TIDMVOR
RNS Number : 9684X
Vordere PLC
24 December 2019
-COMPANY REGISTRATION NUMBER 07892904
VORDERE PLC
INTERIM REPORT FOR THE
SIX MONTHSED 30 SEPTEMBER 2019
(UNAUDITED)
Chairman's Statement
I have pleasure in presenting my first interim statement to
shareholders for the period 1 April 2019 to 30 September 2019 and
because of recent events, I decided that it was appropriate that
you received a report from your Chairman despite my appointment
post period end.
You will be aware that at the General Meeting on 24 October
2019, shareholders voted to remove three of the incumbent
Directors, Nicholas Hofgren, Stuart Cheek and Graeme Johnson and
appoint David Irving as Chief Executive. I was appointed the day
after on the 25 October.
This was the culmination of a series of events resulting in
considerable shareholder frustration with the then management with
the recent history being as follows:
On 5 July 2019, the Company requested that the listing of its
ordinary shares be suspended in order for the Company to assess
accurately its financial position. The suspension of the listing of
ordinary shares followed the allotment on 4 July 2019 of 277
million unlisted ordinary shares in exchange for the acquisition of
six properties in Germany for a total price of EUR59.3m. That
suspension is still continuing.
As a result of the suspension of the listing of the ordinary
shares, poor communication, and increasing concerns about how the
Company was being run, a number of shareholders attended the
Company's Annual General Meeting held on 4 September 2019, at which
time the Company's listing of ordinary shares remained suspended.
At the Meeting shareholders sought, amongst other things,
clarification from the Board of Directors on its plans to have the
suspension lifted. Unfortunately, that clarification was not
forthcoming.
On the 16 September 2019, following the Annual General Meeting,
one of the Company's major shareholders, Mr John O'Donnell,
requisitioned a General Meeting of the Company for shareholders to
consider the removal of three of the incumbent Directors, Nicholas
Hofgren, Stuart Cheek and Graeme Johnson, and the appointment of
David Irving as a Director of the Company. Allegations of fraud
were made and the Company is currently working through the fact
finding stage of their investigation into these allegations and
will update shareholders once finalised.
On 21 October 2019, and shortly before the requisitioned General
Meeting was held, the then Board announced that it had allotted
129,277,975 ordinary shares in exchange for the acquisition of five
properties in Brazil for a total purchase price of GBP25.9m.
Following the announcement of the acquisition of the Brazilian
properties, Mr John O'Donnell applied to the High Court of Justice
to obtain an interim injunction preventing those shares from voting
at the General Meeting. The High Court of Justice duly granted the
interim injunction. The interim injunction was extended by the
Hight Court of Justice on 31 October 2019 to prevent the recipients
of the ordinary shares from registering any transfer of such
shares.
As previously mentioned, the General Meeting was held on 24
October 2019, at which all Resolutions were passed resulting in the
removal of Nicholas Hofgren, Stuart Cheek and Graeme Johnson as
Directors of the Company and the appointment of David Irving as a
Director of the Company. The new Board of Directors following the
General Meeting comprised Brent Fitzpatrick and David Irving. On 25
October 2019, the Board appointed myself, an experienced public
company director, as non-executive Chairman of the Company. I
believe that the Company is extremely fortunate to have secured the
services of David Irving as the Chief Executive.
As announced on 18 December 2019, at hearings in the High Court
in London on 13 and 16 December 2019, the Company consented to the
continuation by the Court of an injunction, as explained further in
the Chief Executive's Report.
In conclusion, there is still no certainty that the suspension
of the Company's shares will be lifted. Your Board continues to
consult with its advisers and the FCA, and will report to
shareholders on this issue by the end of the first quarter of
2020.
In this past week there has been a delay in receiving funds
relating to the sale of the Mohriner Allee property leading to an
uncertainty relating to the Company's going concern position, which
is outlined further within the Financial Review section of the
Chief Executive's Report.
Your Board is currently undertaking a comprehensive review of
both how the Company operates, its property operations, listing and
future strategy and I hope to be in a position to report our
findings to Shareholders by the end of the first quarter.
