TIDMUCP
RNS Number : 8724S
Unitech Corporate Parks Plc
29 September 2014
Unitech Corporate Parks plc
("UCP" or the "Company")
Annual results
Unitech Corporate Parks Plc (AIM: UCP), an investment company
focusing on commercial real estate in India, announces its annual
results for the year ended 31 March 2014.
The Company's Annual Report and Accounts for the year ended 31
March 2014 are being sent to shareholders and will shortly be
available on the Company's website
(http://www.unitechcorporateparks.com/) in accordance with AIM Rule
26.
For further information please contact:
Westhouse Securities Limited Tel: +44 (0)20 7601 6118
Alastair Moreton
-------------------------
Darren Vickers
-------------------------
IOMA Fund and Investment Management Tel: +44 (0)1624 681250
Limited
-------------------------
Philip Scales
-------------------------
Graham Smith
-------------------------
Chairman's Statement
On 11 June 2014 the Company announced that it had entered into a
conditional agreement with an affiliate of Brookfield Property
Partners for the sale and purchase of the entire issue share
capital of Candor, the Company's principal subsidiary in Mauritius,
and thus of the Company's interests in all our six development
projects in India.
The Board is pleased to announce that the proposed sale and the
consequent change in the Company's Investing Policy were approved
at the extraordinary general meeting on 27 June 2014. A further
condition precedent in the disposal agreement is obtaining the
consent of the Board of Approvals to the proposed change in control
of the SEZs. Following publication of the minutes of the 63rd
meeting of the SEZ Board held on Thursday 18 September 2014 it has
been confirmed that the proposed transfer of Candor's shares has
been approved, subject to a number of customary conditions and we
are expecting confirmation letters shortly. It is expected that
Completion of the Disposal with take place in October and a further
announcement will be made in due course.
The Board continues to work actively towards the recovery of
certain deposits placed and investments made with two financial
institutions by two of the project companies (see note 15 for
further details). The maturity date in respect of all amounts
deposited and invested has now expired and formal repayment has
been demanded. No repayments have yet been received and the
counterparties have failed to provide any justification for not
returning the deposits and investments.
The Company has engaged English and Indian lawyers to assist in
their recovery. The Board has received legal advice that, in the
event that repayment is not forthcoming, the Company has recourse
to alternative means to obtain redress and therefore continues to
believe that the value of deposits and investments will be
recovered. In light of this the Board believes that a solution
satisfactory for shareholders is likely to be achieved and as such
these funds have been disclosed in the Statement of Financial
Position without impairment.
Following completion I shall write to you again to outline
proposals for an initial cash distribution to shareholders. This is
expected to be effected through the creation of a new class of B
Shares to provide shareholders with a choice of receiving the
initial distribution either as income or capital. Such structure
will require your approval at a further extraordinary general
meeting which is likely to be held in November 2014.
In the light of these events since our year end on 31 March
2014, these annual results do not include a further review of
letting or other progress beyond the information we have already
communicated to shareholders. The accompanying Financial Statements
reflect the terms of the disposal agreement rather than an external
property valuation, and also the mandatory change in accounting
practice under IFRS 11 from proportional consolidation to equity
accounting.
Donald Lake
Chairman
29 September 2014
Directors' Report
The Directors present their report and financial statements for
the year ended 31 March 2014.
Principal Activities
Unitech Corporate Parks PLC (the "Company") is an investment
company established to invest in the Indian real estate sector. The
Company's strategy is to invest in commercial real estate developed
specifically for the high growth IT (Information Technology) and
ITES (IT Enabled Services) sectors. The Company focuses on
investment in Special Economic Zones dedicated to the IT and ITES
industries ("IT SEZs") or IT Parks which are suitable for foreign
direct investment ("FDI"). The Company participated as a
co-investor alongside the Unitech Group in six investment property
development projects. The Unitech Group is one of the largest
listed property development companies in India.
On 3 April 2014 the Board of the Company announced that it had
received an approach from a third party expressing interest in a
potential acquisition of the Company's wholly owned direct
subsidiary Candor Investments Limited ("Candor"). On 11 June 2014
the Company announced that it had entered into an agreement ("SPA")
with an affiliate of Brookfield Property Partners ("Brookfield")
for the sale and purchase of the entire issued share capital of
Candor. The sale of Candor will result in the sale of all the
Company's subsidiaries and joint ventures.
On 27 June 2014 it was announced that the Shareholders had
passed a resolution to approve the sale by the Company of the
entire issued share capital of Candor.
Investing Policy
The Company's strategy was to target the real estate
requirements of the growing Indian IT and ITES sectors.
The Company's new Investing Policy, which was adopted on 27 June
2014, is to return capital to Shareholders following completion of
the sale of Candor. The return of capital, amounting to almost all
of the expected net proceeds from the sale of Candor, is expected
to be effected by way of a Shareholder distribution which will be
subject to the formal approval by Shareholders of the Company at a
future extraordinary general meeting. Such meeting is expected to
be held within 3 months of Completion. Thereafter, the Company will
conduct its affairs to comply with post Completion obligations
relating to the Disposal and at the end of such period any residual
funds will be returned to Shareholders by way of a members'
voluntary winding up or other restructuring, subject to approval by
Shareholders. On adoption of the New Investing Policy, the Company
shall not make any new investments.
Exit Strategy
On completion of the sale of the shares of Candor any residual
funds will be returned to Shareholders by way of a members'
voluntary winding up or other restructuring, subject to approval by
Shareholders.
The Company had an initial life of eight years which has been
extended from 31 December 2014 to 31 December 2017 in accordance
with the Company's Articles of Association which also provide an
end to the life of the Company on 31 December 2018.
Results and Dividend
The Group's consolidated financial statements are set out below.
The Group reported net assets at the date of the statement of
financial position of GBP202.4 million (2013: GBP207.9 million) and
for the year ended 31 March 2014 total comprehensive loss
attributable to the shareholders of GBP5.5 million (year ended 31
March 2013: profit GBP20.8 million). The total comprehensive loss
consisted of a profit for the year of GBP39.0 million less foreign
currency translation differences of GBP44.5 million, due to the
fall in the value of the Indian Rupee (INR) against GBP sterling
during the financial year.
INR amounts are converted to GBP sterling at the 2013-14 average
rate of INR 96.19 = GBP1 for revenue and expense amounts, and at
INR 99.70 = GBP1 for those at the reporting date.
The Directors do not propose a dividend in respect of the year
ended 31 March 2014 (year ended 31 March 2013: GBPnil).
The Company was re-registered under the Isle of Man Companies
Act 2006 on 2 October 2013.
Directors
The Directors of the Company throughout the year and to date
were:
Ajay Chandra
Mohammad Yousuf Khan
Donald Lake
Nicholas Robert Sallnow-Smith
John Keith Sleeman (appointed 1 June 2013)
The following Directors had interests in the shares of the
Company as at 31 March 2014.
2014 2013
Donald Lake 42,500 42,500
Secretary
The Secretary of the Company throughout the year and to date
was:
Philip Peter Scales
Graham Roger Smith - Assistant Company Secretary
Auditors
KPMG Audit LLC, Isle of Man, being eligible, has indicated its
willingness to continue in office.
By order of the Board
P. P. Scales
Company Secretary 29 September 2014
Statement of Directors' Responsibilities in respect of the
Directors' Report and the Financial Statements
The Directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations. In addition, the Directors have elected to
prepare the financial statements in accordance with International
Financial Reporting Standards ("IFRSs"), as adopted by the European
Union ("EU").
The financial statements are required to give a true and fair
view of the state of affairs of the Group and of the profit or loss
of the Group for that period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with
International Financial Reporting Standards, as adopted by the EU;
and
-- prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the Group and Parent Company will continue in
business.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the Parent
Company's transactions and disclose with reasonable accuracy at any
time its financial position. They have general responsibility for
taking such steps as are reasonably open to them to safeguard the
assets of the Group and to prevent and detect fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation governing the preparation and
dissemination of financial statements may differ from one
jurisdiction to another.
