TIDMUCP
RNS Number : 7062Z
Unitech Corporate Parks Plc
22 September 2015
Unitech Corporate Parks plc
("UCP" or the "Company")
Annual results
Unitech Corporate Parks Plc (AIM: UCP) announces its annual
results for the year ended 31 March 2015.
The Company's Annual Report and Accounts for the year ended 31
March 2015 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
----------------------------- --------------------
Rose Ramsden
----------------------------- --------------------
FIM Capital Limited Tel: +44 (0)1624
681250
----------------------------- --------------------
Philip Scales
----------------------------- --------------------
Graham Smith
----------------------------- --------------------
Chairman's Statement
Introduction
The main feature of the year was the sale of our principal
subsidiary, Candor Investments Limited, to an affiliate of
Brookfield Property Partners. At closing on 4 November 2014, UCP
received a cash consideration of approximately GBP189 million which
led to an initial distribution to shareholders of 49.25 pence per
share on 9 January 2015. The amount of this initial distribution
represented a premium of more than 25% to the average share price
over the 6 month period prior to the announcement of discussions
with Brookfield.
At the time of the disposal of Candor we expected that a period
of 12 months from completion would be sufficient to complete the
return of capital to shareholders and for the Company to enter into
a members' voluntary winding up. However, as I explain below, the
process to recover UCP's share of certain funds placed by two of
the project SPVs with Indian financial institutions is taking
longer than expected. This will be one of the key factors which
will determine the length of the future life of the company and the
amount and timing of further distribution(s) to shareholders. We
now expect that a further period of 12 months or so will be
required to complete the process for the return of capital.
Recovery of deposits from SREI and ATEN; losses caused by
Nectrus
At the time of closing with Brookfield, funds placed by two of
the project SPVs with Indian financial institutions SREI and ATEN
had not been repaid as due. These INR amounts, of which UCP's share
amounted to approximately GBP15.8 million, were therefore deducted
from the consideration in the sale to Brookfield. The sale and
purchase agreement with Brookfield provides a mechanism by which
the recovery of the deposits is to be pursued and the sums
recovered ultimately paid to UCP.
The recovery is being actively pursued through multiple avenues,
including the Indian arbitration process prescribed under the
agreements and with the appropriate regulators. A claim has also
been notified to the Company's former investment manager Nectrus
for GBP18.2 million in respect of the GBP15.8 million damages
arising plus the past and anticipated costs associated with
recovery of the funds. Further to this, we announced on 18 May 2015
that the Board believed the placing of the deposits represented
breaches by Nectrus of the investment management agreement with
inter alios the Company, and accordingly withheld GBP18.2 million
from funds otherwise payable to Nectrus pursuant to the
distribution in January 2015.
Note 10 sets out further information on the recovery of the
project SPV funds. Given that the claims are ongoing, we are not in
a position to provide further detail save to say that all efforts
are focused on the recovery of these funds.
Year End Financial Statements
Following discussion with our auditors and other advisers, we
have adopted a revised treatment for the amounts due to UCP in
relation to the project SPV funds. These are now recognised as a
contingent asset of up to GBP17.8 million (being the GBP15.8m
withheld from the sales consideration plus estimated interest and
foreign currency movement up to 31 March 2015) and I particularly
draw your attention again to Note 10.
To reduce the Company's ongoing costs, Board meetings are now
usually held by telephone with physical meetings being held
annually or as necessary rather than quarterly, and we have also
agreed reduced costs with, or no longer use, the services of some
external advisers. The year-end financial statements contain a
provision of GBP3 million to cover the future anticipated running
costs of the Company, including legal fees and costs relating to a
winding up.
As previously announced, UCP has to make a tax return to the
Indian authorities for the period to 31 March 2015 and this return
is about to be made. The process and time for agreeing the return
are not under our control. The Board continues to receive clear
advice from the Company's tax advisors that no tax should be
payable in relation to the sale of Candor, but out of an abundance
of caution we retained the sum of GBP4 million when deciding the
amount of the initial distribution.