Peter L R Hewitt JP FCSI FRSA
Chairman
Chief Executive's Report
Since my appointment on 24 October 2019, the newly constituted
Board of Directors has spent time reviewing the activities of the
previous Board as well as planning and developing a new strategy in
order to develop the Company's assets to deliver value for
shareholders. I would like to take this opportunity to reassure
shareholders that, despite the issues that have arisen over the
past few months, your Board is working hard to protect and enhance
shareholder value..
Business review
Turning now to the Company's trading activities, I would like to
highlight the developments in the financial year to date and also
my initial views on the portfolio.
During the six-month period to 30 September 2019, the previous
Board continued with the strategy outlined in the Annual Report for
the year ended 31 March 2019. Namely that your Company continued to
identify itself as an investment and development company, although
no meaningful development had been undertaken in the preceding
year. The Company increased its property portfolio from four to ten
properties, with new sites acquired in Germany. The Board is
currently conducting an in-depth review of each property to
determine the most appropriate business plan to maximise
shareholder value, on a risk-adjusted basis.
Properties held at the start of the year
The Company owned four sites in Germany at the start of the year
in: Bamberg; Berchtesgaden; Haag; and Hanau. The sites at
Berchtesgaden and Hanau have generated some relatively
insignificant rental income; these and the other two sites have
remained undeveloped during the period.
Unfortunately, progress has been slow in resolving a pre-emption
claim from the local municipality associated with the pre-existing
Hanau site. The previous assessment that it is probable that the
future economic benefits associated with the property will flow to
the Company is still considered appropriate, but there is a risk
that the Court will find in favour of the municipality and this
ongoing litigation restricts the Company's plans for the site. The
Board may need to incur additional costs in order to settle the
dispute with the municipality, so that progress can be made in
developing the Hanau site.
Properties acquired during the period
The Company acquired six new sites in Germany during the period,
as disclosed in the 31 March 2019 Annual Report, in Jüterbog;
Mohriner Allee; Pegau; Schkeuditz; Sehnde and Usedom: All of the
sites, with the exception of Mohriner Allee, are classified as
investment properties with the intention being to hold the sites to
earn rentals or for capital appreciation or both.
Following my appointment, I am pleased to report that I have now
visited all of your Company's properties in order to fully
appreciate and understand each property's location and
characteristics. This will assist me in recommending to the Board,
the most appropriate development strategy going forward. This work
is nearing completion and the Board will provide shareholders with
an update in the first quarter of 2020.
The table below outlines the near-term asset management
priorities for each property. These have been developed in
conjunction with Fortis Home (the Company's German property
managers) and following an intensive property tour, visiting each
asset, over a 3-week period.
Bamberg Due to listed building requirements, the refurbishment
of the existing accommodation is extremely complex
and cost intensive. We plan to have further discussion
with the municipality and the owner of the adjacent
property in Q1 2020 in order to develop and evaluate
a full suite of options.
Berchtesgaden The hotel element of this property has been re-let
successfully for 5 years.
A unit in the property, formerly leased to a dentist
is now vacant and this will be developed/refurbished
for apartment letting. Due to lack of refurbishment
over the last number of years the property requires
significant ongoing maintenance expenditure, relative
to the income derived from the asset.
Our current view is to continue to increase the
rental income from this property to a level where
it becomes attractive to potential buyers.
----------------------------------------------------------
Haag The redevelopment of this property into a restaurant
/ hotel does not appear to be economically viable.
Following a meeting with local development partners,
we are evaluating the redevelopment of the property
into social/senior living. We will have feedback
on interested long-term operating partners by
Q2 2020.
----------------------------------------------------------
Hanau This property is currently subject to a preemption
right by the City of Hanau and Vordere is in litigation
with the City due to disagreement on the value
of the property that they City has placed on the
property. We are evaluating a proposal to commence
with the building-out/refurbishment two buildings
in order to demonstrate to the City that Vordere
is serious about redevelopment of this site and
in the process for the City to waive its preemption
right.