By Order of the Board
P. P. Scales
Company Secretary 29 September 2014
Corporate Governance Statement
The Directors recognise the value of the Principles of Good
Corporate Governance and Code of Best Practice as set out in the UK
Corporate Governance Code issued by the Financial Reporting Council
(the "Governance Code"). Although the Company is not obliged by the
AIM Rules issued by the London Stock Exchange to do so, the Board
intends to take appropriate measures to ensure that the Company
complies with the Governance Code to the extent appropriate taking
into account the size of the Company and the nature of its
business.
The Board
The Directors' bring a wide range of skills and experience to
the Board. All the Directors have signed a letter of appointment to
formalise in writing the terms of their engagement as
Directors.
It is the responsibility of the Board to ensure that there is
effective stewardship of the Company's affairs. Strategic issues
and all operational matters of a material nature are determined by
the Board. In order to enable them to discharge their
responsibilities, all Directors have full and timely access to
relevant information.
The Board directs the Company's activities in an effective
manner through its regular Board meetings and monitors performance
through timely and relevant reporting procedures. It is the
responsibility of the Board to ensure that there is effective
stewardship of the Company's affairs. The members of the Board meet
quarterly to review the investment performance and other high-level
management information including financial reports and reports of a
strategic nature. It monitors compliance with the Company's
objectives and investing policy.
After each board meeting the independent directors only meet
formally with the Administrator and others as appropriate to review
the progress of the business of the Company and the performance of
the Investment Manager and thus act as a Management Engagement
Committee.
During the year the Board has maintained appropriate Directors'
and Officers' liability insurance cover. The Board has direct
access to the advice and services of the Company Secretary, Philip
Scales, who is responsible for ensuring that Board and Committee
procedures are followed and applicable regulations are complied
with.
The quorum of any Board meeting is two Directors; however,
attendance by all Directors at each meeting is strongly encouraged.
Attendance at directors' meetings is shown in the table below:
A Chandra M Khan D Lake N Sallnow-Smith J Sleeman
26 April 2013 X X X X *
---------- ------- ------- ---------------- ----------
23 July 2013 - X X X X
---------- ------- ------- ---------------- ----------
15 October X
2013 - X X X
---------- ------- ------- ---------------- ----------
15 January X
2014 X X X X
---------- ------- ------- ---------------- ----------
29 April 2014 X X X X X
---------- ------- ------- ---------------- ----------
21 May 2014 X X X X X
---------- ------- ------- ---------------- ----------
*Mr Sleeman was appointed to the Board on 1 June 2013.
The Board has established audit and nominations committees but
does not consider it necessary to establish a remuneration
committee. The Board as a whole will review annually the level of
Directors' fees. Nicholas Sallnow-Smith is Chairman of both the
Audit Committee and the Nomination Committee. The Directors
recognise the value of progressive refreshing of, and succession
planning for, company boards. The Directors regularly review the
structure of the Board, including the balance of expertise and
skills brought by individual Directors. The Board is of the view
that length of service does not necessarily compromise the
independence or contribution of Directors of an investment company,
where continuity and experience can add significantly to the
strength of the Board.
Nomination Committee
The Nomination Committee is a sub-committee of the Board and
makes recommendations to the Board which retains the right of final
decision. Nicholas Sallnow-Smith, Mohammad Yousuf Khan and Donald
Lake make up the Nomination Committee.
The terms of reference of the Nomination Committee cover the
following:
-- the composition of the Committee, quorum and who else attends meetings;
-- appointment and duties of the Chairman;
-- duties in relation to externally monitoring the composition
of the Board, succession planning for executive and non-executive
directors, and recommendations to the Board in respect of
appointments to the Board or its sub-committees;
Audit Committee
The Audit Committee is a sub-committee of the Board and makes
recommendations to the Board which retains the right of final
decision. The primary role of the Audit Committee is to review the
Company's accounting policies, the contents of the financial
statements, the adequacy and scope of the external audit and
compliance with regulatory and financial reporting requirements. In
addition, it also reviews the provision of non-audit services by
the external auditor, the risks to which the Company is exposed and
the controls in place to mitigate those risks.
The Board retains ultimate responsibility for all aspects
relating to the annual and interim accounts and other significant
published financial information.
The Audit Committee is comprised of Directors who are considered
by the Board to be independent and meets at least 4 times a year,
including before each board meeting. It is considered that there is
a range of recent and relevant financial experience amongst the
members of the Audit Committee.
The terms of reference of the Audit Committee cover the
following:
-- the composition of the Committee, quorum and who else attends meetings;
-- appointment and duties of the Chairman;
-- duties in relation to external reporting, including reviews
of financial statements, shareholder communications and other
announcements; and
-- duties in relation to the external auditors, including
appointment/dismissal, approval of fees and discussion of
audit.
Auditors
The Audit Committee has direct access to the auditors, KPMG
Audit LLC and the external valuers, CBRE. The auditors attend the
Audit Committee meeting to review the annual results and provide a
comprehensive review of the audit of the Company.
The Audit Committee has reviewed the findings of the work
carried out by KPMG Audit LLC for the audit of the annual accounts.
On the basis of this and their experience in auditing the affairs
of the Company, the Audit Committee has assessed and is satisfied
with the effectiveness of the external audit. The Audit Committee
has taken into account the standing, experience and tenure of the
audit partner, the nature and level of services provided and has
received confirmation that the auditors have complied with all
relevant and professional regulatory and independence standards.
The Audit Committee considers KPMG Audit LLC to be independent of
the Group, the Investment Manager and the Administrator in all
respects.
Internal Controls and Management of Risk
The Board has overall responsibility for the Company's systems
of internal controls and for reviewing their effectiveness and
ensuring the day to day operations. These controls aim to ensure
that assets of the Company are safeguarded, proper accounting
records are maintained and the financial information used within
the business and for publication are reliable.
Control of the risks identified, covering financial,
operational, compliance and overall risk management, is exercised
by the Board through regular discussion at Board Meetings.
The systems of internal controls are designed to manage rather
than eliminate risk of failure to achieve business objectives and
can only provide reasonable, but not absolute, assurance against
material misstatement, loss or fraud.
In common with most investment property companies of a similar
size, the Company does not have an internal audit function. All of
the Company's day to day management functions are delegated to the
Investment Manager and the Administrator which have their own
internal audit and risk assessment and whose controls are monitored
by the Board. It is therefore felt that there is no need for the
Company to have its own internal audit function. However, this will
be reviewed annually by the Audit Committee. Action will be taken
to remedy any significant failings or weaknesses identified from
the review of the effectiveness of the internal control system.
Investor relations
Communications with shareholders is given a high priority. The
Company's annual report and accounts, containing a detailed review
of performance, is sent to all shareholders. At the half year
stage, an interim report, containing updated information in a more
abbreviated form, is also sent to all shareholders. Updated
information is also available on the Company's website.
All shareholders are invited to attend the Annual General
Meeting, at which shareholders will be given an opportunity to
question the Chairman.
Nicholas Sallnow-Smith
Chairman, Audit Committee 29 September 2014
Report of the Independent Auditors, KPMG Audit LLC, to the
members of Unitech Corporate Parks plc
We have audited the financial statements of Unitech Corporate
Parks PLC for the year ended 31 March 2014 which comprise the
Consolidated Statement of Comprehensive Income, the Consolidated
Statement of Financial Position, the Consolidated Statement of
Changes in Equity, the Consolidated Statement of Cash Flows and the
related notes. The financial reporting framework that has been
applied in their preparation is applicable law and International
Financial Reporting Standards (IFRSs), as adopted by the EU.
This report is made solely to the Company's members, as a body.
Our audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to them in
an auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of Directors and Auditors
As explained more fully in the Directors' Responsibilities
Statement, the Directors are responsible for the preparation of
financial statements that give a true and fair view. Our
responsibility is to audit, and express an opinion on, the
financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
(APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Group's circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the Directors; and the overall
presentation of the financial statements.
