 16,500,556 60,645,285
============= =============
PUBLIC SERVICE PROPERTIES INVESTMENTS LIMITED
CONSOLIDATED CASH FLOW STATEMENT
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FOR THE YEAR ENDED 31 DECEMBER 2015
Note 2015 2014
GBP GBP
Loss for the year: (2,981,585) (14,816,019)
Adjustments for non-cash items:
-Interest expense 131,741 1,527,488
- Net foreign exchange losses/(gains) 8 & 15 1,137,905 1,267,976
-Interest income (1,612) (1,294,997)
-Income tax expense (86,937) (1,428,505)
-Impairment of loan - 2,000
-Proceeds from finance lease - 933,025
-Gain on disposal of subsidiaries (67,822) 16,140,120
-Amortisation of debt issue
costs 67,168 626,722
-Changes in fair value of investment
property 11 1,442,732 3,418,077
Changes in working capital
-Decrease in receivables and
prepayments 451,005 184,480
-Decrease in trade and other
payables (228,779) (4,680)
-Decrease in accruals 1,296,556 1,406,795
Cash generated from operations 1,160,372 7,962,482
Interest paid (298,101) (1,505,695)
Income tax paid (663,444) (332,714)
------------ ------------
Net cash generated/(used) from
operating activities 198,827 6,124,073
Cash flow from investing activities
Change in restricted cash 2,519 (664,510)
Proceeds from sale of subsidiary
- net of costs 15 33,342,049 -
Proceeds from sale of investment
property - net of costs 15 5,344,012 7,913,965
Interest received 1,611 958
------------ ------------
Net cash generated from investing
activities 38,690,191 7,250,413
Cash flow from financing activities
Payments made on partial capital
reduction 18 (21,637,887) -
Repayments of borrowings - including
penalties (16,699,976) (11,230,412)
Cost associated with new borrowings - (53,508)
------------ ------------
Net cash used by financing activities (38,337,863) (11,283,920)
Net increase / (decrease) in cash and
cash equivalents 551,155 2,090,566
Movement in cash and cash equivalents
At start of year 5,968,761 4,001,022
Net increase / (decrease) in cash
and cash equivalents 551,155 2,090,566
Foreign currency translation
adjustments (192,060) (122,827)
At end of year 6,327,856 5,968,761
Cash and cash equivalents 6,119,892 4,094,701
Cash and cash equivalents -
included in assets of disposal
group 207,964 1,874,060
------------ ------------
6,327,856 5,968,761
PUBLIC SERVICE PROPERTIES INVESTMENTS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2015
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 2014 605,722 89,736,103 (137,944) 1,033,796 (39,427,953) 51,809,724
========== ============= ========== ============ ============= =============
Comprehensive income
Loss for the year - - - - (14,816,019) (14,816,019)
Other comprehensive income
Cash flow hedges - net of tax - - (167,335) - - (167,335)
Foreign currency translation - - - (412,409) - (412,409)
---------- ------------- ---------- ------------ ------------- -------------
Total comprehensive income - - (167,335) (412,409) - (579,744)
Balance as of 31 December 2014 605,722 89,736,103 (305,279) 621,387 (54,243,972) 36,413,961
========== ============= ========== ============ ============= =============
Balance as of 1 January 2015 605,722 89,736,103 (305,279) 621,387 (54,243,972) 36,413,961
========== ============= ========== ============ ============= =============
Comprehensive income
Loss for the year - - - - (2,981,585) (2,981,585)
Other comprehensive income
Cash flow hedges - net of tax - - 146,325 - - 146,325
Foreign currency translation - - - 445,827 - 445,827
---------- ------------- ---------- ------------ ------------- -------------
Total comprehensive income - - 146,325 445,827 (2,981,585) (2,389,433)
Partial capital redemption (474,886) (21,163,001) - - - (21,637,887)
Balance as of 31 December 2015 130,836 68,573,102 (158,954) 1,067,214 (57,225,557) 12,386,641
========== ============= ========== ============ ============= =============
The notes on pages 12 to 41 form part of these consolidated
financial statements.
1. GENERAL INFORMATION
Public Service Properties Investments Limited was incorporated
in 2001 and 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"), is an investment property
group with a portfolio in Germany. It is involved in leasing real
estate where the rental income is primarily generated directly or
indirectly from governmental sources. As at 31 December 2015, the
Group owns four investment properties in Germany, these have been
presented as held for sale within these consolidated financial
statements and their results for the year treated as discontinued
operations as it is anticipated that these will be sold within the
first half of 2016. After the sale of these assets the Group will
hold no investment properties.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of
these consolidated financial statements have been consistently
applied to all the years presented, unless otherwise stated.
2.1 Basis of preparation
The consolidated financial statements of the Group have been
prepared in accordance with and comply with International Financial
Reporting Standards (IFRS), published by the International
Accounting Standards Board (IASB). The consolidated financial
statements are reported in Pounds Sterling unless otherwise stated
and are based on the annual accounts of the individual subsidiaries
at 31 December 2015, which have been drawn up according to uniform
Group accounting principles.
The consolidated financial statements have been prepared on a
going concern basis. The 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.
Comparative information in the consolidated income statement and
consolidated statement of comprehensive income have been restated
in order to be consistent with the presentation of certain items as
discontinued operations in 2015 as detailed in Note 15.
Adoption of new standards and interpretations
No new standards or interpretations have been adopted during the
year by the group.
The group has adopted, without impact, the following annual
improvements and amendment.
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)
New standards not yet adopted
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The following new standards have been issued but are not
effective for the financial year ended 31 December 2015 and have
not been early adopted:
IFRS 15, 'Revenue from contracts with customers' deals with
revenue recognition and establishes principles for reporting useful
information to users of financial statements about the nature,
amount, timing and uncertainty of revenue and cash flows arising
from an entity's contracts with customers. Revenue is recognised
when a customer obtains control of a good or service and thus has
the ability to direct the use and obtain the benefits from the good
or service. The standard replaces IAS 18 'Revenue' and IAS 11
'Construction contracts' and related interpretations. The standard
is effective for annual periods beginning on or after 1 January
2018 and earlier application is permitted. The adoption of IFRS 15
is not expected to have a material impact on the consolidated
financial statements.
IFRS 9, 'Financial instruments', addresses the classification,
measurement and recognition of financial assets and financial
liabilities. IFRS 9 will require impairments to be based on a
forward-looking model; will change the approach to hedging
financial exposures and related documentation and the recognition
of certain fair value changes. The standard is effective for
accounting periods beginning on or after 1 January 2018. Early
adoption is permitted. The adoption of IFRS 9 is not expected to
have a material impact on the consolidated financial
statements.
2.1 Basis of preparation (Continued)
IFRS 16: IFRS 16 Leases substantially changes the financial
statements as the majority of leases will become on-balance sheet
liabilities with corresponding right of use assets on the balance
sheet. The standard replaces IAS 17 Leases and is effective January
1, 2019. Early application is permitted for companies that also
apply IFRS 15 Revenue from Contracts with Customers. The Group is
yet to assess the possible impact of IFRS 16.
2.2 Principles of consolidation
2.2.1 Subsidiaries
Subsidiaries are all entities over which the Group has control.
The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated
from the date that control ceases.