----------------------------------------------------------
Juterbog This is the largest asset in the portfolio and
will result in a development comprising of commercial
and residential buildings. We have received positive
feedback from the municipality who are keen for
Vordere to commence with planning with the aim
of starting the refurbishment of one to two buildings
by the end of 2020. We are currently working on
clean-up activities in preparation for the development.
----------------------------------------------------------
Mohriner This project has been sold. The sale process is
Allee being finalised with receipt of the proceeds expected
in January 2020.
----------------------------------------------------------
Pegau Given the increased cost that Vordere has had
to assume in order to acquire this property, we
will have to re-evaluate and will most likely
revise the concept for this site to ensure that
it is economically viable.
----------------------------------------------------------
Schkeuditz The municipality supports the development of the
intended residential units and commercial space.
An adjacent site has been developed with residential
units and terraced houses which have been sold
and are mostly occupied. We are working with PDE/PORR
to prepare a development plan comprising of multi-family
houses and some commercial space.
----------------------------------------------------------
Sehnde The municipality fully supports the development
of the intended residential units and has plans
to develop the area around our property. We have
undertaken extensive clean-up works to ensure
the property is ready for the next stage of development.
We are currently putting the bank guarantee in
place and will have further meetings with the
municipality in Q1 2020.
----------------------------------------------------------
Usedom We are evaluating a change in the development
concept from permanent residential living residential
to micro-living apartments for salaried employees
of the local hospitality businesses. Initial research
indicates that there is a demand for this accommodation.
----------------------------------------------------------
Financial review
Since 31 March 2019, the Company has increased its total assets
from GBP24.2m to GBP73.6m as a result of the acquisition of six new
properties via the issue of consideration shares, as outlined in
the Company's announcement on 4 July 2019.
The properties purchased in the period were bought for
EUR59,290,000, with consideration being the issue of new shares at
GBP0.20 per share. Introducer fees of EUR2,668,050 and broker fees
of EUR1,482,250, being 4.5% and 2.5% of the purchase price
respectively, were also settled through the issue of new shares at
GBP0.20 per share, resulting in at total of 277,931,954 new shares
being issued to purchase the properties. In addition, EUR3,092,000
of RETT was accrued at the date of the transaction and other
professional fees associated with the transactions of EUR351,988
were incurred, both of which were capitalised as part of the
properties' transaction costs. The total of the purchase price and
all transaction costs in GBP was GBP58,604,013 (being GBP56,639,212
of investment property and GBP1,964,801 of development property
(inventory).
Your new Board has revisited the requirement to hold the
investment property portfolio at fair value at the period end and,
given the lack of progress made in developing the properties, do
not consider there to have been any increase in the fair value of
the properties since acquisition and this has resulted in a
significant loss on revaluation. This loss represents the
significant transaction costs that were occurred in relation to
introducer fees, broker fees, RETT and other professional fees
(equivalent of GBP6,503,622), GBP944,119 of increased cost that
Vordere has had to assume in order to acquire the Pegau property,
plus GBP501,257 of property related professional fees that had been
capitalised in relation to spend with advisers in trying to
establish a development strategy for the new and existing
properties, which is not considered to have led to an increase in
fair value to the investment properties at the period end and is
considered to have limited use to the development strategy going
forward. The total loss from the fair value adjustment of
investment properties is GBP7,951,024.
Within the administrative expense of GBP2,513,478 there are
exceptional costs that have been incurred in relation to Prospectus
costs of GBP506,248 for a prospectus which was not approved by the
FCA. The Current Board are putting in a great deal of effort in
understanding the reasons behind this. Additional fees paid to the
Directors in September 2019 were GBP132,178. The Prospectus costs
relate to professional fees incurred by previous management going
back around nine months, GBP237,118 of the costs had been carried
within prepayments as at 31 March 2019, with additional costs of
GBP269,130 originally capitalised within the period to 30 September
2019. Given the length of time taken, the change in management and
changes to advisors, these costs are no longer considered to have
any value and have been written-off in the period. In addition, the
Mohriner Allee property that is held as inventory was written down
by GBP323,694 from its cost to its net realisable value, based on
its disposal after the period, as outlined below.