Basis for qualified opinion on financial statements
With respect to deposits and investments, having a carrying
amount of GBP14,624,000 (INR 1,458,000,000) as at 31 March 2014,
the audit evidence available to us was limited because, as at the
date of this audit report, these deposits and investments were past
repayment date, had been called for repayment and no repayment had
been received. Further we have not received confirmation that the
deposits and investments are free from any encumbrance. Although
the Directors have been provided with legal advice that the Company
has recourse to alternative means of redress, the success of these
alternative means of redress remains uncertain. We were unable to
obtain sufficient appropriate audit evidence regarding the
recoverability of the deposits and investments by using other audit
procedures.
Qualified opinion on the financial statements
In our opinion, except for the possible effects of the matter
described in the basis for qualified opinion on financial
statements paragraph, the financial statements:
-- give a true and fair view of the state of the Group's affairs
as at 31 March 2014 and of the Group's result for the year then
ended; and
-- have been properly prepared in accordance with IFRSs, as adopted by the EU.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man IM99 1HN 29 September 2014
Consolidated Statement of Comprehensive Income
Notes Year ended Year ended
31 March 2014 31 March 2013
GBP '000 GBP '000
*Restated
Income
Service fee income - 1,138
Interest income on cash balances 8 3
8 1,141
-------------- --------------
Expenditure
Management fee 4 4,654 4,706
Legal and other professional fees 7 1,607 933
Other operating expenses 110 340
Provision for run-off costs 8 1,750 -
8,121 5,979
-------------- --------------
Operating loss for the period (8,113) (4,838)
Share of profits of equity-accounted joint ventures, net of tax 10 32,688 27,350
Valuation uplift upon classification of investments as assets held for sale 11 14,411 -
Profit for the year before tax 38,986 22,512
Current tax expense 9 - (415)
-------------- --------------
Profit for the year 38,986 22,097
-------------- --------------
Other comprehensive loss
Foreign currency translation differences for foreign operations (44,482) (1,304)
Other comprehensive loss for the year net of income tax (44,482) (1,304)
-------------- --------------
Total comprehensive (loss)/income for the year (5,496) 20,793
-------------- --------------
Basic and diluted earnings per share 12 10.83p 6.14p
-------------- --------------
*Restated - see note 2.2.
The notes form an integral part of these financial
statements.
Consolidated Statement of Financial Position
2014 2013
GBP 000 GBP 000
Assets *Restated
Non-current assets
Equity-accounted joint ventures 13 - 143,272
---------- ----------
- 143,272
---------- ----------
Current assets
Assets held for sale and associated liabilities 14 188,950 60,367
Trade and other receivables 23 1,156
Deposits and investments 15 14,624 -
Cash and cash equivalents 16 775 4,432
---------- ----------
204,372 65,955
---------- ----------
Total assets 204,372 209,227
---------- ----------
Financed by:
Equity
Share capital and reserves 17
Share capital 3,600 3,600
Share premium 342,919 342,919
Translation reserve - 44,482
Retained reserves (144,109) (183,095)
---------- ----------
202,410 207,906
---------- ----------
Current liabilities
Trade and other payables 18 212 1,321
Provision for run-off costs 8 1,750 -
---------- ----------
Total liabilities 1,962 1,321
---------- ----------
Total equity and liabilities 204,372 209,227
---------- ----------
*Restated - see note 2.2.
The notes form an integral part of these financial
statements.
These financial statements were approved and authorised for
issue by the Board of Directors on 29 September 2014 and signed on
their behalf by:
_______________ ________________
Donald Lake Nicholas Sallnow-Smith
Director Director
Consolidated Statement of Changes in Equity
Translation Revaluation Retained
Share capital Share premium reserve reserve loss Total
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
Balance at 1 April
2012 3,600 342,919 45,786 (22,468) (182,724) 187,113
Total comprehensive
profit/(loss) for
the year:
Profit for the year - - - 22,097 22,097
Other comprehensive
loss - - (1,304) - - (1,304)
------------- ------------- ----------- ----------- --------- --------
Total comprehensive
(loss)/ profit for
the year - - (1,304) - 22,097 20,793
------------- ------------- ----------- ----------- --------- --------
Reclassification
of reserves - - - 22,468 (22,468) -
------------- ------------- ----------- ----------- --------- --------
Balance at 31 March
2013 3,600 342,919 44,482 - (183,095) 207,906
------------- ------------- ----------- ----------- --------- --------
Balance at 1 April
2013 3,600 342,919 44,482 - (183,095) 207,906
Total comprehensive
profit/(loss) for
the year:
Profit for the year - - - - 38,986 38,986
Other comprehensive
loss - - (44,482) - - (44,482)
------------- ------------- ----------- ----------- --------- --------
Total comprehensive
(loss)/profit for
the year - - (44,482) - 38,986 (5,496)
------------- ------------- ----------- ----------- --------- --------
Balance at 31 March
2014 3,600 342,919 - - (144,109) 202,410
------------- ------------- ----------- ----------- --------- --------
The notes form an integral part of these financial
statements.
Consolidated Statement of Cash Flows
Year ended Year ended
31 March 2014 31 March 2013
GBP 000 GBP 000
*Restated
Operating activities
Profit for the period before tax 38,986 22,512
Adjustments for:
Interest income on cash balances (8) (3)
Share of profit of equity-accounted joint ventures, net of tax (32,688) (27,350)
Valuation uplift upon classification of investments as assets held for sale (14,411) -
Foreign exchange loss 13 170
-------------- --------------
Operating loss before changes in working capital (8,108) (4,671)
Decrease in trade and other receivables 1,132 2,821
Increase/(decrease) in trade and other payables (1,109) (1,215)
Increase in provisions 1,750 -
-------------- --------------
1,773 1,606
Tax paid - (415)
Net cash used in operating activities (6,335) (3,480)
-------------- --------------
Investing activities
Interest received 8 3
Subsidiaries cash and cash equivalents, receivables and payables reclassified as
assets held
for sale (1,989) -
Distribution received from joint venture 4,672 -
Joint venture share buy-back - 4,495
-------------- --------------
Net cash generated from investing activities 2,691 4,498
-------------- --------------
(Decrease)/increase in cash and cash equivalents (3,644) 1,018
-------------- --------------
Cash and cash equivalents at beginning of period 4,432 3,584
Exchange difference on cash and cash equivalents (13) (170)
Cash and cash equivalents at end of the period (note 15) 775 4,432
-------------- --------------
*Restated - see note 2.2.
The notes form an integral part of these financial
statements.
Notes to the Consolidated Financial Statements for the year
ended 31 March 2014
1. Reporting entity
Unitech Corporate Parks PLC (the "Company") is a closed-ended
investment company domiciled in the Isle of Man. It was
incorporated on 6 September 2006 in the Isle of Man as a public
limited company and is quoted on the Alternative Investment Market
("AIM") operated and regulated by the London Stock Exchange. The
consolidated financial statements of the Company comprise the
Company and its subsidiaries (together referred to as the "Group")
and the Group's interest in jointly controlled entities. In October
2013, the Company was re-registered under the Isle of Man Companies
Act 2006.
The Company invests in the Indian real estate sector. The
Company's strategy is to invest in commercial real estate developed
specifically for the high growth IT (Information Technology) and
ITES (IT Enabled Services) sectors, and in particular in Special
Economic Zones dedicated to the IT and ITES industries (IT SEZs) or
IT Parks which are suitable for foreign direct investment
(FDI).
On 27 June 2014 the Company adopted a new Investing Policy which
is to return capital to Shareholders following completion of the
sale of its wholly owned subsidiary, Candor Investments Limited
("Candor"). The return of capital, amounting to almost all of the
expected net proceeds from the sale of Candor, is expected to be
effected by way of a Shareholder distribution which will be subject
to the formal approval by Shareholders of the Company at a future
extraordinary general meeting. Such meeting is expected to be held
within 3 months of Completion. Thereafter, the Company will conduct
its affairs to comply with post Completion obligations relating to
the Disposal and at the end of such period any residual funds will
be returned to Shareholders by way of a members' voluntary winding
up or other restructuring, subject to approval by Shareholders. On
adoption of the New Investing Policy, the Company shall not make
any new investments.