The Group applies the acquisition method to account for business
combinations. 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.
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised
losses are also eliminated. When necessary, amounts reported by
subsidiaries have been adjusted to conform with the Groups
accounting policies.
2.2.2 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 Segmental Reporting
Segmental reporting has been prepared in accordance with IFRS 8
(Segment Reporting).
The chief operating decision maker has been identified as the
board of directors, who review the Group's internal reporting and
management information in order to assess performance and allocate
resources.
The board of directors reviews management information, considers
the business and makes decisions from a geographic perspective. As
such, the Group has been organised into the following segments:
-- Activities in Germany (discontinued in 2015)
-- Activities in the United Kingdom (discontinued in 2014)
A geographical segment is one that is engaged in providing
products or services within a particular economic area which are
subject to risks and returns that are different from those of
segments operating in other economic areas. Revenues are wholly
derived from operating leases and finance leases.
Total segment assets and liabilities excludes certain assets and
liabilities which are managed on a central basis, these form the
reconciliation to total balance sheet assets.
2.4 Foreign currency transactions and translation
Functional and presentation currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates ("the functional
currency"). The consolidated financial statements are presented in
Pounds Sterling, which is the Group's presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the date of each
transaction. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income
statement, except where deferred in equity as qualifying cash flow
hedges and qualifying net investment hedges.
Foreign exchange gains and losses that relate to borrowings and
cash and cash equivalents are presented net in the income statement
within finance costs and finance income respectively. All other
foreign exchange gains and losses are presented net in the
statement of comprehensive income.
Group Companies
The results and financial position of all the Group entities
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
(i) assets and liabilities for each balance sheet are translated
at the closing rate at the date of the balance sheet;
(ii) income and expenses for each income statement are
translated at average exchange rates (unless this average is not a
reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates in which case income and
expenses are translated at the rates on those dates of the
transactions); and
(iii) all resulting exchange differences are recognised in the
statement of comprehensive income.
On the disposal of a foreign operation (that is, a disposal of
the Group's entire interest in a foreign operation, or a disposal
involving loss of control over a subsidiary that includes a foreign
operation) all of the exchange differences accumulated in equity in
respect of that operation attributable to the equity holders of the
Group are reclassified to profit or loss.
The translation rates used are disclosed in Note 5 to the
consolidated financial statements.
2.5 Investment property
Property not occupied by the Group but held for long-term rental
yields, for capital appreciation or both is classified as
investment property.
Investment property comprises freehold land and buildings and is
initially recognised at historic cost, including related
transaction costs and borrowing costs. After initial recognition
investment property is held at fair value which is based on active
market prices, adjusted if necessary, for any difference in the
nature, location or condition of the specific asset. If this
information is not available, the Group uses alternative valuation
methods such as recent prices on less active markets or discounted
cash flow projections. These valuations are performed in accordance
with guidance issued by the International Valuation Standard
Committee and are prepared annually by independent external
valuers.
The fair value of investment property reflects, among other
things, rental income from current leases and assumptions about
rental income from future leases in the light of current market
conditions. The fair value also reflects any cash outflows that
could be expected in respect of the property.
Subsequent expenditure is capitalised to the asset's carrying
amount only when it is probable that future economic benefits
associated with the expenditure will flow to the Group and the cost
of the item can be measured reliably. All other repairs and
maintenance costs are expensed when incurred. When part of an
investment property is replaced, the carrying amount of the
replaced part is derecognized
Changes in fair values are recorded in the income statement.
Gains and losses on disposals are determined by comparing proceeds
with the carrying amount. These are included in the income
statement where necessary.
Where the Group disposes of a property at fair value in an arm's
length transaction, the carrying value immediately prior to the
sale is adjusted to the transaction price, and the adjustment is
recorded in the income statement within net gain from fair value
adjustment on investment property
2.6 Leases
Finance lease:
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When assets are leased out under a finance lease, the present
value of the lease payments is recognised as a receivable. The
difference between the gross receivable and the present value of
the receivable is recognised as unearned finance income.
Lease income is recognised over the term of the lease using the
net investment method, which reflects a constant periodic rate of
return.
Operating lease:
The Group currently treats all of its investment property leases
as operating leases, however this classification is considered by
the directors for each property on acquisition. An operating lease
is a lease in which substantially all the risks and rewards of the
asset (investment property) remain with the lessor and as such
these assets remain in the Group's balance sheet. Lease payments
from the lessee are recognised as rental income and as such
disclosed in the income statement on a straight-line basis over the
period of the lease.
Lease classification:
The Group determines the classification of leases on each asset
having regard to whether substantially all risks and rewards
incidental to ownership of the asset are transferred to the
lessee.
2.7 Loans and receivables
Loans are classified in accordance with the specific contractual
arrangements.
Purchases and sales of loans are recognised on the trade date,
which is the date that the Group commits to purchase or sell the
asset. Loans are initially recognised at fair value plus
transaction costs and are subsequently carried at amortised cost
using the effective interest method, less provision for impairment.
A provision for impairment of loans is established when there is
evidence that the Group will not be able to collect all amounts due
according to the original terms of loans. In the case of loans, the
financial position of the underlying companies and their ability to
repay the preference share capital is considered in determining
whether the loans are impaired.
The Group assesses at each balance sheet date whether there is
objective evidence that a financial asset or a group of financial
assets is impaired. The amount of the provision is the difference
between the asset's carrying amount and the present value of
estimated future cash flows, discounted at the effective interest
rate. The amount of the provision is recognised in the income
statement. Loans are derecognised when the rights to receive cash
flows from the loans have expired or have been transferred and the
Group has transferred substantially all risks and rewards of
ownership. When investments are sold the resulting gains and losses
are included in the income statement as gains and losses from
loans.
2.8 Accounting for derivative financial instruments and hedging
activities
Derivatives are initially recognised at fair value on the date a
derivative contract is entered into and are subsequently remeasured
at their fair value. The method of recognising the resulting gain
or loss depends on whether the derivative is designated as a
hedging instrument, and if so, the nature of the item being
hedged.
Cash flow hedges:
The effective portion of changes in the fair value of
derivatives that are designated and qualify as cash flow hedges are
recognised in the statement of comprehensive income. The gain or
loss relating to the ineffective portion is recognised immediately
in the income statement.
Amounts accumulated in equity are recognised in the income
statement in the periods when the hedged item will affect profit or
loss (for instance when the forecast sale that is hedged takes
place). However, if the forecast transaction that is hedged results
in the recognition of a non-financial asset or a liability, the
gains and losses previously deferred in equity are transferred from
equity and included in the initial measurement of the costs of the
asset or liability.
When a hedging instrument expires or is sold, or when a hedge no
longer meets the criteria for hedge accounting, any cumulative gain
or loss existing in equity at that time remains in equity and is
recognised when the forecast transaction is ultimately recognised
in the income statement. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss that was reported in
equity is immediately transferred to the income statement.
2.9 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand; deposits held
at call with banks, other short-term highly liquid investments with
original maturities of three months or less and bank overdrafts. In
the balance sheet, bank overdrafts are included in borrowings under
current liabilities.