At 30 September 2019, the Company had GBP4.3 million in cash, no
debt and continued to keep a number of its operational business
functions outsourced which the historic board saw as best practice.
Your Board is currently reviewing this operational strategy with a
view to significantly reducing the administrative expenses. Since
the period end the Company has incurred net cash outflows of
cGBP3.4 million through to the end of November 2019, with the
largest outlays being on Real Estate Transfer Tax of c.GBP1.1
million, putting in place a development bond for the Sehnde
property of c.GBP0.75 million and normal cash outflows for
overheads of GBP0.2 million per month. In addition, there were
c.GBP1.1 million of payments made by the previous Board, elements
of which are currently under investigation as referred to in the
Chairman's Statement.
In September 2019, the Company has also received an additional
GBP1.1 million of cash from the early repayment of one of its
Norwegian loans. The Company is currently negotiating the full
payment of unpaid interest from the previously repaid loan and the
current loan.
Completion of Mohriner Allee and going concern
Your Board has prepared cash flow forecasts for a period of at
least 12 months from the date of this announcement, and have a
reasonable expectation that the funds from the Mohriner Allee sale
will be received early in January 2020 and as a result continue to
prepare these condensed financial statements on a going concern
basis.
As mentioned, cash from the sale of the Mohriner Allee property
is due to be received in early January 2020 and this is anticipated
to result in net proceeds of EUR1,879,000 to the Group (being the
equivalent of GBP1,673,584 at the projected period end foreign
exchange rate). Costs of sale of GBP14,251 were accrued for and
off-set within the valuation of the Mohriner Allee property as at
30 September 2019.
The proceeds were originally expected to be received prior to
announcing these interim results, but delays in the legal process
have resulted in the Board concluding that a material uncertainty
exists in relation to this matter and its potential impact on the
Company's cash flows. The delays that have already taken place in
finalising the sale have left the Board unable to conclude with
sufficient certainty that the funds will be received without
further delay.
Separately, your Board are seeking to raise short to mid-term
debt finance, secured against the property portfolio, in order to
accelerate the development of the properties and to generate rental
income.
Further details of this matter are provided within Note 3 to the
financial statements.
Key Performance Indicators
The net asset value per share has increased by 30% since 31
March 2019, from 11.67p per share to 14.66p per share as at 30
September 2019.
For the period ended 30 September 2019 no updated formal
property valuations have been obtained and the directors are
relying on the previous formal valuations as at the year end 31
March 2019 or 4 July 2019 for those purchased in the period. The
directors do not believe that there are any material factors that
would impact these valuations, but would note that they are based
on the assumptions and development strategies put forward by the
previous Board.
Principal Risks and uncertainties
The principal risks and uncertainties remain unchanged from
those outlined within the 31 March 2019 Annual Report, with the
exception of the updates below.
Your Board understands that the original seller of the
properties is currently undergoing a form of re-structuring and
although there is technically no legal risk surrounding your
Company's ownership of the properties, there is a possibility that
these properties might be caught up in any restructuring or
administration proceedings. Accordingly, it is a current priority
of your Board to ensure that ownership is fully transferred to the
Company as soon as possible.
The preservation of cash remains a core driver for your Board
and we remain determined to keep operational costs to a minimum
whilst reviewing the efficiency of the company to ensure that
maximum funds remain available to invest in value enhancing
projects. As outlined in the financial review section, your Board
is currently discussing the possibility of arranging short or
mid-term debt finance to be secured against the property portfolio,
in order to make progress in developing the properties.
Your Board recognises and is conscious of the political and
economic uncertainty that surrounds the UK's decision to leave the
European Union and the political uncertainty that has existed prior
to the recent General Election. However, we do not believe that the
risks facing the business have changed significantly since the year
end.
Other matters
Brazil
In October 2019, the Company signed binding agreements to
acquire five properties in Brazil for a total purchase price of
GBP25,855,595, payable in the Company's shares. The five properties
were valued by ReMax, with BDO LLP providing Companies Act Section
593 approval. In consideration for the acquisition, the Company
allotted 129,277,975 new ordinary shares at a price of GBP0.20 per
share in the capital of the Company by way of the issuance of
certificated shares.