The Company does not have any employees.
2. Basis of preparation
2.1 Statement of compliance
The consolidated financial statements have been prepared in
accordance with and comply with International Financial Reporting
Standards ('IFRS') as adopted by the European Union, International
Financial Reporting Interpretations Committee ("IFRIC")
interpretations and the Isle of Man Companies Act 2006.
2.2 Basis of preparation
The consolidated financial statements have been prepared on the
historical cost basis except that assets held for sale are measured
at realisable value. On 11 June 2014 the Company announced that it
had entered into an agreement ("SPA") with an affiliate of
Brookfield Property Partners ("Brookfield") for the sale and
purchase of the entire issued share capital of Candor. After the
distribution of cash generated by this sale the Company is expected
to be wound up. This constitutes an adjusting post-balance sheet
event and as such the financial statements have been presented on a
non-going concern basis. The assets of the Group have been stated
at realisable value and provision has been made for the unavoidable
costs of winding up the Company.
During the year the Company changed its accounting policy for
its interest in joint ventures in line with IFRS 11, which was
adopted by the European Union and is effective for annual periods
beginning on or after 1 January 2013. Under IFRS 11, the Company
classified its interest in joint arrangements as joint ventures.
When making the assessment, the Company considered the structure of
the arrangements, the legal form of the separate vehicles, the
contractual terms of the arrangements and other facts and
circumstances. Previously, the structure of the arrangement was the
sole focus of classification.
As a result of applying IFRS 11 during the year, the Company
accounted for its interest in joint ventures using the equity
method of accounting instead of the proportional consolidation
method which was previously used. This significantly changed the
presentation of the primary financial statements but there was no
impact on the recognised net assets and comprehensive income of the
Group. As at the financial year-end, the Company's interest in the
joint ventures was reclassified as assets held for sale, following
the post year-end sale agreement. All comparative financial
information provided in these financial statements has been
restated.
2.3 Functional and presentation currency
These consolidated financial statements are presented in British
pounds, which is the Company's functional currency.
2.4 Use of estimates and judgments
The preparation of financial statements requires management to
make judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ
from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimate is revised and in any future periods
affected.
In particular, information about significant areas of estimation
uncertainty and critical judgments in applying accounting policies
that have the most significant effect on the amount recognised in
the financial statements are described in Note 6: Determination of
Fair Values and Note 4: Management Fees.
2.5 Future changes in accounting policies
There are no standards and interpretation with an effective date
on or after 1 April 2014 that are considered will have a
significant effect on the financial statements.
3. Significant accounting policies
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below:
3.1 Basis of consolidation
Subsidiaries
Subsidiaries are those entities controlled by the Group. The
financial statements of subsidiaries are included in the
consolidated financial statements from the date that control
commences until the date that control ceases.
Joint Ventures
Joint ventures are those entities over whose activities the
Group has joint control, established by the contractually agreed
sharing of control of an arrangement, which exists only when
decisions about the relevant activities require the unanimous
consent of the parties sharing control.
The Group used the equity accounting method to account for its
share of the joint ventures up until the reclassification to assets
held for sale. Under the equity accounting method, on initial
recognition the investment in a joint venture is recognised at cost
and the carrying amount is increased or decreased to recognise the
investor's share of the profit or loss of the joint venture after
the date of acquisition.
Transactions eliminated on consolidation
Intra-group balances and any un-realised income and expenses
arising from intra-group transactions, are eliminated in preparing
the consolidated financial statements.
3.2 Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to the
respective functional currencies of Group entities at exchange
rates at the dates of the transactions. Monetary assets and
liabilities denominated in foreign currencies at the reporting date
are retranslated to the functional currency at the exchange rate at
that date. Exchange differences arising on translation are
recognised in Statement of Comprehensive Income.
Foreign operations
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on acquisition, are
translated to British pounds at exchange rates at the reporting
date. The income and expenses of foreign operations are translated
to British pounds at exchange rates at the dates of the
transactions. Exchange differences arising on translation of
foreign operations are recognised in other comprehensive income and
presented in the translation reserve in equity. Since the sale of
all foreign operations has been agreed the relevant amount in the
translation reserve has been transferred to Statement of
Comprehensive Income.
3.3 Investment property
Property that is held for long-term rental yields or for capital
appreciation or both, and that is not occupied by the Group, is
classified as investment property.
Investment property comprises freehold land, freehold buildings,
land held under finance lease and buildings held under
finance/operating lease.
Land held under operating/finance lease is classified and
accounted for as investment property when the rest of the
definition of investment property is met. The operating lease, if
any, is accounted for as if it were a finance lease.
Investment property is measured initially at its cost, including
related transaction costs.
After initial recognition, investment property is carried at
fair value with any change therein recognised in the Statement of
Comprehensive Income. Fair value is based on active market prices,
adjusted, if necessary, for any difference in the nature, location
or condition of the specific asset.
The valuation of the properties has been completed by CBRE South
Asia Private Limited (independent professionally qualified valuers)
as of 31 March 2014. The valuation was carried out in accordance
with RICS Appraisal and Valuation Standards ("The Red Book"). For
the year ended 31 March 2013 the valuation was performed by Knight
Frank (India) Private Limited.
3.4 Investment property revenue
Revenue includes rental income, service charges and management
charges from properties, and income from property trading, if any.
Rental income from operating leases is recognized as income in
accordance with the contractual payment obligations. When the Group
provides incentives to its customers, the cost of incentives are
recognized over the lease term, on a straight-line basis, as a
reduction of rental income.
Service and management charges are recognized in the accounting
period in which the services are rendered, i.e, on the completion
of the activity relating to the service.
Revenue comprises the fair value of the consideration received
or receivable for the sale of goods and rendering of services in
the ordinary course of the Group's activities.
Revenue is presented, net of goods and services tax, rebates and
discounts. Revenue is recognised as follows:
(a) Base rent, amenities income, fit-out and car park rental income
Base rent, amenities income, fit-out and car park rental income,
net of incentives received, are recognised in the Statement of
Comprehensive Income in accordance with the contractual payment
obligations.
Base rent comprises rental income earned from the leasing of the
owned, completed and occupied lettable office area of the
properties.
Amenities income is rental revenue earned from the leasing of
the owned, completed and occupied lettable area at the properties
for common amenities.
Fit-out rental income is rental revenue earned from fit-out
provisions developed in accordance with specifications required by
tenants of the properties. Fit-out rents typically arise from the
higher costs related to tenant-specific fit-out requirements, which
are in turn passed through to those tenants via fit-out provisions
in their lease agreements. The cost of fit-outs is recovered from
tenants over the lease period with an implied annual return on
actual costs and a mark-up.
Car park rental income is earned from the operation of parking
facilities, with parking spaces leased to tenants on a monthly
basis. The parking facilities are expected to commence operations
in line with the phasing schedules of the lettable area.
3.5 Interest income
Interest income comprises bank interest earned on un-invested
funds and is recognised on an accruals basis using the effective
interest rate method.
3.6 Expenses
Expenses are accounted for on an accruals basis.
3.7 Finance costs
Interest expense on lease payments is recognised on the
effective interest rate method.
The net present value adjustment for mobilisation advances is
included in finance costs. Finance costs also includes the finance
expenses on discounting of security deposits.
3.8 Income tax expense
Income tax expense comprises current and deferred tax. Current
tax and deferred tax is recognised in profit or loss except to the
extent that it relates to a business combination, or items
recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to
tax payable in respect of previous years. Current tax payable also
includes any tax liability arising from the declaration of
dividends.
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for:
-- temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss;
-- temporary differences related to investments in subsidiaries
and jointly controlled entities to the extent that it is probable
that they will not reverse in the foreseeable future; and
-- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to
be applied to temporary differences when they reverse, based on the
laws that have been enacted or substantively enacted by the
reporting date.
Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities and
assets, and they relate to income taxes levied by the same tax
authority on the same taxable entity, or on different tax entities,
but they intend to settle current tax liabilities and assets on a
net basis or their tax assets and liabilities will be realised
simultaneously.