2.10 Share capital
Ordinary shares are classified as equity. Any transaction costs
of an equity transaction are accounted for as a deduction from
equity to the extent they are incremental costs directly
attributable to the equity transaction that otherwise would have
been avoided. The costs of an equity transaction that is abandoned
are recognised as an expense.
2.11 Trade payables and other payables
Trade payables and other payables are recognised initially at
fair value and subsequently measured at amortised cost using the
effective interest method.
2.12 Dividends
Dividends are recorded as a liability in the Group's financial
statements in the period in which they are approved by the Group's
shareholders.
2.13 Borrowings
Borrowings are recognised initially at fair value, net of
transaction costs incurred. Borrowings are subsequently stated at
amortised cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognised in the
income statement over the period of the borrowings using the
effective interest method.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 months after the balance sheet date.
2.14 Current and deferred income tax expense
The tax expense for the period comprises current and deferred
tax. Tax is recognised in the income statement, except to the
extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also
recognised in other comprehensive income or directly in equity,
respectively.
The current income tax charge is calculated on the basis of the
tax laws enacted or substantively enacted at the balance sheet date
in the countries where the Group and its subsidiaries operate and
generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts
expected to be paid to tax authorities.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the
consolidated financial statements. However, the deferred income tax
is not accounted for if it arises from initial recognition of an
asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither
accounting, nor taxable profit or loss. Deferred income tax is
determined using the tax rates (and laws) that have been enacted or
substantially enacted by the balance sheet date and are expected to
apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it
is probable that future taxable profit will be available against
which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising
on investments in subsidiaries, except where the timing of the
reversal of the temporary difference is controlled by the Group and
it is probable that the temporary difference will not reverse in
the foreseeable future. Due to the tax jurisdictions of the Group
companies no tax impact is anticipated.
2.15 Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is probable
that an outflow of resources will be required to settle the
obligation, and a reliable estimate of the amount can be made.
Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of
money and the risks specific to the obligation. The increase in the
provision due to passage of time is recognised as interest
expense.
2.16 Revenue recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue can be
reliably measured. Rental income from investment properties is
recognised in accordance with the terms of the lease. Every
investment property is accounted for individually. Operating lease
agreements of the German investment properties are based on
long-term leasing contracts of 20 years.
2.17 Borrowing costs
General and specific borrowing costs directly attributable to
the acquisition, construction or production of qualifying assets,
which are assets that necessarily take a substantial period of time
to get ready for their intended use or sale, are added to the cost
of those assets, until such time as the assets are substantially
ready for their intended use or sale. All other borrowing costs are
recognised in profit or loss in the period in which they are
incurred. The Group has chosen to capitalise borrowing costs on all
qualifying assets irrespective of whether they are measured at fair
value or not.
2.18 Finance income and expense
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Interest income and expense are recognised within 'finance
income' and 'finance costs' in profit or loss using the effective
interest rate method, except for borrowing costs relating to
qualifying assets, which are capitalised as part of the cost of
that asset. 'Finance income' is presented before operating profit
and 'Finance costs' are presented after operating profit.
2.19 Earnings per share
The Group has chosen to disclose an adjusted earnings per share
figure. This provides an indication of the Group's underlying
business performance and excludes significant "non cash" items such
as fair value movements on investment properties, the recognition
of accrued income, foreign exchange movements and movements in the
value of derivative financial instruments charged to the income
statement.
2.20 Discontinued operations
Discontinued operations are shown in accordance with IFRS 5, any
part of the entity which has either been disposed of or is
classified as held for sale is treated as a discontinued operation
if it represents a separate major line or geographical area of
operations. The total post tax profit or loss is presented as a
single figure on the face of the income statement and details of
revenue, expenses, taxation and cash flows are separately
disclosed.
3. FINANCIAL AND OTHER RISK MANAGEMENT
3.1 Financial risk factors
The Group's activities expose it to a variety of financial
risks: market risk (including currency 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 minimise
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.
(a) Market risk
Foreign exchange risk
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to euros. Limited foreign exchange risk arises from
future commercial transactions, recognised assets and liabilities
and net investments in foreign operations. However, most operating
entities have limited exposure to exchange risk outside their
functional currencies.
The Group has investments in foreign operations, whose net
assets are exposed to foreign currency translation risk. In
particular the Group is exposed to foreign currency movements in
relation to Euro denominated intercompany balances between Euro and
Sterling denominated segments.
Historically the Group has not entered into any hedging
transactions in respect of the net assets of subsidiaries
denominated in foreign currencies. The Group will review this
policy from time to time.
(b) Credit risk
Credit risk arises from cash, derivative financial instruments
and deposits with banks and financial institutions.
The table below shows the credit rating and balance of the three
major bank counterparties at the balance sheet date. The table
includes all cash and cash equivalents including that classified as
held for sale.
31 December 2015 31 December 2014 31 December 2015 31 December 2014
Counterparty Rating Rating Balance Balance
Allied Irish Bank BB+ BB 616,430 2,836,477
Bremer Kreditbank AG NA NA 207,965 450,699
NatWest Plc BBB+ A- 5,503,466 807,525
The balances in relation to Bremer Kreditbank AG are included
within those presented as held for sale as at 31 December 2015 (see
Note 15). Ratings for this bank are not available.
(c) 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.
The table below analyses the Group's financial liabilities and
net-settled derivative financial liabilities into relevant maturity
groupings based on the remaining period at the balance sheet date
to the contractual maturity date. The amounts disclosed in the
table are the continuing contractual undiscounted cash flows.
At 31 December 2015 Note Less than 1 year Between 1 and 2 years Between 2 and 5 years Over 5 Years
GBP GBP GBP GBP
Borrowings 19 - - - -
Trade and other payables 22 46,272 - - -
Derivative financial instruments 16 - - - -
Accruals 23 132,205
Total 178,477 - - -
At 31 December 2014 Note Less than 1 year Between 1 and 2 years Between 2 and 5 years Over 5 Years
Borrowings 19 347,605 339,389 965,637 2,433,140
Trade and other payables 22 147,512 - - -
Derivative financial instruments 16 - - - 251,410
Accruals 23 463,393
Total 958,510 339,389 965,637 2,684,550
Borrowings in the table above include future interest
payable.
Where an interest rate swap is in place, the fixed rate implicit
in the agreement has been used to calculate future payments,
consequently the position is shown after any cash flows arising
from interest rate swaps.
(d) Capital risk management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders (if free
cash is available for dividend declaration), return capital to
shareholders, issue new shares or sell assets to reduce debt.
3.2 Fair value estimation
The table below provides disclosure of fair value measurements
as at 31 December by level of the following fair value measurement
hierarchy:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
-- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (level
2).
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (level
3).
See Note 15 for disclosures of the disposal assets and
liabilities held for sale and have been measured at fair value.