You will also see from the financial statements that UCP's cash
balances at 31 March 2015 amounted to approximately GBP9 million in
addition to the amount withheld from Nectrus referred to above.
This represents a significant cash resource which is available to
meet the future run off costs and other liabilities including the
winding up of the Company explained above as well as the tax
retention. To the extent not utilized, this cash will be available
for distribution to shareholders.
Trading on AIM
At the time of the announcement of the sale of Candor we stated
that the AIM Rules provided for a period of 12 months from the date
of completion of the disposal (4 November 2014) for UCP to
implement its new investing policy to return capital to
shareholders, otherwise its shares would be suspended from trading
on AIM.
Although UCP has returned to shareholders a significant
proportion of the potential total amount anticipated at the time of
the disposal, as referred to above, further time is required prior
to complete the return of capital process. The AIM Rules do not
make any allowance for an extension of the 12 month period and
therefore UCP's shares will be suspended from trading on AIM from
8:00am on 5 November 2015. The Board is disappointed with this
outcome since it believes that having a facility to trade its
shares while the Company seeks to complete the return of capital
process would be valued by shareholders. It will therefore be
investigating whether a cost effective off market matched bargain
trading facility can be put in place for shareholders.
Further distribution to shareholders
Despite uncertainties over the timing of the recovery of funds
from SREI and ATEN and the timeframe in which the Company's tax
return will be dealt with, we believe that significant progress
will be made over the next 12 months. However, it is difficult to
estimate the timing and amount of any further distribution to
shareholders. We shall continue to keep shareholders updated when
there is useful information to impart and in any event we shall
provide a further report when we publish the half year results to
30 September 2015 in December.
Change of Company name
At the forthcoming AGM shareholders will be asked to approve the
change of the Company's name from Unitech Corporate Parks PLC to
UCP PLC.
Donald Lake
Chairman
21 September 2015
Directors' Report
The Directors present their report and financial statements for
the year ended 31 March 2015.
Principal Activities
Unitech Corporate Parks PLC (the "Company") is an investment
company established to invest in the Indian real estate sector. On
4 November 2014 the Board of the Company announced that it had
completed the sale of the Company's wholly owned direct subsidiary
Candor Investments Limited ("Candor"). The sale of Candor resulted
in the sale of all the Company's subsidiaries and joint
ventures.
Investing Policy
The Company's Investing Policy, as 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
Following completion of the sale of the shares of Candor a
return of capital was effected in accordance with the Investing
Policy. The Board expect the Company to receive further proceeds
(as described more fully in this Report), after which a further
distribution will be made. Thereafter, 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.
The Company was re-registered under the Isle of Man Companies
Act 2006 on 2 October 2013.
Results and Distribution
(MORE TO FOLLOW) Dow Jones Newswires
September 22, 2015 02:00 ET (06:00 GMT)
The Company reported net assets at the date of the statement of
financial position of GBP5.8 million (2014: GBP202.4 million) and
for the year ended 31 March 2015 total comprehensive loss
attributable to the shareholders of GBP19.3 million (year ended 31
March 2014: loss GBP5.5 million).
Distributions totalling GBP177.3 million were declared during
the year ended 31 March 2015 (year ended 31 March 2014:
GBPnil).
Directors
The Directors of the Company throughout the year and to date
were:
Ajay Chandra (not re-elected 22 December 2014)
Mohammad Yousuf Khan
Donald Lake
Nicholas Robert Sallnow-Smith
John Keith Sleeman
The following Directors had interests in the shares of the
Company as at 31 March.
2015 2014
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 21 September 2015
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 Company and of the profit or
loss of the Company 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 Company will continue in business.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the 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 21 September 2015
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.
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 calls, 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
or speak 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.
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
-------------- ---------- ------- ------- ---------------- ----------
29 April 2014 X X X X X
-------------- ---------- ------- ------- ---------------- ----------
21 May 2014 X X X X X
-------------- ---------- ------- ------- ---------------- ----------
29 July 2014 X X X X X
-------------- ---------- ------- ------- ---------------- ----------
20 October
2014 - - X X X
-------------- ---------- ------- ------- ---------------- ----------
31 October
2014 X X X X X
-------------- ---------- ------- ------- ---------------- ----------
28 November
2014 X X X X X
-------------- ---------- ------- ------- ---------------- ----------
2 January
2015 n/a X X X X
-------------- ---------- ------- ------- ---------------- ----------
13 January
2015 n/a X X X X
-------------- ---------- ------- ------- ---------------- ----------
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.