A deferred tax asset is recognised for unused tax losses, tax
credits and deductible temporary differences, to the extent that it
is probable that future taxable profits will be available against
which they can be utilised. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
3.9 Earnings per share
The Group presents basic and diluted earnings per share (EPS)
data for its ordinary shares. Basic EPS is calculated by dividing
the profit or loss attributable to ordinary shareholders of the
Company by the weighted average number of ordinary shares
outstanding during the period.
3.10 Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits. Cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts of cash
and are subject to an insignificant risk of changes in value.
3.11 Segmental reporting
A segment is a distinguishable component of the Group that is
engaged either in providing related products or services (business
segment), or in providing products or services within a particular
economic environment (geographical segment), which is subject to
risks and rewards that are different from those of other
segments.
The Group invests in a single geographic region and has a single
business segment.
3.12 Assets classified as held for sale
Assets classified as held for sale as part of a disposal group
are measured at the lower of carrying amount and fair value less
costs to sell. Assets are classified as held for sale if their
carrying amounts will be recovered through a sale transaction
rather than through continuing use. This condition is regarded as
met only when the sale is highly probable and the asset is
available for immediate sale in its present condition. Management
must be committed to the sale, which should be expected to qualify
for recognition as a completed sale within one year from the date
of classification.
At 31 March 2014 all subsidiaries and joint ventures meet the
criteria of held for sale and discontinuing operations in
accordance with the International Financial Reporting Standard 5
'Non-Current Assets Held for Sale and Discontinued Operations'
("IFRS 5"). The impact of this on the presentation of the primary
statements is to present the income and expenses of the disposal
groups as one line in the Consolidated Statement of Comprehensive
Income. All assets and liabilities of the disposal group are
presented as a single line in the Consolidated Statement of
Financial Position.
At 31 March 2014 assets classified as held for sale have been
recognised at their realisable value which is considered to be fair
value less costs to sell. The realisable value has been recognised
because it is the intention to liquidate the Company once Candor
has been sold. Therefore, the Company is not a going concern and
assets should be reported at realisable value.
3.13 Investments - Non-convertible debentures
Non-convertible debentures are financial assets classified as
available for sale.
4. Management fee
Nectrus Limited, the Investment Manager, and an affiliate of the
Unitech Group, receives a management fee equivalent to 2 per cent
per annum of the Company's average invested equity capital paid
quarterly in arrears. With effect from 19 February 2009 25% of the
management fee is being deferred until the sale of each asset is
completed and payment will be contingent on an internal rate of
return ("IRR") of 10% being achieved on that project. The remaining
75% of the management fee is to be invested in Company shares
acquired in the open market. The management fee payable by Candor
for the year ended 31 March 2014 amounted to GBP4.65 million of
which GBP1.15 million was payable at the year end.
At 31 March 2014 the total deferred management fee amounted to
GBP8.23 million (2013: GBP6.68 million). No provision for deferred
management fee has been made in the financial statements at 31
March 2014, as the IRR on each project is below 10 per cent.
In addition the Group may become due to pay the Investment
Manager a performance fee calculated by reference to the amount by
which the internal rate of return on an investment project (Project
IRR) exceeds certain benchmarks. The Investment Manager
receives:
- a performance fee of 20 per cent of that part of the net cash
flow generated in respect of a project that results in a Project
IRR greater than 10 per cent and less than or equal to 20 per cent;
and
- a performance fee of 30 per cent of that part of the net cash
flow generated in respect of a project that results in a Project
IRR greater than 20 per cent; minus
- any performance fees previously paid in respect of the relevant project.
The provision for performance fees at the year-end has been
determined on an individual project basis. No provision has been
made at 31 March 2014 based on the Project IRRs (2013: GBPnil).
5. Financial risk management
5.1 Financial risk factors
The Company's principal financial risks have changed since the
agreed sale of the entire share capital of Candor. The principal
risks that the Company is exposed to are now credit risk and
liquidity risk. The risk management policies employed by the Group
to manage these risks are discussed below.
5.2 Market risk
(i) Foreign currency risk
The Group's principal operating currency is the British pound
but substantially all of its income and expenditure were
denominated in Indian Rupee. The sale price of Candor is
denominated in British pounds which has removed the foreign
currency risk of to the Group. The translation reserve due to the
Indian operations has been realised on the announcement of the sale
of Candor. All monies returned to shareholders and the reported net
asset value of the Group will be denominated in British pounds.
At the reporting date, the Group's currency exposure was as
follows:
2014 2013
GBP 000 GBP 000
British pounds 187,520 2,858
Indian Rupees 14,624 204,767
US dollar 266 281
Net assets 202,410 207,906
======== ========
If the Indian Rupee appreciated/depreciated by 5% against the
British pound the effect on net assets would be to
increase/decrease net assets by GBP0.73 million (2013: GBP10.34
million).
There is a contingent foreign currency risk arising on the
potential adjustment to the sale price of Candor due to the
recoverability of the deposits and investments. See note 15
(ii) Cash flow and fair value interest rate risk and sensitivity
The Group holds financial assets and liabilities that are
interest bearing. As a result the Group is subject to interest rate
risk due to fluctuations in the prevailing levels of market
interest rates. Any excess cash and cash equivalents are invested
at short-term market interest rates.
The table below summarises the Group's exposure to interest rate
risks. It includes the Group's financial assets and liabilities at
the earlier of contractual re-pricing or maturity date, measured by
the carrying values of assets and liabilities:
31 March 2014 3 mths
Less than 1 - 3 to 1 1 - 5 Over Non-interest
1 month months year years 5 years bearing Total
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
Financial assets
Trade and other receivables - - - - - 23 23
Deposits and investments - - 14,624 - - - 14,624
Cash and cash equivalents 775 - - - - - 775
----------------------------- ---------- -------- -------- -------- --------- ------------- --------
Total financial assets 775 14,624 23 15,422
----------------------------- ---------- -------- -------- -------- --------- ------------- --------
Financial liabilities
Trade and other payables - - - - - 1,962 1,962
----------------------------- ---------- -------- -------- -------- --------- ------------- --------
Total interest rate
sensitivity gap 775 - - - - - 775
----------------------------- ---------- -------- -------- -------- --------- ------------- --------
31 March 2013* 3 mths
Less than 1 - 3 to 1 1 - 5 Over Non-interest
1 month months year years 5 years bearing Total
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
Financial assets
Trade and other receivables - - - - - 1,156 1,156
Cash and cash equivalents 4,432 - - - - - 4,432
----------------------------- ---------- -------- -------- -------- --------- ------------- --------
Total financial assets 4,432 - 1,156 5,588
----------------------------- ---------- -------- -------- -------- --------- ------------- --------
Financial liabilities
Trade and other payables - - - - - 1,321 1,321
----------------------------- ---------- -------- -------- -------- --------- ------------- --------
Total interest rate
sensitivity gap 4,432 - - - - - 4,432
----------------------------- ---------- -------- -------- -------- --------- ------------- --------
*Restated - see note 2.2.
5.3 Credit risk
Credit risk is the risk that a party to a financial instrument
will fail to discharge an obligation or commitment it has entered
with the Group.
The carrying amounts of financial assets best represent the
maximum credit risk exposure at the reporting date. This relates to
financial assets carried at amortised cost, as they have a short
term maturity.
At the reporting date, the Group's financial assets exposed to
credit risk amounted to the following:
2014 2013*
GBP 000 GBP 000
Trade and other receivables 23 1,156
Deposits and investments 14,624 -
Cash and cash equivalents 775 4,432
15,422 5,588
======== ========
*Restated - see note 2.2.
The maximum exposure to credit risk is represented by the
carrying amount of each financial asset in the statement of
financial position. Management does not expect any counterparty to
fail to meet its obligations.
The Company is exposed to credit risk related to a potential
adjustment to the sales price which is dependent on the
recoverability of deposits lent and investments made by two of the
Indian joint ventures. The deposits and investments are denominated
in Indian Rupees so the value of the adjustment may vary to that
calculated at 31 March 2014. See note 15.