Following the Company's announcement on 21 October 2019 in
respect of the acquisition of the Brazil properties, one of the
Company's major shareholders, Mr John O'Donnell, applied to the
High Court of Justice to obtain an interim junction preventing the
Company from registering the 129,277,975 ordinary shares in the
register of members.
The High Court of Justice duly granted the interim injunction
and this was extended by the High Court of Justice on 31 October
2019 to prevent the recipients of the ordinary shares from
registering any transfer of such shares.
At hearings in the High Court in London on 13 and 16 December
2019, the Company consented to the continuation by the Court of an
injunction made against the Company, Ritz Property Investimentos
Imobiliarios EIRELI ("Ritz"), Aurora Capital Ltd ("Aurora") and GFG
UK Ltd ("GFG UK"), which prevents the registration of any transfer
of the shares in the Company held by Ritz, Aurora and GFG UK,
pending the resolution of the claim made by Mr John O'Donnell for
orders setting aside a transaction made between the Company and
Ritz in October 2019.
The Court also made orders for service of the Court documents on
Ritz in Brazil and Aurora in Cayman, which will be completed in the
coming weeks. The Company, Ritz, Aurora and GFG UK will then be
required to take a formal position in relation to Mr O'Donnell's
claim and the case will proceed to be resolved by the Court.
The Brazilian acquisition contains a number of conditions
subsequent which may prevent the transaction from legally closing.
The Board is of the opinion that the Brazilian property acquisition
is not in the best interests of shareholders and will continue to
seek to have the transaction set aside or unwound.
Your Board is committed to increasing transparency and
communication with shareholders as well as being fully focused on
developing a strategy that maximises shareholder capital and
risk-adjusted returns.
I would like to take the opportunity to thank the Company's
shareholders for their continued support and patience in what has
been a difficult past few months.
David Irving
Chief Executive Officer
The Directors of Vordere PLC and their bios are listed on the
Company's website at www.vordere.com.
Condensed consolidated income statement and condensed
consolidated statement of comprehensive income for the six months
ended 30 September 2019
Note Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 Mar
30 Sep 30 Sep 2018 2019
2019
GBP
GBP GBP
Revenue 115,587 80,670 174,268
Net loss from fair value (7,951,024) - -
adjustment on property
Repair and maintenance costs (74,053) (30,132) (38,877)
Other direct property operating
expenses (16,063) (39,563) (100,128)
Other expenses (2,513,478) (1,361,997) (2,735,446)
Operating Loss (10,439,031) (1,351,022) (2,700,183)
Finance income 65,465 60,230 114,913
Loss before taxation (10,373,566) (1,290,792) (2,585,270)
Taxation - (593) (1,621)
----------------------------------- ----- ------------- ------------- ------------
Loss for the period attributable
to equity owners of the
company (10,373,566) (1,291,385) (2,586,891)
----------------------------------- ----- ------------- ------------- ------------
Statement of comprehensive
income
----------------------------------- ----- ------------- ------------- ------------
Exchange gain/(loss) arising
on translation of foreign
operations 1,517,435 39,803 (362,899)
----------------------------------- ----- ------------- ------------- ------------
Total comprehensive loss
for the period/year attributable
to the owners of the company (8,856,131) (1,251,582) (2,949,790)
----------------------------------- ----- ------------- ------------- ------------
Loss per share
----------------------------------- ----- ------------- ------------- ------------
Basic 4 (0.028) (0.006) (1.295)
Diluted 4 (0.028) (0.006) (1.295)
----------------------------------- ----- ------------- ------------- ------------
Condensed consolidated statement of financial position as at 30
September 2019
Note Unaudited Unaudited Audited
Six months Six months Year ended
ended ended 31 Mar
30 Sep 2019 30 Sep 2018 2019
GBP GBP GBP