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 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. 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 Company and the Administrator in all respects.
Internal Controls and Management of Risk
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September 22, 2015 02:00 ET (06:00 GMT)
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
Administrator which has 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 21 September 2015
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 2015 which comprise the
Statement of Comprehensive Income, the Statement of Financial
Position, the Statement of Changes in Equity, the 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 Company'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. In addition we
read the financial and non-financial information in the annual
report to identify material inconsistencies with the audited
financial statements and to identify any information that is
apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of
performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for
our report.
Opinion on the financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the Company's
affairs as at 31 March 2015 and of the Company's loss for the year
then ended; and
-- have been properly prepared in accordance with IFRSs as adopted by the EU.
Emphasis of matter - contingent asset
In forming our opinion on the financial statements, which is not
modified, we would highlight the disclosures made in note 10 to the
financial statements concerning a contingent asset estimated at
GBP17.8m. The contingent asset is in respect of the recovery of
funds deposited or invested by two project special purpose
vehicles: Unitech Developers & Projects Limited and Unitech
Realty Projects Limited with Indian financial institutions, which
were deducted from the consideration received on the sale of the
Company's interest in Candor. The contingent asset comprises the
funds deposited or invested in Rupees plus accrued interest and has
been converted to Sterling at the year-end foreign currency
exchange rate. The recovery is being pursued through a number of
avenues, including arbitration in the Indian courts and a claim
notified against Nectrus Limited, the former investment manager,
and, as is the case in any such disputes, is uncertain.
KPMG Audit LLC, Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man IM99 1HN 21 September 2015
Statement of Comprehensive Income
Notes Year ended Year ended
31 March 2015 31 March 2014
GBP 000 GBP 000
Income
Interest income on cash balances 65 8
65 8
-------------- --------------
Expenditure
Management fee 16 - 4,654
Other operating expenses 5 2,323 1,717
Movement in provision for run-off costs 6 1,250 1,750
3,573 8,121
-------------- --------------
Operating loss for the period (3,508) (8,113)
Share of profits of equity-accounted joint ventures, net of tax - 32,688
Change in fair value of assets held for sale 9 (1,138) 14,411
De-recognition of other receivables 10 (14,624) -
(Loss)/profit for the year before tax (19,270) 38,986
Current tax expense 7 - -
-------------- --------------
(Loss)/profit for the year (19,270) 38,986
-------------- --------------
Other comprehensive loss
Foreign currency translation differences for foreign operations - (44,482)
Other comprehensive loss for the year net of income tax - (44,482)
-------------- --------------
Total comprehensive loss for the year (19,270) (5,496)
-------------- --------------
Basic and diluted (loss)/earnings per share 8 (5.35)p 10.83p
============== ==============
The notes form an integral part of these financial
statements.