5.4 Liquidity risk
The Group manages its liquidity risk by maintaining sufficient
cash balances to meet its obligations. The Group's liquidity
position is monitored by the Investment Manager and the Board of
Directors. The provision for unavoidable wind-up costs is expected
to be paid from the consideration received by the Company on the
sale of Candor. A maturity analysis showing the remaining
contractual maturities of financial liabilities at year-end is
shown below:
31 March 2014
Less than 3 months 1-5 Over 5
to 1 year
3 months years years
GBP 000 GBP 000 GBP 000 GBP 000
Financial liabilities
Trade and other
payables 212 1,750 - -
212 1,750 - -
========== =========== ======== ========
31 March 2013*
Less than 3 months 1-5 Over 5
to 1 year
3 months years years
GBP 000 GBP 000 GBP 000 GBP 000
Financial liabilities
Trade and other 1,321 - - -
payables
1,321 - - -
========== =========== ======== ========
*Restated - see note 2.2.
6. Determination of fair values
The Company's investment properties and investment property
under construction were valued at fair value in accordance with the
RICS Appraisal and Valuation Standards ("The Red Book") by CBRE
South Asia Private Limited at 31 March 2014. These valuations
provide the basis of the net assets reported in note 14 which do
not take account of the gain recognized as a result of the contract
to sell Candor to Brookfield. The valuer used the following
valuation methodologies depending on each project's particular
circumstances.
Category Method
----------------------------
Already constructed/ leased out and Income approach -
under construction portions
Discounted cash flow method
Term and reversion method
----------------------------
Land without construction Market approach -
------------------------------------
Direct comparable method
------------------------------------ ----------------------------
Discounted cash flow method - this valuation methodology is
based upon an estimation of future results. The methodology begins
with a set of assumptions as to the projected income and expenses
of the property. The income and expense figures are mathematically
extended with adjustments for estimated changes in economic
conditions. This methodology use market derived assumptions,
including discount rates, obtained from analysed transactions.
Term and reversion method- this valuation methodology involves
capitalizing a 'normalised' single year net income estimated by an
appropriate market based yield. This approach is best utilized with
stable revenue producing assets, whereby there is little volatility
in the net annual income. This methodology uses market derived
assumptions, including capitalization rates, obtained from market
transactions.
Direct comparable method - this valuation methodology is
applicable to all property which is capable of being bought or sold
in the market. A comparison is made for the purpose of valuation
withsimilar properties that have actually been sold in an
arms-length transaction or are offered for sale (after deducting
for value of built-up structure located thereon). This technique
demonstrates what buyers have historically been willing to pay (and
sellers/landlords willing to accept) for similar properties in an
open and competitive market and is particularly useful in
estimating the value of land that is typically traded as open plots
or with structures thereon.Comparable properties are selected for
similarity to the subject property by way of attributes, such as
age, size, shape, quality of construction, building features,
condition, design, gentry, etc. Sales prices are then adjusted for
their difference from the subject property and a market value is
estimated from the adjusted sales price of the comparable
properties.
The Discount Rate and Capitalisation Rates used at 31 March 2014
are as below.
31 March 2014
Portfolio Discount Rate Capitalisation
Rate
K1 15.8% 11.0%
-------------- ---------------
N2 15.0% 10.5%
-------------- ---------------
G1 15.0% 10.5%
-------------- ---------------
G2 15.0% 10.5%
-------------- ---------------
N1 15.8% 11.0%
-------------- ---------------
Investment property at fair value reconciliation
2014 2013*
GBP 000 GBP 000
Value
Balance at the start of year 282,316 219,806
Net additions 27,727 41,504
Transfer from property, plant and equipment - 180
Revaluation of investment property 20,981 22,687
Effect of movements in exchange rates (49,270) (1,861)
Balance at end of year 281,754 282,316
========= ========
Split of investment property in the Statement of
Financial Position
Investment property in a disposal group
held for sale 281,754 100,030
Investment property in continuing operations - 182,286
--------- --------
281,754 282,316
========= ========
*Restated - see note 2.2.
At 31 March 2013 due to the status of sale negotiations for the
sale of Unitech Developers and Projects Limited (G2) the Board
reclassified the Group's interest in Infospace, Dundahera in
Gurgaon "G2", including its associated liabilities, as held for
sale under IFRS 5.
7. Legal and other professional fees
Legal and professional fees comprise of:
2014 2013*
GBP 000 GBP 000
Administration and accounting fees 165 138
Valuation fees 57 37
Legal and advisory fees 610 62
Directors fees and expenses (see note 17) 386 334
Audit fees 85 59
NOMAD and LSE expenses 233 241
Other professional fees 71 62
1,607 933
======== ========
*Restated - see note 2.2.
8. Provision for run-off costs
A provision has been made for the estimated unavoidable costs
that are expected to be incurred in respect of the winding up of
the Company. See note 22. At 31 March 2014 it was estimated that
these costs, including general contingencies, are likely to be
GBP1.75m.
9. Taxation
A standard zero per cent rate of income tax applies for Isle of
Man companies (except in relation to profits arising from banking,
or from land and property in the Isle of Man).
The Mauritius subsidiaries are subject to taxation at 15 per
cent on dividends received from the joint venture companies however
a foreign tax credit will be available reducing the tax rate to 3
per cent. The Mauritius subsidiaries are not expected to have any
liability to capital gains tax.
The joint venture companies are subject to corporate taxation in
India at the rate of 33.99 per cent (2013: 32.445 per cent) on
their net income calculated as per applicable tax rules. Indian
entities are required to pay a Minimum Alternate Tax ("MAT") on
book profits if they have taxable income but no tax is payable due
to Income tax exemptions and concessions.
The tax and legal environment in India is complex and subject to
a level of uncertainty regarding interpretation of requirements.
The results of the Indian JV companies could be significantly
affected by changes in this environment.
From time to time, the Indian JV companies receive inquiries
from revenue authorities into their taxation affairs, as is common
for entities operating in the Indian property market. It is the
policy of the Indian JV companies to account for any taxation due
as a result of such inquiry in the year in which the substance of
any settlement become probable.
Deferred tax arising on the revaluation of investment property
under construction has been provided for at the reporting date as
Indian capital gains tax would be payable in the event that the
property is sold.
The Directors consider that the sale of Candor is not expected
to result in a tax liability for UCP in either India or Mauritius.
The Company is, however, required to file a tax return in India
after the end of the current tax year on 31 March 2015 and the
Board has decided, conservatively, to retain an amount of GBP4.0m
from the sale proceeds until such tax return has been filed. No
provision has been made in the financial statements for this
amount. In light of the advice that no tax liability is expected to
result from the sale, it is anticipated that this sum should
ultimately be able to be returned to Shareholders.
10. Share of profits of equity accounted joint ventures
The share of profits of equity accounted joint ventures for the
financial years ended 31 March 2014 and 31 March 2013 are shown
below.
2014 2013*
GBP 000 GBP 000
Income
Investment property revenue 35,686 28,943
Finance income 5,423 4,256
Loss on amortisation of security deposits (653) (2,323)
Net gain from fair value adjustments (note 6) 20,981 22,687
--------------------------------------------------------------------------------- -------- --------
61,437 53,563
Expenditure
Property expenses 12,338 11,179
Other expenses 1,458 129
--------------------------------------------------------------------------------- -------- --------
13,796 11,308
--------------------------------------------------------------------------------- -------- --------
Operating profit for the year 47,641 42,255
Finance costs 7,192 3,056
--------------------------------------------------------------------------------- -------- --------
Profit for the year before tax 40,449 39,199
Current tax (credit)/expense 211 342
Deferred tax charge 14,677 11,507
--------------------------------------------------------------------------------- -------- --------
Profit for the year after tax 25,561 27,350
Realisation of the translation reserve in relation to the Indian joint ventures 7,127 -
Share of equity-accounted joint ventures, net of tax 32,688 27,350
--------------------------------------------------------------------------------- -------- --------
*Restated - see note 2.2.