2015 Level 1 Level 2 Level 3 Total balance
GBP
GBP GBP GBP
Assets
Investment property - - - -
--------------------- -------- -------- -------- --------------
Total assets - - - -
--------------------- -------- -------- -------- --------------
Liabilities
Derivatives used for - - - -
hedging
--------------------- -------- -------- -------- --------------
Total liabilities - - - -
--------------------- -------- -------- -------- --------------
2014 Level 1 Level 2 Level 3 Total balance
GBP
GBP GBP GBP
Assets
Investment property 15,954,390 15,954,390
--------------------------------- -------- ----------- --------------
Total assets - - 15,954,390 15,954,390
---------------------- --------- -------- ----------- --------------
Liabilities
Derivatives used for
hedging - 251,410 - 251,410
---------------------- --------- -------- ----------- --------------
Total liabilities - 251,410 - 251,410
---------------------- --------- -------- ----------- --------------
The fair value of financial instruments traded in active markets
is based on quoted market prices at the balance sheet date. A
market is regarded as active if quoted prices are readily and
regularly available from an exchange, dealer, broker, industry
group, pricing service, or regulatory agency, and those prices
represent actual and regularly occurring market transactions on an
arm's length basis. The quoted market price used for financial
assets held by the Group is the current bid price. These
instruments are included in level 1.
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The fair value of financial instruments that are not traded in
an active market (for example, over-the-counter derivatives) is
determined by using valuation techniques. These valuation
techniques maximise the use of observable market data where it is
available and rely as little as possible on entity specific
estimates. If all significant inputs required to fair value an
instrument are observable, the instrument is included in level
2.
If one or more of the significant inputs is not based on
observable market data, the instrument is included in level 3.
Specific valuation techniques used to value financial
instruments include:
-- Quoted market prices or dealer quotes for similar instruments.
-- The fair value of interest rate swaps is calculated as the
present value of the estimated future cash flows based on
observable yield curves.
-- The fair value of forward foreign exchange contracts is
determined using forward exchange rates at the balance sheet date,
with the resulting values discounted back to present value.
-- Other techniques, such as discounted cash flow analysis, are
used to determine fair value for the remaining financial
instruments.
For further information of the valuation of Investment
Properties see Note 11.
3.3 Other risk factors
The Group is exposed to property price and market rental risks.
Wherever possible the Group builds into the terms of its leases
indexation linked to consumer price indices, in order to manage its
market rental risk.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates and judgments are continually evaluated and are based
on historical experiences and other factors, including expectations
of future events that are believed to be reasonable under the
circumstance. The Group makes estimates and assumptions concerning
the future. By definition, the resulting accounting estimates may
not equal the related actual results. The estimates and assumptions
that may have a significant risk of causing a material adjustment
to the carrying amount of assets and liabilities within the next
financial year are described below.
(a) Estimate of fair value of investment properties
The best evidence of fair value is current prices in an active
market for similar lease and other contracts. In the absence of
such information, the Group determines the amount within a range of
reasonable fair value estimates. In making this judgement, the
Group considers information from a variety of sources
including:
i) current prices in an active market for properties of
different nature, condition or location (or subject to different
lease or other contracts), adjusted to reflect those
differences;
ii) recent prices of similar properties in less active markets,
with adjustments to reflect any changes in economic conditions
since the date of the transactions that occurred at those prices;
and
iii) discounted cash flow projections based on reliable
estimates of future cash flows, derived from the terms of any
existing lease and other contracts, and (where possible) from
external evidence such as market rents for similar properties in
the same location and condition, and using discount rates that
reflect current market assessments of the uncertainty in the amount
and timing of cash flows.
As at 31 December 2015, the valuation of the investment property
has been based on the estimated market value. As mentioned in Note
15 the properties were being actively marketed as at 31 December
2015 and negotiations were at an advanced stage, from these
negotiations the Group was able to estimate current price in an
active market.
5. FOREIGN EXCHANGE RATES
Balance Sheet
Income Statement
and Cash Flow
Statement
average average
As at 31 As at
December 31 December
2015 2014 2015 2014
GBP GBP GBP GBP
EUR 1.00 0.7368 0.7825 0.7264 0.8059
6. REVENUE
2015 2014
GBP GBP
Rental income - continuing operations - -
Rental income - discontinued operations
- Germany (Note 15) 1,469,151 2,764,020
Rental income - discontinued operations
- UK - (Note 15) - 3,885,433
1,469,151 6,649,453
The group derives its revenue entirely from rental income
received from investment property. As at 31 December 2015, the four
remaining investment properties owned by the group in Germany have
been presented as held for sale. As these represent a significant
separate geographical line of business, it has been treated as a
discontinued operation (see Note 15), as such no rental income is
shown within continued operations in the consolidated income
statement (comparatives have also been restated).
The majority of investment properties in Germany are leased for
an initial period of 20 years; however the lessee has the right to
renew the leases for a further period of 5 or 10 years, subject to
the agreement of the revised rent. The rent on the majority of
leases is changed every four years from the anniversary of
inception, with reference to the German Consumer Price Index.
The investment properties in the UK were included in
discontinued operations in 2014 and sold on 4 March 2015 (see Note
15). The investment properties were leased for an initial period of
35 years. The leases terminated in 2039, although the lessee had
the right to renew the leases two years before their expiry, for a
further period of 35 years subject to agreement on the revised
rent. Each lease was subject to an upward only market rent review
every five years from the start of the lease. In the event that a
UK property was damaged or destroyed by any insured risk and was
not reinstated by the Group within a period of 3 years, the lessee
had the right to terminate the lease in respect of that UK
property. The lessor had the option to terminate each lease,
subject to the senior lender's consent, for various reasons
including the breach of material clauses of the lease.
7. ADMINISTRATIVE EXPENSES
2015 2014
(restated)
GBP GBP
Third party company administration 76,932 12,412
Management fees 340,683 498,631
Professional fees 216,625 427,035
Audit fees 103,110 84,804
Insurance and general expenses 49,343 56,074
786,693 1,078,956
8. FINANCE COSTS
2015 2014
(restated)
GBP GBP
Other interest and borrowing
expenses 314 6,014
Net exchange losses 1,137,905 1,055,708
1,138,219 1,061,722
9. EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net
profit attributable to shareholders by the weighted average number
of ordinary shares outstanding during the period.
December December
2015 2014
(restated)
GBP GBP
Loss from continuing operations attributable
to shareholders (1,923,383) (2,141,960)
Loss from discontinued operations
attributable to shareholders (1,058,202) (12,674,059)
Total (2,981,585) (14,816,019)
Weighted average number of ordinary
shares outstanding 57,385,592 105,365,717
Basic and diluted earnings per share
- (pence per share) continuing operations (3.35) (2.03)
Basic and diluted earnings per share
- (pence per share) discontinued operations (1.84) (12.03)
Total (5.19) (14.06)
10. DIVIDENDS
No interim or final dividend was paid in 2014. No interim
dividend was paid in 2015 and the Directors do not recommend a
final dividend for 2015. See Note 18 for details of Compulsory
Partial Redemptions of Ordinary Shares made during 2015.
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11. INVESTMENT PROPERTY
2015 2014
GBP GBP
As at 1 January 15,954,390 72,092,779
Net (loss) on fair value adjustment
- discontinued (1,442,732) (3,418,077)
Disposals (Note 15) (3,933,853) (11,286,970)
Impairment to sales value (Note 15) - (7,949,827)
Transferred to disposal group classified
as held for sale (Note 15) (9,580,381) (31,502,582)
Net change in fair value due to exchange
differences (997,424) (1,980,933)
As at 31 December - 15,954,390
Investment property held for sale
Included in investment property held for sale as at 31 December
2015 are the four remaining investment properties held by the
Company in Germany (Brakel, Buren, Arnsberg and Kreuztal-Kromabch);
these were approved for sale in 2015.