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September 22, 2015 02:00 ET (06:00 GMT)
Statement of Financial Position
Notes 31 March 31 March
2015 2014
GBP 000 GBP 000
Current assets
Assets held for sale and associated liabilities 9 - 188,950
Trade receivables and prepayments 16 23
Other receivables 10 - 14,624
Cash and cash equivalents 11 27,200 775
--------- ---------
27,216 204,372
--------- ---------
Total assets 27,216 204,372
========= =========
Financed by:
Equity
Share capital and reserves 12
Share capital 3,600 3,600
Distributable reserves 2,240 198,810
--------- ---------
5,840 202,410
========= =========
Current liabilities
Trade and other payables 13 207 212
Distribution payable 14 18,169 -
Provision for run-off costs 6 3,000 1,750
--------- ---------
Total liabilities 21,376 1,962
--------- ---------
Total equity and liabilities 27,216 204,372
========= =========
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 21 September 2015 and signed on
their behalf by:
_______________ ________________
Donald Lake Nicholas Sallnow-Smith
Director Director
Statement of Changes in Equity
Share Translation Distributable
capital Share premium reserve reserves Total
GBP 000 GBP 000 GBP 000 GBP 000 GBP 000
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)
Transfer upon
re-registration
as 2006 Act company - (342,919) - 342,919 -
Balance at 31
March 2014 3,600 - - 198,810 202,410
-------- ------------- ----------- ------------- ---------
Balance at 1
April 2014 3,600 - - 198,810 202,410
Total comprehensive
loss for the
year:
Loss for the
year - - - (19,270) (19,270)
Total comprehensive
loss for the
year - - - (19,270) (19,270)
-------- ------------- ----------- ------------- ---------
Distributions
to shareholders - - - (177,300) (177,300)
-------- ------------- ----------- ------------- ---------
Balance at 31
March 2015 3,600 - - 2,240 5,840
======== ============= =========== ============= =========
The notes form an integral part of these financial
statements.
Statement of Cash Flows
Year ended Year ended
31 March 2015 31 March 2014
GBP 000 GBP 000
Operating activities
(Loss)/profit for the period before tax (19,270) 38,986
Adjustments for:
Interest income from cash and cash equivalents (65) (8)
Share of profit of equity-accounted joint ventures, net of tax - (32,688)
De-recognition of other receivables 14,624 -
Change in fair value of assets held for sale 1,138 (14,411)
Foreign exchange loss 21 13
-------------- --------------
Operating loss before changes in working capital (3,552) (8,108)
Decrease in trade receivables and prepayments 7 1,132
Decrease in trade and other payables (5) (1,109)
Increase in provisions 1,250 1,750
-------------- --------------
1,252 1,773
Tax paid - -
Net cash used in operating activities (2,300) (6,335)
-------------- --------------
Investing activities
Interest received 65 8
Proceeds received from sale of Candor Investments Limited 188,927 -
Loan repayment from Candor Investments Limited 1,000 -
Release of disposal cost provision (2,115) -
Subsidiaries cash and cash equivalents, receivables and payables reclassified as
assets held
for sale - (1,989)
Distribution received from joint venture - 4,672
-------------- --------------
Net cash generated from investing activities 187,877 2,691
-------------- --------------
Financing activities
Distributions paid to shareholders (159,131) -
-------------- --------------
Net cash used in financing activities (159,131) -
-------------- --------------
Increase/(decrease) in cash and cash equivalents 26,446 (3,644)
-------------- --------------
Cash and cash equivalents at beginning of year 775 4,432
Exchange difference on cash and cash equivalents (21) (13)
Cash and cash equivalents at end of the year 27,200 775
============== ==============
The notes form an integral part of these financial
statements.
Notes to the Financial Statements for the year ended 31 March
2015
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 AIM operated and regulated by the
London Stock Exchange.
The Company does not have any employees.
2. Basis of preparation
2.1 Statement of compliance
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These 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 financial statements have been prepared on the historical
cost basis except that assets held for sale are measured at
realisable value. On 4 November 2014 the Company completed the sale
of the entire issued share capital of Candor Investments Limited
("Candor") to an affiliate of Brookfield Property Partners
("Brookfield"). After the distribution of cash generated by this
sale the Company is expected to be wound up in accordance with its
Investing Policy. In light of this 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.
2.3 Functional and presentation currency
These financial statements are presented in British pounds,
which is the Company's functional currency and presentation
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 Provision for
run-off costs and Note 10 Contingent assets..
2.5 Future changes in accounting policies
There are no standards or interpretations with an effective date
on or after 1 April 2015 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 financial statements are set out below:
3.1 Foreign currency
Foreign currency transactions
Transactions in foreign currencies are translated to British
pounds at the exchange rates ruling 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.
3.2 Interest income
Interest income comprises bank interest earned on cash and cash
equivalents and is recognised on an accruals basis using the
effective interest rate method.
3.3 Expenses
Expenses are accounted for on an accruals basis.
3.4 Income tax expense
Income tax expense comprises current tax. Current 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.