11. Valuation uplift upon classification of investments as assets held for sale
The announcement of the sale of Candor after the financial
year-end was considered to be an adjusting event after the
reporting date, in accordance with IAS 10, because the intention of
the Board and the Shareholders that the Company will be wound up
once the sale is completed. As the Company is no longer considered
a going concern the assets of the Company have been stated at their
realisable value.
The realisable value of the subsidiaries and joint ventures of
the Company are considered to be the sales price included in the
SPA less the anticipated costs to sell. An adjustment has been made
to the sales price for the deposits and investments (see note
15).
As a result of the adjustment from carrying value to realisable
value less costs to sell the Company has recognised a gain of
GBP14.41 million in the financial year ending 31 March 2014.
The costs to sell have been estimated at GBP2.12m based on
agreements with the various professional advisors involved in the
sale, and estimates or invoices received, if applicable.
12. Basic and diluted earnings per share
2014 2013
Gain attributable to ordinary shareholders (GBP
000) 38,986 22,097
Weighted average number of ordinary shares in
issue (number 000) 360,000 360,000
--------
Basic earnings per ordinary share (in pence) 10.83 6.14
======== ========
The Company has no dilutive potential ordinary shares. The
diluted earnings per share is therefore the same as the basic
earnings per share.
13. Equity accounted joint ventures
At 31 March 2014 all equity accounted joint ventures have been
recognised as assets held for sale see note 14. The assets of the
equity accounted joint ventures that are attributable to the
Company for the financial year ended 31 March 2013 are shown below
for comparative purposes.
2013*
GBP '000
------------------------------------------ ---------
Assets
Investment property (note 6) 182,286
Property, plant and equipment 423
Trade and other receivables 14,976
Cash and cash equivalents 3,795
------------------------------------------ ---------
201,480
Liabilities
Borrowings 24,624
Trade and other payables 12,921
Deferred tax liabilities 20,258
Finance lease liabilities 194
Income tax liabilities 211
------------------------------------------ ---------
58,208
------------------------------------------ ---------
Share of equity-accounted joint ventures
net assets 143,272
------------------------------------------ ---------
*Restated - see note 2.2.
14. Assets held for sale and associated liabilities
The sale of the subsidiaries and joints ventures of the Company,
as described in note 23, was under negotiation and highly probable
at 31 March 2014 and the investments were available for immediate
sale in their present condition at this time. Therefore at 31 March
2014 all the subsidiaries and joint ventures of the Company were
classified as held for sale in accordance with IFRS 5.
Further details on the subsidiaries and joint ventures held for
sale are disclosed in note 20.
Assets held for sale and associated liabilities 2014 2013
GBP 000 GBP 000
Assets
Investment property (note 6) 281,754 100,030
Property, plant and equipment 1,282 253
Inter-corporate deposits - 19,476
Trade and other receivables 23,545 7,583
Cash and cash equivalents 8,159 9,718
-------- --------
314,740 137,060
-------- --------
Liabilities
Borrowings 70,021 47,336
Trade and other payables 22,591 9,249
Deferred tax liabilities 47,589 20,108
-------- --------
140,201 76,693
-------- --------
Re-measurement to fair value less costs to sell 14,411 -
Total assets held for sale and associated liabilities 188,950 60,367
======== ========
Under IAS 10 Events after the Reporting Date the intention to
wind up the Company (see note 22) would constitute an adjusting
event after the reporting date. As such the assets held for sale
and associated liabilities have been adjusted to their realisable
value which is considered to be the fair value less costs to sell.
Fair value less costs to sell has been determined by taking the
sales price from the Share Purchase Agreement ("SPA") and deducting
the estimated costs to sell and the deposits and investments (see
note 15). Costs to sell have been estimated as GBP2.12 million.
At 31 March 2013 due to the status of sale negotiations for the
sale of Unitech Developers and Projects Limited ("G2") the Board
reclassified the Group's interest in G2, including its associated
liabilities, as held for sale under IFRS 5. At this time the
development was being actively marketed and generating interest
from potential purchasers.
In the current financial year G2 made a cash distribution of
GBP4.67m to its Mauritian joint venture partner company Gladiolys
Realty Inc.
15. Deposits and investments
As explained further in notes 14 and 23, subsequent to the
year-end the Company entered into an agreement for the sale and
purchase of the entire share capital of Candor Investments Limited.
The consideration receivable (see note 14) is subject to an
adjustment to the extent that certain funds placed with two
financial institutions by two of the Indian joint venture
companies, Unitech Developers and Project Limited ("G2") and
Unitech Realty Projects Limited ("G1"), are not recovered by the
date of the sale's completion. If the sale is completed before the
funds are repaid, the sales price will be adjusted and either (i)
the rights of G2 and G1 to receive repayment of 60 per cent. of
such outstanding funds will be assigned to the Company, subject to
necessary approvals or (ii) any recovery of such amounts by or on
behalf of G2 or G1 will be repaid to the Company.
At 31 March 2014 the balance outstanding excluding accrued
interest was GBP14.62 million based on the exchange rate at 31
March 2014 of GBP1 = INR 99.70.
At 22 September 2014 and based on an exchange rate of GBP1 = INR
99.01, GBP9.09 million had been deposited on behalf of G2 with SREI
Infrastructure Finance Limited, and GBP0.18 million with Aten
Capital Pvt Limited. A total of GBP5.45 million had also been
invested in non-convertible debentures managed by Aten Portfolio
Managers Services Pvt Limited on behalf of G2 and G1. Interest,
which is not included in these amounts, is accruing on the balances
at a rate of 10.6% with SREI and 16% on the balance with Aten. The
Board is of the opinion that these transactions were not conducted
in accordance with the Group Treasury policy.
The maturity date in respect of all amounts deposited and
invested has now expired and formal repayment has been demanded. No
repayments have yet been received although the counterparties have
failed to provide any justification for not returning the deposits
and investments.
The Company has engaged English and Indian lawyers to assist in
their recovery. The Board has received legal advice that, in the
event that repayment is not forthcoming, the Company has recourse
to alternative means to obtain redress and therefore continues to
believe that the value of deposits and investments will be
recovered. Accordingly, the Board has concluded that these amounts
should be recorded in the Statement of Financial Position without
impairment.
16. Cash and cash equivalents
For the purpose of the Consolidated Cash Flow Statement, cash
and cash equivalents comprise the following balances:
2014 2013
GBP 000 GBP 000
UCP cash at bank 775 1,858
Mauritian subsidiaries cash at bank - 2,574
-------- --------
Cash and cash equivalents for the purposes of
the cash flow statement 775 4,432
======== ========
17. Share capital and reserves
17.1 Capital management
The Company's newly adopted investing policy is to achieve
Shareholder returns through the sale of Candor.
Company capital comprises share capital, share premium and
reserves. The Company is not subject to externally imposed capital
requirements.
17.2 Share capital
Number 000 GBP 000
Ordinary shares of par value GBP0.01
each
Authorised 500,000 5,000
================== ========
Issued 360,000 3,600
================== ========
17.3 Translation reserve
The translation reserve comprises foreign currency differences
arising from the translation of the financial statements of foreign
operations. As a result of the agreed disposal of all foreign
operations of the Company the translation reserve has been treated
as realised and released to retained reserves.
18. Trade and other payables
The Group's trade and other payables are analysed as follows
2014 2013*
GBP 000 GBP 000
Trade payables 103 1,204
Accruals 109 117
212 1,321
======== ========
*Restated - see note 2.2.
19. Directors' fees
Mr Lake receives an annual Director's fee of GBP60,000 for
carrying out his role as Chairman of the Board.
The other Directors receive fees of GBP27,500 per annum.
All directors receive a sitting fee of GBP1,000 for each Board
Meeting attended.
Mr Sallnow-Smith receives an additional GBP5,000 per annum for
his role as Chairman of the Audit Committee.
20. Related-party transactions
Parties are considered to be related if one party has the
ability to control the other party or exercise significant
influence over the other party in making financial or operational
decisions.
Ajay Chandra, a Director of the Company, is also the Managing
Director of Unitech Limited.