As at 31 December 2014 and 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% (2014 - 9.29%). 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 (2014 - 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. Prior to the transfer to
the disposal group classified as held for sale, these properties
were written down to their estimated sales values (EUR3,000,000 in
relation to the Brakel property and EUR10,000,000 in relation to
the three properties in Buren, Arnsberg and Kreuztal-Krombach, in
total EUR13,000,000 (GBP9,580,381)), which is also in line with the
latest Colliers valuation.
The group announced the sale of the Brakel property on 2
February 2016 for a gross price of EUR3,000,000 (GBP2,210,433) and
the sale of the three remaining assets leased to Marseille Kliniken
on 10 March 2016 for a gross price of EUR10,000,000 (GBP7,369,938)
(see Note 29).
Disposal of investment property
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 EUR5,400,000
(GBP3,933,853) prior to disposal. In doing so the Group recognised
a loss of EUR550,676 (GBP399,765) which is included in the net
losses on fair value adjustments of GBP1,442,732 in the table
above.
As discussed in Note 15, the Group disposed of its UK companies,
businesses and assets on 4 March 2015. As these companies were
approved for sale in 2014, the UK investment properties were
treated as held for sale as at 31 December 2014. Prior to transfer
to the disposal group classified as held for sale, these assets
were written down to their sales value of GBP29,546,400.
Also included in Investment property held for sale as at 31
December 2014 is one investment property in Germany (Lichtenberg)
which was approved for sale prior to the year end. This had a sales
value of EUR2,500,000 (GBP1,956,182) and the sale finalised in
2015.
Disposals during the year ended 31 December 2014 relate to the
disposal of a German partnership which owns two care home
properties in Germany (Langen and Lutzerath) which completed in
November 2014. The disposal value of GBP11,286,970 (EUR14,319,780)
represents the fair value at the date of disposal which equated to
the Colliers valuation performed in June 2014.
Bank borrowings are secured on investment property as outlined
in Note 19.
12. FINANCIAL INSTRUMENTS BY CATEGORY
The accounting policies for financial instruments have been
applied to the line items below. See Note 15 for disclosures of the
disposal assets and liabilities held for sale and have been
measured at fair value less cost to sale.
Notes Loans and Assets at fair Derivatives used Available for Total
receivables value through for hedging sale
the profit and
loss
31 December 2015 GBP GBP GBP GBP GBP
Assets as per
balance sheet
Restricted cash 17 - - - - -
Cash and cash
equivalents 6,119,892 - - - 6,119,892
Total 6,119,892 - - - 6,119,892
================== ================= ================== ================== ==========
Liabilities at Derivatives used Other financial Total
fair value for hedging liabilities
through the
profit and loss
GBP GBP GBP GBP
Liabilities as per
balance sheet
Borrowings 19 - - - -
Derivative 16 - - - -
financial
instruments
Trade and other
payables 22 - - 46,272 46,272
Total - - 46,272 46,272
================= ================== ================== ==========
12. FINANCIAL INSTRUMENTS BY CATEGORY (Continued)
The accounting policies for financial instruments have been
applied to the line items below. See Note 15 for disclosures of the
disposal assets and liabilities held for sale and have been
measured at fair value less cost to sale.
Notes Loans and Assets at fair Derivatives used Available for Total
receivables value through for hedging sale
the profit and
loss
31 December 2014 GBP GBP GBP GBP GBP
Assets as per
balance sheet
Restricted cash 17 502,593 - - - 502,593
Cash and cash
equivalents 4,094,701 - - - 4,094,701
Total 4,597,294 - - - 4,597,294
================== ================= ================== ================== ==========
Liabilities at Derivatives used Other financial Total
fair value for hedging liabilities
through the
profit and loss
GBP GBP GBP GBP
Liabilities as per
balance sheet
Borrowings 19 - - 3,383,786 3,383,786
Derivative
financial
instruments 16 - 251,410 - 251,410
Trade and other
payables 22 - - 147,512 147,512
Total - 251,410 3,531,298 3,782,708
================= ================== ================== ==========
13. RECEIVABLE FROM FINANCE LEASES
2015 2014
GBP GBP
Non-current
Finance leases - gross receivables - 26,462,907
Unearned finance income - (16,787,792)
- 9,675,115
------- -------------
Current
Finance leases - gross receivables - 948,189
Unearned finance income - (953,928)
- (5,739)
------- -------------
Total receivable from finance
leases - 9,669,376
======= =============
Gross receivables from finance
leases:
- no later than 1 year - 948,189
- later than 1 year and no
later than 5 years - 3,937,281
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- later than 5 years - 22,488,625
------- -------------
- 27,374,095
Unearned future finance income
on finance leases - (17,741,719)
Total receivable from finance
leases - 9,632,376
======= =============
Impairment to sales value
(Note 18) - (4,632,376)
Transferred to disposal group classified
as held for sale - (5,000,000)
- -
======= =============
The net receivable from finance leases may
be analysed as follows:
- no later than 1 year - -
- later than 1 year and no
later than 5 years - -
- later than 5 years - -
- -
======= =============
As referred to in Note 15, the remaining UK portfolio was
approved for disposal by the Directors in December 2014 and sold on
4 March 2015. As such the receivable from finance lease was
transferred to the disposal group classified as held for sale as at
31 December 2014.
The Group had leased out a business under a licence agreement.
The business is in respect of the provision of domiciliary care to
clients in their own properties which had been licensed to an
independent third party for 35 years with annual increases in line
with the Retail Price Index, subject to a maximum increase of 5%.
The operator maintained the right to run the business and receive
any benefits/losses derived from running the business. The
remaining life of this licence was 25 years.
The Group does not have any finance leases as at 31 December
2015.
14. INVESTMENTS IN SUBSIDIARIES
The subsidiaries are: Country of
Incorporation Ownership Percentage
2015 2014
Healthcare Properties UK (Holdings)
Limited BVI 100% 100%
HCP Wellcare Holdings Limited Guernsey 100% 100%
Healthcare Properties (I) Limited UK 100% 100%
PSPI Elliott Celle Limited BVI 100% 100%
PSPI Germany No 1 Limited BVI 100% 100%
PSPI Germany No 2 Limited BVI 100% 100%
PSPI Germany No 3 Limited BVI 100% 100%
PSPI Elliott Bad Nauheim Limited BVI 100% 100%
Inactive Companies
PSPI Elliott Marktredwitz Limited BVI 100% 100%
PSPI Germany No 4 Limited BVI 100% 100%
PSPI Germany No 5 Limited BVI 100% 100%
PSPI Germany No 6 Limited BVI 100% 100%
PSPI Germany No 7 Limited BVI 100% 100%
PSPI Germany No 8 Limited BVI 100% 100%
PSPI Germany No 9 Limited BVI 100% 100%
HCP Wellcare Group Holdings Limited BVI 100% 100%
Companies which were sold during
2015
Healthcare Properties (Wellcare)
Limited UK Nil 100%
HCP Wellcare Progressive Lifestyles
Limited UK Nil 100%
HCP Community Support Services
Limited UK Nil 100%
Companies which were liquidated
during 2015
Healthcare Properties (Ashlea)
Limited Guernsey Nil 100%
Healthcare Properties Etzelgut
Limited Guernsey Nil 100%
HCP Wellcare One Limited UK Nil 100%
HCP Wellcare Two Limited UK Nil 100%
HCP Wellcare Three Limited UK Nil 100%
HCP Wellcare Four Limited UK Nil 100%
HCP Wellcare Five Limited UK Nil 100%
HCP Wellcare Six Limited UK Nil 100%
15. 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 have been 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 completion dates
for these transactions are anticipated to be in the first half of
2016 (See Note 29).