3.5 Earnings per share
The Company 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 year.
3.6 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.
3.7 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 met 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").
Assets classified as held for sale are recognised at their
realisable value which is considered to be fair value less costs to
sell.
3.8 Contingent assets
Contingent assets are assets that arise from past events and
whose existence will be confirmed only by the occurrence or
non-occurrence of future events not wholly within the control of
the Company. Contingent assets are not recognised in the Statement
of Financial Position but are disclosed in the Notes to the
Financial Statements when an inflow of economic benefit is
probable.
3.9 Provision for run-off costs
Following the realisation of the Company's investments, the
return of cash to shareholders and the intention to wind-up the
Company's affairs, provision is made for the total estimated future
costs up to and including the winding up. The provision includes
estimates of all costs incurred in dealing with outstanding
matters.
4. Financial risk management
4.1 Financial risk factors
The Company's principal financial risks have changed since the
sale of the entire share capital of Candor. The principal risks
that the Company is exposed to are now market, credit and liquidity
risk. The risk management policies employed by the Company to
manage these risks are discussed below.
4.2 Market risk
(i) Foreign currency risk
The Company's principal operating currency is the British pound
but substantially all of the operating income and expenditure of
the Group were denominated in Indian Rupee prior to the sale of
Candor.
All monies returned to shareholders and the reported net asset
value of the Company is denominated in British pounds.
The Company is exposed to foreign currency risk on the
contingent assets which it is seeking to recover (see Note 10) as
these are denominated in Indian Rupees.
At the reporting date, the Company's currency exposure was as
follows:
2015 2014
GBP 000 GBP
000
British pounds 5,840 187,520
Indian Rupees - 14,624
US dollar - 266
Net asset value 5,840 202,410
======== ========
(ii) Cash flow and fair value interest rate risk and sensitivity
The Company holds financial assets that are interest bearing. As
a result the Company 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 Company's exposure to interest
rate risks. It includes the Company'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 2015 Less 3 mths
than 1 - to 1 - Over Non-interest
1 month 3 months 1 year 5 years 5 years bearing Total
GBP GBP GBP GBP GBP GBP GBP
000 000 000 000 000 000 000
Financial assets
Trade receivables
and prepayments - - - - - 16 16
Cash and cash
equivalents 27,200 - - - - - 27,200
--------- ---------- -------- --------- --------- ------------- -------
Total financial
assets 27,200 - - - - 16 27,216
--------- ---------- -------- --------- --------- ------------- -------
Financial liabilities
Trade and other
payables - - - - - 21,376 21,376
--------- ---------- -------- --------- --------- ------------- -------
Total interest
rate sensitivity
gap 27,200 - - - - - -
========= ========== ======== ========= ========= ============= =======
31 March 2014 Less 3 mths
than 1 - to 1 1 - Over Non-interest
1 month 3 months year 5 years 5 years bearing Total
GBP GBP GBP GBP GBP GBP GBP
000 000 000 000 000 000 000
Financial assets
Trade receivables
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and prepayments - - - - - 23 23
Other receivables - - 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 - 14,624 - - - -
========= ========== ======= ========= ========= ============= =======
During the year, interest income from cash was GBP64,000 (2014:
GBP8,000). At 31 March 2015, if interest rates on average had
increased by 0.25% with all other variables held constant, total
comprehensive loss/equity for the year would decrease/increase by
GBP35,000 (2014: an immaterial amount).
4.3 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 Company.
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 Company's financial assets exposed to
credit risk amounted to the following:
2015 2014
GBP 000 GBP 000
Trade receivables and
prepayments 16 22
Other receivables - 14,624
Cash and cash equivalents 27,200 775
27,216 15,421
======== ========
The maximum exposure to credit risk is represented by the
carrying amount of each financial asset in the statement of
financial position.
The Company is also exposed to credit risk related to the
recoverability of deposits lent and investments made by two of the
Indian joint ventures. The deposits and investments, classified as
contingent assets, are denominated in Indian Rupees so the value of
the adjustment may vary to that calculated at 31 March 2015. See
Note 10.