As at 31 March 2014 Donald Lake was beneficially interested in
42,500 Ordinary Shares in the Company (31 March 2013: 42,500).
Nectrus Limited, the Investment Manager to the Company, is an
affiliate of the Unitech Group, the Company's co-investor in the
investment property under construction. It receives a management
fee and performance fee from the Group as detailed in Note 4. In
May 2009, Nectrus Limited agreed to compensate the Company for a
loss of GBP4.92 million incurred on a structured note investment.
This amount has been repaid by way of offsetting the investment
management fee due. At 31 March 2014 Nectrus Limited was
beneficially interested in 49,042,428 Ordinary Shares in the
Company (2013: 43,007,428).
Unitech Limited, who was the Company's co-investor, acts as
Property Manager for the investment property under construction and
receives a fee of 5% of the total cost of construction of each
project (exclusive of service tax). The fees payable to Unitech
Limited for the year ended 31 March 2014 totaled GBP1.09 million
(year ended 31 March 2013: GBP1.86 million) and the amount
outstanding as at 31 March 2014 was GBP0.26 million (31 March 2013:
GBP0.56 million).
Unitech Limited was replaced as the joint venture partner in
March 2014 of the Indian joint ventures by IDFC Limited. Unitech
Limited continues to be the Property Manager for the
developments.
Unitech Limited has provided corporate guarantees to Unitech
Hi-Tech Structures Limited, Unitech Developers and Projects Limited
and Seaview Developers Limited in respect of their bank borrowings
and receives a fee of 1.25% pa of the sanctioned amount from each
of those companies. The total fee payable to Unitech Limited for
the year ended 31 March 2014 amounted to INR 167.60 million (year
ended 31 March 2013: INR 89.43 million).
Unitech Infra Ltd., a 100% subsidiary of Unitech Ltd received
payments amounting to GBP0.65 million during the year in respect of
property maintenance and running costs (year ended 31 March 2013:
GBP0.72 million).
QNS Facility Management Private Limited ("QNS"), formerly
Unitech Property Management Pvt. Ltd, which is a wholly owned
subsidiary of Unitech Limited, is rendering its services in respect
of management and co-ordination of operation and maintenance
services of the complexes including the common areas and certain
other services. The fees payable to QNS for the year ended 31 March
2014 totaled GBP1.85 million (year ended 31 March 2013: GBP1.31
million) and the amount outstanding as at 31 March 2014 was GBP0.08
million (31 March 2013: GBP9,000).
Bengal Unitech Universal Infrastructure Property Limited, which
is a wholly owned subsidiary of Unitech Limited, received lease
rental income amounting to GBP21,000 from Unitech Hi-Tech
Structures Limited, with GBP23,000 payable at 31 March 2014 (year
ended 31 March 2013 income of GBP21,000 and outstanding amount at
31 March 2013 GBP6,000).
Elixir Hospitality Management Limited, formerly Unitech
Hospitality Limited , which is a wholly owned subsidiary of Unitech
Limited, provided management services for the food courts located
in several of the properties. For this service they received a
management fees of GBP206,000 for the year ended 31 March 2013 of
which GBP77,000 remained payable at year-end (year ended 31 March
2013 income of GBP57,000 and outstanding amount at 31 March 2013
GBP26,000).
21. Group entities
It was announced on 10 June 2014 that the Company has entered
into an agreement to sell all its subsidiaries and joint
ventures.
21.1 Subsidiaries
Country of Class of Percentage
incorporation shares holding
Candor Investments Limited Mauritius Ordinary 100%
Acacia Properties Inc. Mauritius Ordinary 100%
Dotterel Estates Limited Mauritius Ordinary 100%
Gladiolys Realty Inc. Mauritius Ordinary 100%
Myna Holdings Limited Mauritius Ordinary 100%
Sparrow Properties Limited Mauritius Ordinary 100%
Tulipa Investments Inc. Mauritius Ordinary 100%
On 16 November 2006 the Company acquired the entire share
capital of Candor Investments Limited for a consideration of US$1.
Prior to its acquisition by the Company, Candor Investments Limited
had not traded.
On 28 November 2006 Candor Investments Limited acquired the
entire share capital of the six underlying subsidiaries at par for
a consideration of US$1 each. Prior to their acquisition by Candor
Investments Limited none of the underlying subsidiaries had
traded.
On 10 January 2007 Acacia Properties Inc. acquired a 60%
interest in the ordinary share capital and a 100% interest in the
preference share capital of Shantiniketan Properties Limited for a
consideration of INR 2,630 million.
On 10 January 2007 Dotterel Estates Limited acquired a 60%
interest in the ordinary share capital of Seaview Developers
Limited for a consideration of INR 4,526 million.
On 29 January 2007 Tulipa Investments Inc. acquired a 60%
interest in the ordinary share capital of Unitech Realty Projects
Limited for a consideration of INR 6,268 million.
On 11 January 2007 Gladiolys Realty Inc. acquired a 60% interest
in the ordinary share capital of Unitech Developers and Projects
Limited for a consideration of INR 5,709 million.
On 23 January 2007 Myna Holdings Limited acquired a 60% interest
in the ordinary share capital of Unitech Hi-Tech Structures Limited
for a consideration of INR 5,167 million.
On 10 January 2007 Sparrow Properties Limited acquired a 60%
interest in the ordinary share capital of Unitech Infra- con
Limited for a consideration of INR 2,973 million.
21.2 Joint ventures
The following companies are joint ventures and have been equity
accounted for.
Country of Class of Percentage
incorporation shares holding
Shantiniketan Properties Limited India Ordinary 60%
Shantiniketan Properties Limited India Preference 100%
Seaview Developers Limited India Ordinary 60%
Unitech Developers and Projects
Limited India Ordinary 60%
Unitech Hi-Tech Structures
Limited India Ordinary 60%
Unitech Infra-Con Limited India Ordinary 60%
Unitech Realty Projects Limited India Ordinary 60%
22. Net asset value per share
2014 2013
Net asset value (GBP 000) 202,410 207,906
Ordinary shares in issue (number
000) 360,000 360,000
-------- --------
Net asset value per ordinary share
(in pence) 0.56 0.58
======== ========
The exchange rate used to convert INR to GBP on on 31 March 2014
was GBP 1= INR 99.70 compared to GBP 1 = INR 82.56 at 31 March
2013.
23. Subsequent events
On 3 April 2014 the Board of the Company announced that it had
received an approach from a third party expressing interest in a
potential acquisition of the Company's wholly owned direct
subsidiary Candor Investments Limited ("Candor"). On 10 June 2014
the Company entered into an agreement ("SPA") with an affiliate of
Brookfield Property Partners ("Brookfield") for the sale and
purchase of the entire issued share capital of Candor. This would
result in the sale of all the Company's subsidiaries and joint
ventures. (See note 14 and 15).
Subsequently, on 27 June 2014 at an Extraordinary General
Meeting of the Company, Shareholders passed two resolutions. One
resolution was to approve the sale by the Company of the entire
issued share capital of Candor to Brookfield, and the other was to
approve the Company's new investing policy as a result of the
sale.
The Company's Investing Policy which was adopted on 27 June 2014
is to return capital to Shareholders following completion of the
sale of Candor. The return of capital, amounting to almost all of
the expected net proceeds from the sale of Candor, is expected to
be effected by way of a Shareholder distribution which will be
subject to the formal approval by Shareholders of the Company at a
future extraordinary general meeting. Such meeting is expected to
be held within 3 months of Completion. Thereafter, the Company will
conduct its affairs to comply with post Completion obligations
relating to the Disposal and at the end of such period any residual
funds will be returned to Shareholders by way of a members'
voluntary winding up or other restructuring, subject to approval by
Shareholders. On adoption of the New Investing Policy, the Company
shall not make any new investments.
A further condition precedent in the disposal agreement is
obtaining the consent of the Board of Approvals to the proposed
change in control of the SEZs. The proposed transfer of Candor's
shares was approved at a meeting of the Board of Approvals on 18
September 2014, subject to a number of customary conditions.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UKVURSUAKUAR
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