As at 31 December 2014, the assets and liabilities related to
four subsidiary companies Healthcare (Wellcare) Limited, HCP
Community Support Services, HCP Wellcare Progressive Lifestyles
Limited and Healthcare (I) Limited along with one investment
property owned in Germany have been presented as held for sale
following the approval of the Directors in December 2014 for their
disposal. The completion dates for these transactions were in March
2015.
Assets of disposal group classified as held for sale
At 31 December At 31 December
2015 2014
GBP GBP
Investment property 9,580,381 31,502,582
Receivable from finance lease - 5,000,000
Loans and receivables - 1,000
Current income tax receivable 27,291 453,666
Cash and cash equivalents 207,964 1,874,060
Restricted cash 500,074 1,200,000
10,315,710 40,031,308
=============== ===============
Liabilities of disposal group classified as held for sale
At 31 December At 31 December
2015 2014
GBP GBP
Borrowings 3,055,556 17,446,009
Deferred income tax - 43,960
Accruals 720,928 1,588,900
Derivative financial instruments 158,954 53,869
Trade and other payables - 127,539
Current income tax liabilities - 701,181
3,935,438 19,961,458
=============== ===============
b) Discontinued operations
In the year ended 31 December 2015, the results of the German
segment of the business was treated as discontinued operations as
it represents a significant segment of the business and the four
remaining investment properties have been presented as available
for sale at 31 December 2015, with the expected completion date of
these transactions to be within the first quarter of 2016. The
comparative information for the year ended 31 December 2014 has
been restated to reflect this treatment.
Additionally, in the year ended 31 December 2014, the results of
the four subsidiary companies listed in 15 a) were treated as
discontinued operations as they represent significant segments of
the business.
An analysis of the result of discontinued operations, and the
result recognised on the re-measurement of assets or disposal group
is as follows:
Year ended Year ended
31 December 31 December
2015 2014
(restated)
GBP GBP
Operating cash flows 198,827 6,124,073
Investing cash flows 38,690,191 7,250,413
Financing cash flows (38,337,862) (11,283,920)
551,156 2,090,566
============= =============
Year ended Year ended
31 December 31 December
2015 2014
(restated)
GBP GBP
Revenue (see Note 6) 1,469,151 6,649,453
Net loss from fair value adjustments
on investment properties (1,442,732) (3,418,077)
Gain/(loss) on disposal of subsidiaries
- UK (see Note 15b) 67,822 (14,021,827)
Loss on disposal of subsidiaries
- Germany (see Note 15c) (701,484) (2,118,293)
Administrative expenses (215,560) (405,025)
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Finance income 83 1,294,279
Finance costs (322,419) (2,083,075)
Current income tax (See Note 21) 65,028 (597,336)
Deferred income tax (See Note 20) 21,909 2,025,842
Loss for the year from discontinued
operations (1,058,202) (12,674,059)
============= =============
As mentioned in Note 15 a), during 2014 the Directors approved
for sale the Group's remaining UK companies, business and assets
(together "The Wellcare Portfolio") to the Group's sole UK tenant
("Embrace"). The terms of the disposal under the Share Purchase
Agreement value of the Wellcare Portfolio on a cash free, debt free
basis at GBP34.5 million, being GBP35 million less rent and
business licence fees received by the Group from Embrace in respect
of any period after December 2014. The completion dates for these
transactions was 4 March 2015.
The Group has given certain standard representations and
warranties as part of the disposal of the UK portfolio. The Group
may have claims brought against it with regards to these
representations and warranties by 1 December 2015 and within 12
months after the filing of the 2014 tax returns for any taxation
warranty claims.
The loss calculated on this transaction is calculated as
follows:
Note GBP GBP
Fair value of sales proceeds
Gross sales proceeds 35,000,000
Less: deduction for one month's
rental income (453,600)
34,546,400
Fair value of assets/liabilities
sold
Assets
Investment Properties 37,496,227
Receivable from finance lease 13 9,632,376
Total assets in disposal group (47,128,603)
-------------
Excess of fair value of assets
sold over sales proceeds (12,582,203)
Prepayment penalties on repayment
of borrowings (412,000)
Transaction costs associated with
disposal (1,027,625)
Loss on disposal (14,021,828)
=============
The loss before transaction costs and repayment penalties of
GBP12,582,203 represents GBP7,949,827 in relation to Investment
Properties (see Note 11) and GBP4,632,376 in relation to
Receivables from finance leases (see Note 13).
In addition, the Group recognised fair value losses of
GBP175,841 included in discontinued operations within the
consolidated income statement in respect of the investment
properties included in the transaction.
In the year ended 31 December 2015, the Group recorded a gain of
GBP67,822 in relation to the liquidation of dormant subsidiary
companies in addition to some small differences in provisions made
as at 31 December 2014 in relation to the disposal of the Wellcare
group and actual amounts paid.
b) Other transactions
On 3 November 2014, the Group announced that it had signed a
contract to dispose of a German partnership which owns two care
home properties in Langen and Luzerath for gross consideration of
GBP10.5m (EUR13.4m) in cash.
As part of this transaction, GBP6.9m (EUR8.8m) of the proceeds
repaid debts secured against the disposed properties, and a further
GBP1.5m (EUR1.9m) was used to partially repay debts secured against
German properties shown within continuing operations. The balance
was used to settle transaction costs which included prepayment
penalties and interest rate swap breakage costs. The Group has
given certain standard representations and warranties as part of
the disposal of the German portfolio.
The loss recognised on this transaction is calculated as
follows:
Note GBP GBP
Fair value of sales proceeds (EUR13.4m) 10,489,654
Fair value of assets/liabilities
sold
Assets
Investment Properties (EUR14.4m) 11 11,286,970
Cash and cash equivalents 131,695
Total assets in disposal group 11,418,665
Liabilities
Deferred tax liability 20 (26,797)
Total liabilities in disposal
group (26,797) (11,391,868)
Recycle of cashflow hedging reserve
on disposal (516,569)
Prepayment penalties on repayment
of borrowings (86,718)
Recycle of translation reserve
on disposal 443,494
Transaction costs associated with
disposal (718,024)
Acceleration of debt issue costs
on disposal (125,994)
Foreign exchange losses related
to disposal (212,268)
Loss on disposal (2,118,293)
=============
In addition, the Group recognised fair value losses of
GBP1,588,253 included in discontinued operations in respect of the
investment properties included in the transaction which completed
in November 2014.