4.4 Liquidity risk
The Company manages its liquidity risk by maintaining sufficient
cash balances to meet its obligations. The Company's liquidity
position is monitored by the Board of Directors. A maturity
analysis showing the remaining contractual maturities of financial
liabilities at year-end is shown below:
31 March 2015
Less than 3 months 1-5 Over
to 1 year 5
3 months years years
GBP 000 GBP 000 GBP GBP 000
000
Financial liabilities
Provision for
run-off costs 500 2,500
Trade and other
payables 207 18,169 - -
707 20,669 - -
========== =========== ====== ========
Trade and other payables classified as payable within 3 months
to 1 year includes GBP18,169,000 payable to Nectrus which has been
withheld from the amount distributed by the Company during the
year. See Note 14 for further details.
31 March 2014
Less than 3 months 1-5 Over
to 1 year 5
3 months years years
GBP 000 GBP 000 GBP GBP 000
000
Financial liabilities
Provision for
run-off costs 300 1,450
Trade and other 212 - - -
payables
512 1,450 - -
========== =========== ====== ========
5. Other operating expenses
Other operating expenses comprise of:
2015 2014
GBP 000 GBP 000
Administration fees 210 165
Valuation fees 3 57
Legal and advisory fees 387 610
Directors fees and expenses (see note 15) 356 386
Audit fees 30 85
NOMAD and LSE expenses 328 233
Other expenses 60 181
1,374 1,717
-------- --------
Expenses in relation to the disposal of Candor 949 -
-------- --------
2,323 1,717
======== ========
See Note 9 for a breakdown of expenses incurred in relation to
the disposal of Candor.
6. 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. At 31 March 2015 it was estimated that these costs,
consisting primarily of legal costs associated with the recovery of
the funds described in note 10 and including general contingencies,
are likely to be GBP3.00m (31 March 2014: GBP1.75m).
7. 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 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 dealt with.
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.
8. Basic and diluted (loss)/earnings per share
2015 2014
(Loss)/profit attributable to ordinary
shareholders (GBP 000) (19,270) 38,986
Weighted average number of ordinary
shares in issue (number 000) 360,000 360,000
--------
Basic (loss)/earnings per ordinary
share (in pence) (5.35) 10.83
========= ========
The Company has no dilutive potential ordinary shares. The
diluted earnings per share are therefore the same as the basic
earnings per share.
9. Assets held for sale
The Company completed the sale of the entire issued share
capital of Candor, the Company's wholly owned subsidiary and
holding company for all UCP's property interests on 4 November
2014. The sale proceeds received were GBP188.9m. This completed the
sale of all assets held for sale at 31 March 2014.
At 31 March 2014 due to the announcement of the sale of Candor
all subsidiaries were classified as held for sale and were measured
at realisable value less costs to sell. This led to a valuation
uplift of GBP14.41 million in the Statement of Comprehensive Income
for the year ended 31 March 2014.
The realisable value of assets held for sale at 31 March 2014
was considered to be:
31 March
Assets held for sale 2014
GBP
000
Base consideration 205,000
Add: Net receivables 689
Less: Deposits and investments of 2 joint
venture companies (14,624)
191,065
Less: Disposal costs provision (2,115)
---------
Realisable value 188,950
=========
The costs to sell were estimated at GBP2,115,000 based on
agreements with the various professional advisors involved in the
sale, and estimates or invoices received, if applicable. Actual
costs incurred amounted to GBP3,064,000 and the difference of
GBP949,000 is included in the year's operating expenses as shown in
Note 5.
At 4 November 2014, (the date of completion), the value of
deposits and investments to be deducted from the consideration had
increased by GBP1,138,000, due to interest accrued and foreign
exchange rate movement, from GBP14,624,000 to GBP15,762,000.
10. Contingent assets
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At the time of completion of the sale of Candor to an affiliate
of Brookfield Property Partners (Brookfield), funds placed by two
of the project SPVs with Indian financial institutions SREI and
Aten had not been repaid as due despite demand. Accordingly,
GBP15.8m (as described in Note 9) was deducted from the
consideration payable by Brookfield and certain provisions of the
sale and purchase agreement relating to the sale of Candor (SPA)
came into effect.
The project SPVs: Unitech Developers & Projects Limited
(UDPL) and Unitech Realty Projects Limited (URPL) had placed funds
with SREI Infrastructure Finance Limited (SREI), Aten Capital Pvt
Limited (Aten Capital), and Aten Portfolio Managers Services Pvt
Limited (Aten PM). The amounts were deposited or invested in either
"inter corporate deposits" or "non-convertible debentures" as
follows:
SREI INR 1,500,000,000 (150 crores)
Aten Capital INR 30,000,000 (3 crores)
Aten PM INR 900,000,000 (90 crores)
TOTAL INR 2,430,000,000 (243 crores)
At the date of completion of the sale of Candor (4 November
2014) the equivalent total in GBP, including accrued interest, was
GBP26.3m. Interest was to have accrued on the balance with SREI at
a rate of 10.9% and at a rate of between 16% and 18% on the
balance(s) with Aten. UCP's interest in these monies was 60%,
reflecting the Company's holdings in the SPVs. At 31 March 2015,
UCP therefore estimated its interest to be GBP17.8m (2014:
GBP14.6m)
The arrangements with SREI and Aten by the SPVs were not
properly reported to, or approved by, the UCP Board. As announced
on 18th May 2015, the arrangements were not in accordance with the
UCP Board's Treasury Policy or in accordance with the Investment
Management Agreement (IMA) between Nectrus, Candor and UCP. Nectrus
has been notified of its breaches of the IMA and a claim for
GBP18.2m in damages arising from: (i) the non-recovery of the
funds, and (ii) current and anticipated costs associated with the
recovery. UCP accordingly withheld GBP18.2m from the cash return
attributable to the shares held by Nectrus pursuant to the
distribution in January 2015, pending recovery from SREI and
Aten.
Claims have been commenced against SREI and the Aten entities by
UDPL and URPL. The SPVs are now both 100% subsidiaries of
Brookfield (Brookfield having acquired 60% of each through the
purchase of Candor, and the remaining 40% subsequently). Brookfield
has undertaken to assist with recovery of the monies, including
assisting in these courses of action.
Each of the agreements between UDPL and URPL and SREI and the
Aten entities provides for disputes to be determined through
arbitration. Arbitration proceedings and/or proceedings in aid of
arbitration have been commenced in India, under the Indian
Arbitration Act 1996.
To date, none of the Aten entities has put forward an
explanation or justification for failing to repay as demanded in
May 2014 and subsequently. Aten Capital has been required by the
Indian Courts, in aid of arbitration, to lodge a bank guarantee in
the amount of INR 36,000,000 as security. Aten PM has pleaded that
it placed URPL's moneys in an account at IL&FS Securities
Services Limited (IL&FS) in September 2014. The Company is
making efforts to verify this information.
In response to the action against it, SREI has claimed that it
was entitled to offset the monies deposited with it by UDPL (150
crore) against amounts due to it from Unitech Limited (UL) on which
UL has defaulted. In addition to this claimed right to offset, SREI
is pursuing UL before the Indian Debt Recovery Tribunal (DRT) for a
further amount of approximately 4.4 crore. In its claim against UL,
SREI relies upon a lengthy loan agreement, which makes no reference
to the UDPL deposit. SREI also has the benefit of personal
guarantees by the promoters of UL. Despite these forms of security,
in the UDPL proceedings SREI seeks to rely on an un-evidenced
"inter se" agreement that the UDPL monies could be offset against
the amounts due from UL. SREI claims to have assumed that UCP was a
part of the 'Unitech group' despite all public information to the
contrary, and despite having been put on notice by UCP, some 12
months ago, that any such belief was erroneous.
Complaints have also been made to the appropriate regulators:
the Reserve Bank of India and the Securities and Exchange Board of
India, and are being followed up with diligence.
UCP will continue to vigorously pursue all avenues of recovery
and, in the light of the above, the Company continues to believe
that recovery will be made.