The loss on the sale of German investment properties
(Huttenstrasse and the four remaining properties presented as held
for sale) in the year ended 31 December 2015 of GBP701,484
represents transaction costs payable of GBP534,515 and breakage
costs on loan repayment of GBP166,969. In addition the group
recognised fair value losses of GBP1,442,732 in respect of these
investment properties.
16. DERIVATIVE FINANCIAL INSTRUMENTS
2015 2014
----------------------- ----------------------
Assets Liabilities Assets Liabilities
GBP GBP GBP GBP
Non-Current
Interest rate swaps -
cash flow hedges - - - 251,410
Interest rate swaps
The notional principal amounts of the outstanding interest rate
swap contracts at 31 December 2015 were EUR4.2 million (2014 -
EUR6.2 million). At 31 December 2015, the fixed interest rates,
excluding lending margins, was 1.35% (2014 -1.35%).
As the borrowings relating to the swap agreement have been
presented as available for sale as at 31 December 2015, the
valuation of GBP158,954 has also been presented as available for
sale at this date (see Note 15).
Additionally, as at 31 December 2014 a valuation of GBP53,869
has been assigned to the element of the swap agreement in relation
to one investment property which has been presented as held for
sale as at 31 December 2014 (see Note 15).
Interest rate swaps are commitments to exchange one set of cash
flows for another. Swaps result in an economic exchange of interest
rates (for example, fixed rate for floating rate). No exchange of
principal takes place. The Group's credit risk represents the
potential cost to replace the swap contracts if counterparties fail
to perform their obligation. This risk is monitored on an on-going
basis with reference to the current fair value, a portion of the
notional amount of the contracts and the liquidity of the market.
The Group assesses counterparties using the same techniques as for
its lending activities to control the level of credit risk
taken.
The maximum exposure to credit risk at the reporting date is the
fair value of each class of derivative financial instruments
mentioned above. The Group does not post any collateral as
security.
17. RECEIVABLES AND PREPAYMENTS
2015 2014
GBP GBP
Trade receivables - -
Prepayments 64,954 62,293
Restricted cash - 502,593
64,954 564,886
Included under restricted cash is an amount of GBPNil (2014 -
GBP502,593) in respect of funds held in a maintenance and liquidity
reserve under the terms of a financing agreement within the PSPI
Elliott Celle Group. A balance of GBP500,074 as at 31 December 2015
has been transferred to the disposal group classified as available
for sale (see Note 15).
None of the receivables and prepayments are impaired.
18. SHARE CAPITAL
31 December 31 December
2015 2014
GBP GBP
Authorised:
Equity interests:
500,000,000 Ordinary shares of $0.01
each 2,569,974 2,569,974
Allotted, called up and fully paid:
Equity interests:
105,365,717 Ordinary shares of $0.01
each - 605,722
22,759,054 Ordinary shares of $0.01 130,836 -
each
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
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March 24, 2016 03:00 ET (07:00 GMT)
2015 (67,434,020) (387,662) (15,712,210) (16,099,872)
Compulsory partial
redemption - 9 November
2015 (15,172,643) (87,224) (5,450,791) (5,538,015)
At 31 December 2015 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
GBP16,099,871.93. 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
GBP5,538,014.70. The Company's share capital after the partial
redemption comprised 22,759,054 ordinary shares of $0.01 each.
The Company intends to make further Compulsory Partial
Redemptions following the completion of the sales of the investment
properties shown as held for sale as at 31 December 2015 (see Note
29).
19. BORROWINGS
2015 2014
GBP GBP
Non-current
Mortgages - 3,172,517
- 3,172,517
Current
Mortgages - 211,269
- 211,269
Total borrowings - 3,383,786
======= ==========
As detailed in Note 15, the four remaining investment properties
owned by the company have been presented as available for sale as
31 December 2015. Borrowings secured upon these assets have been
classified similarly as these will be repaid from any proceeds and
disposed of in a single transaction. As at 31 December 2015 these
total GBP3,055,556 (EUR4,147,000) (See Note 15a).
Total borrowings include secured liabilities (Mortgages, bonds
and other borrowings) of GBPNil (2014 - GBP3,383,786). These
borrowings are secured by the assets of the Group. There are
various pledges and covenants included in the loan agreements of
the Group which are regularly reviewed and tested to ensure
compliance at least annually. These include various loan-to-value
covenants, interest and income cover covenants. Some of the
agreements also contain cross default clauses consistent with
industry practice.
The maturity of borrowings is as follows:
2015 2014
GBP GBP
Current borrowings - 211,269
Between 1 and 2 years - 211,269
Between 2 and 5 years - 633,807
Over 5 years - 2,327,441
Non-current borrowings - 3,172,517
The carrying amounts and fair value of the non-current
borrowings are as follows:
Carrying amounts Fair values
-------------------- -----------------
2015 2014 2015 2014
GBP GBP GBP GBP
Mortgages - 3,172,517 - 3,115,382
- 3,172,517 - 3,115,382
The table below shows the movement in Group borrowings in the
year to 31 December 2015:
Available Available Total available Mortgages Total
for Sale for Sale for sale - Germany
- UK - Germany (Note 17)
GBP GBP GBP GBP GBP
As at 31 December
2014 16,000,000 1,446,009 17,446,009 3,383,784 20,829,793
Disposal of UK
Portfolio (4 March
2015) (16,000,000) - (16,000,000) - (16,000,000)
Payment on sale
of property - (1,446,009) (1,446,009) - (1,446,009)
2015 capital repayments - - - (196,007) (196,007)
Debt issue cost
amortisation - - - 67,168 67,168
Foreign exchange
movement - - - (199,389) (199,389)
Transfer to disposal
group available
for sale - 3,055,556 3,055,556 (3,055,556) -
------------- ------------ ---------------- ------------ -------------
As at 31 December
2015 - 3,055,556 3,055,556 - 3,055,556
============= ============ ================ ============ =============
As mentioned in Note 15, the Group's remaining UK business (the
Wellcare Portfolio) was approved for sale in 2014 and, as such, the
borrowings secured on the these properties (totalling
GBP16,000,000) were presented as available for sale as at 31
December 2014. Additionally, borrowings secured on one German
property of GBP1,446,009 were also presented as available for sale
as at 31 December 2014. These loans were repaid from sale proceeds
during 2015.
The carrying amounts of the Group's total borrowings are
denominated in the following currencies:
2015 2014
GBP GBP
Pound sterling - -
Euro - 3,383,786
- 3,383,786
20. DEFERRED INCOME TAX
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income taxes relate
to the same fiscal authority.
2015 2014
GBP GBP
Deferred tax liabilities to be recovered
after more
than 12 months - 23,765
Deferred tax liabilities to be recovered - -
within 12 months
The gross movement on the deferred income tax liability account
is as follows:
2015 2014
GBP GBP
Beginning of the year 23,765 2,127,287
Income statement - discontinued operations
(Note 15) (21,909) (2,025,842)
Disposals (Note 15) - (26,797)
Net changes due to exchange differences (1,856) (6,923)
Transferred to disposal group classified
as held for sale
(Note 15) - (43,960)
End of the year - 23,765
No deferred income tax liabilities have been recognised for the
withholding tax and other taxes concerning un-remitted earnings of
subsidiaries as these liabilities will not crystallise due to the
tax structure of the Group.