Consequently, in accordance with accounting standards, this
receivable estimated to be GBP17.8 million is treated as a
contingent asset, and has been de-recognised from the Statement of
Financial Position.
11. Cash and cash equivalents
The Company's cash and cash equivalents are held with two major
global banks and are analysed as follows:
2015 2014
GBP 000 GBP 000
Short-term deposits 27,150 -
Current accounts 50 775
-------- --------
27,200 775
======== ========
12. Share capital and reserves
12.1 Capital management
Company capital comprises share capital and distributable
reserves. The Company is not subject to externally imposed capital
requirements.
12.2 Share capital
Number GBP 000
000
Ordinary shares of par value
GBP0.01 each
Authorised 500,000 5,000
------------ --------
Issued 360,000 3,600
============ ========
The distribution declared on 7 January 2015 was returned to
Shareholders by way of a B share scheme. 360,000,000 B shares were
issued on that date and allotted to Shareholders. The B shares were
neither quoted nor admitted to trading on AIM. The B shares were
then either cancelled on purchase back by the Company or converted
to deferred shares with extremely limited rights and negligible
value, depending on the distribution method chosen by the
Shareholder.
13. Trade and other payables
The Company's trade and other payables are analysed as
follows:
2015 2014
GBP 000 GBP 000
Trade payables 64 103
Accruals 143 109
-------- --------
207 212
======== ========
14. Distribution payable
A distribution of 49.25 pence per share was declared on 7
January 2015. From the total distribution payable of GBP177.3
million, GBP18.2 million was withheld from the amount due to
Nectrus in its capacity as the beneficial owner of 49,042,428
Ordinary Shares in the Company. The Company has an outstanding
claim against Nectrus with respect to significant damages resulting
from breaches by Nectrus of the Investment Management Agreement in
relation to the contingent assets as described in Note 10.
The Company estimates the total loss to be GBP18.2 million. This
consists of GBP15.8 million withheld from the sale proceeds of
Candor in relation to the deposits and investments, interest
amounting to GBP7,000 accrued from that date and estimated legal
costs of GBP2.4 million relating to their recovery.
15. Directors' fees
Mr Lake receives an annual Director's fee of GBP60,000 (2014:
GBP60,000) for carrying out his role as Chairman of the Board. He
also received an additional GBP60,000 during the year (2014: nil)
for extra work carried out in relation to the sale of Candor and
the earlier abortive sale of G2.
The other Directors receive fees of GBP27,500 per annum (2014:
GBP27,500).
All directors receive a sitting fee of GBP1,000 for each Board
Meeting attended.
Mr Sallnow-Smith receives an additional GBP5,000 per annum
(2014: GBP5,000) for his role as Chairman of the Audit
Committee.
Mr Chandra was not re-elected to the Board on 22 December
2014.
16. 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.
As at 31 March 2015 Donald Lake was beneficially interested in
42,500 Ordinary Shares in the Company (31 March 2014: 42,500).
Ajay Chandra, a Director of the Company until 22 December 2014,
is also the Managing Director of Unitech Limited. Unitech Limited,
who was the Company's co-investor, acted as Property Manager for
the investment property under construction and received a fee of 5%
of the total cost of construction of each project (exclusive of
service tax) in the prior year.
Nectrus Limited, the former Investment Manager to the Company,
is an affiliate of Unitech Limited, the Company's former
co-investor in the investment property under construction. Nectrus
received a management fee from Candor when Candor was a subsidiary
of UCP. The management fee payable to Nectrus for the year ended 31
March 2014 was GBP4.65 million and the payable at that date was
taken into account as part of the sale consideration paid by
Brookfield. Nectrus Limited was beneficially interested in
49,042,428 Ordinary Shares in the Company throughout the financial
year and the preceding year which equates to a 13.6% shareholding
in the Company.
17. Net asset value per share
2015 2014
Net asset value (GBP 000) 5,840 202,410
Ordinary shares in issue (number
000) 360,000 360,000
-------- --------
Net asset value per ordinary
share (pence) 1.6 56.2
======== ========
This information is provided by RNS
The company news service from the London Stock Exchange
END
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