The movement in deferred tax assets and liabilities during the
year, without taking into consideration the offsetting of balances
within the same jurisdiction, is as follows:
Deferred tax liabilities: Fair value Fair value Total
gains from gains
Business
combinations
GBP GBP
GBP
At 31 December 2013 638,385 1,488,902 2,127,287
Charged to the income statement
- discontinued operations (638,385) (1,387,457) (2,025,842)
Disposals - (26,797) (26,797)
Net changes due to exchange
differences - (6,923) (6,923)
Transferred to disposal group
classified as held for sale - (43,960) (43,960)
At 31 December 2014 - 23,765 23,765
Charged to the income statement
- discontinued operations (Note
15) - (21,909) (21,909)
Net changes due to exchange
differences - (1,856) (1,856)
- - -
At 31 December 2015
============== ============ ============
21. INCOME TAX EXPENSE
2015 2014
GBP GBP
Current income tax - continuing operations - -
Deferred income tax - continuing operations - -
------- ----------
- -
Current income tax - discontinued operations
(Note 15) 65,028 (597,336)
Deferred income tax - discontinued
operations (Note 15) 21,909 2,025,841
------- ----------
86,937 1,428,505
Total income tax 86,937 1,428,505
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The tax on the Group's profit before tax differs from the
theoretical amount that would arise using the weighted average tax
rate applicable to profits of the consolidated companies as
follows:
2015 2014
GBP GBP
Loss from continuing operations before
tax (1,923,383) (2,141,960)
Loss from discontinued operations before
tax (1,145,139) (14,102,565)
------------ --------------
(3,068,522) (16,244,525)
Income tax calculated at domestic tax
rates applicable to profits in the
respective countries (183,222) (2,838,714)
Income not subject to tax (4,050) -
Expenses not deductible for tax 24,285 -
Utilisation of losses brought forward - (430,604)
Fair value losses in excess of initial
cost 64,237 1,770,676
Income tax losses for which no deferred
tax asset was recognised 114,846 374,305
(Over)/under provision of tax in previous
years (103,033) (304,168)
Income tax expense (86,937) (1,428,505)
The weighted average applicable tax rate was 5.97%% (2014:
17.47%). The decrease in the effective tax rate was caused by a
change in the contribution to the Group's result from its different
jurisdictions. As at 31 December 2015, the Group had unused tax
losses of nil.
22. TRADE AND OTHER PAYABLES
2015 2014
GBP GBP
Other taxes - -
Other third party payables 46,272 147,512
46,272 147,512
23. ACCRUALS
2015 2014
GBP GBP
Amounts owed to related parties 19,479 36,683
Other accrued expenses 112,726 426,710
132,205 463,393
24. RELATED PARTY TRANSACTIONS
Until 26 March 2007, USI Group Holdings AG ("USIGH AG") was the
ultimate controlling party of PSPI. After this date, USIGH AG
retained a significant interest in the Company with a 20.07%
shareholding which was fully disposed of by USIGH AG during the
year ended 31 December 2014. David Quint and Dr Doraiswamy Srinivas
are both directors of RP&C International Inc (RP&C), USIGH
AG and some of its subsidiaries. William Vanderfelt is also a
non-executive director of USIGH AG and was a non-executive director
of RP&C until 31 December 2012. The RP&C International
Group held less than 5% of the issued ordinary share capital of
USIGH AG as at 31 December 2015 and 2014.
The Group was charged GBP269,258 (2014 - GBP453,956) in
management fees by RP&C. At 31 December 2015, management fees
of GBP19,479 (2014 - GBP36,683) was owed by the Group (Note 23) to
RP&C. Other transaction fees payable to RP&C of GBP235,497
are included within discontinued operations (Note 15)
In July 2012, the Group combined the majority of its UK property
portfolio with the assets and business of the European Care Group
(rebranded to "Embrace" during 2014), the Group's sole UK tenant in
a non-cash transaction. Esquire Realty Holdings Limited, a
wholly-owned subsidiary of Esquire Group Investment (Holdings)
Limited ("Esquire"), the holding company of the European Care
Group, acquired certain of the Group's subsidiary companies in
consideration for issuance of 20% of the ordinary share capital of
Esquire and the issuance of a GBP2.8 million subordinated secured
loan note instrument in Esquire Consolidated Investment (Holdings)
Limited, a wholly owned subsidiary of Esquire, recorded at a
nominal value of GBP1,000 (Note 12). Patrick Hall became a director
of the holding company of the European Care Group on 25 July 2012
for which he received a director's fee at the rate of GBP36,000 per
annum. On the same date, Richard Barnes became a director of
Esquire and certain subsidiaries for which he received no
director's fees. Further to a Board meeting held on 20 March 2014,
Patrick Hall and Richard Barnes resigned their positions as
directors of companies in the European Care Group on the grounds of
potential conflicts of interest in the context of the
implementation of any restructuring of the European Care Group's
debt and assets. During 2014, Esquire Consolidated Investment
(Holdings) Limited was placed into liquidation and as such the loan
note was impaired to a nil value.
Esquire Consolidated Limited ("ECL"), one of the shareholders of
USIGH AG, has subsidiaries that were customers of the Group. As
mentioned in Note 15 the Group completed the sale of its remaining
UK business to the sole UK tenant ("Embrace") on 4 March 2015.
Under various rental contracts total rental income and finance
lease income from these contracts for the year ended 31 December
2015 was GBPNil (2014 - GBP3,808,841) and GBPNil (2014 -
GBP1,072,547) respectively.
As mentioned in Note 15, the Group completed the sale of an
assisted living apartment building located in Berlin to Marseille
Kliniken AG Group, the current tenant of the property, during 2015
for EUR2,500,000 in cash.
25. DIRECTORS' REMUNERATION
The following directors' fees were recognised in 2015 and
2014:
2015 2014
GBP GBP
Mr Patrick Hall 45,000 45,000
Mr Richard Barnes 25,000 29,500
Mr Christopher Lovell 25,000 25,000
Mr Jonas Rydell Nil Nil
Mr Neel Sahai 25,000 25,000
26. EMPLOYEES
The Group had no employees at 31 December 2015 (2014 -
none).
27. ULTIMATE CONTROLLING PARTY
The Company's shares are listed on AIM, a market operated by
London Stock Exchange plc. The Company does not have a controlling
party.
28. SUBSEQUENT EVENTS
On 2 February 2016 the Group announced that it had exchanged
contracts to dispose of its care home in Brakel, Germany for a
gross price of EUR3.0 million. The sale was executed with a company
owned by the same beneficial owner as the tenant at the property.
This sale completed on 4 March 2016.
On 10 March 2016 the Group announced it had exchanged contracts
to dispose of its three remaining properties leased to the
Marseilles Kliniken Group ("MK") for an aggregate gross price of
EUR10.0 million. The sales were executed with subsidiaries of MK
and are expected to close within 6 weeks of the sale
announcement.
Following the completion of these sales the Group will have
completed the sale of its remaining investment properties held in
all jurisdictions.
29. BOARD APPROVAL OF FINANCIAL STATEMENTS
The consolidated financial statements were approved by the board
of directors on 23 March 2016.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SEWFWDFMSEED
(END) Dow Jones Newswires
March 24, 2016 03:00 ET (07:00 GMT)
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