----------------------------------- ----- ------------- ---------------- ------------
NON-CURRENT ASSETS
Investment property 5 66,239,734 - 15,586,442
Property, plant and equipment 6,917 7,579 7,248
Financial assets at amortised
cost 6 941,712 2,075,278 2,011,122
Total non-current assets 67,188,363 2,082,857 17,604,812
CURRENT ASSETS
Development property 7 1,673,584 16,120,568 -
Trade and other receivables 401,301 293,341 900,782
Cash and cash equivalents 4,332,986 7,175,135 5,645,997
----------------------------------- ----- ------------- ---------------- ------------
Total current assets 6,407,871 23,589,044 6,546,779
----------------------------------- ----- ------------- ---------------- ------------
Total assets 73,596,234 25,671,901 24,151,591
----------------------------------- ----- ------------- ---------------- ------------
LIABILITIES
----------------------------------- ----- ------------- ---------------- ------------
Total current liabilities 8 (3,562,261) (669,980) (847,878)
----------------------------------- ----- ------------- ---------------- ------------
NET ASSETS 70,033,973 25,001,921 23,303,713
----------------------------------- ----- ------------- ---------------- ------------
EQUITY
Capital and reserves attributable
to owners of the company
Share capital 9 9,553,647 3,995,008 3,995,008
Share premium 74,533,183 24,505,431 24,505,431
Retained earnings (14,854,854) (3,185,782) (4,481,288)
Foreign exchange reserves 801,997 (312,736) (715,438)
----------------------------------- ----- ------------- ---------------- ------------
TOTAL EQUITY 70,033,973 25,001,921 23,303,713
----------------------------------- ----- ------------- ---------------- ------------
Condensed consolidated statement of changes in equity for the
six months ended 30 September 2019
Share Share premium Retained Foreign Total equity
capital earnings exchange
reserve
GBP GBP GBP GBP GBP
Balance at 1 April
2018 (audited) 3,995,008 24,505,431 (1,894,397) (352,539) 26,253,503
Comprehensive Loss
Loss for the period
and total comprehensive
income - - (1,291,385) - (1,291,385)
Other comprehensive
income - - - 39,803 39,803
Total owners equity
at 30 September
2018 (unaudited) 3,995,008 24,505,431 (3,185,782) (312,736) 25,001,921
-------------------------- ---------- -------------- ------------- ---------------- -------------
Comprehensive loss
Loss for the period - - (1,295,506) - (1,295,506)
Other comprehensive
income - - - (402,702) (402,702)
-------------------------- ---------- -------------- ------------- ---------------- -------------
Total owners equity
at 31 March 2019
(audited) 3,995,008 24,505,431 (4,481,288) (715,438) 23,303,713
-------------------------- ---------- -------------- ------------- ---------------- -------------
Comprehensive Loss
Loss for the period - - (10,373,566) - (10,373,566)
Other comprehensive
income - - - 1,517,435 1,517,435
Transactions with
owners
Issue of share capital 5,558,639 50,027,752 - - 55,586,391
Total owners equity
at 30 September
2019 (unaudited) 9,553,647 74,533,183 (14,854,854) 801,997 70,033,973
-------------------------- ---------- -------------- ------------- ---------------- -------------
Condensed consolidated cash flow statement for the six months
ended 30 September 2019
Unaudited Unaudited Audited
Six months Six months Year ended
ended 30 ended 30 31 Mar
Sep 2019 Sep 2018 2019
GBP GBP GBP
------------------------------------------- ------------- ------------ ------------
Cash flows from operating activities
Loss for the year (10,373,566) (1,291,385) (2,586,891)
Adjustments for:
Tax expense - 593 1,621
Depreciation and impairment 331 331 662
Net loss from fair value adjustment 7,951,024 - -
on investment property
Write-down of development property 323,694 - -
to net realisable value
Finance income (65,465) (60,230) (114,913)
Finance costs - - -
(2,163,982) (1,350,691) (2,699,521)
Movements in working capital
Decrease/(increase) in receivables 164,662 459,217 (128,087)
Increase in payables 367,407 167,639 547,595
Increase in development properties (136,609) (1,789) (1,976)
Tax paid - (593) (1,621)
------------------------------------------- ------------- ------------ ------------
395,460 624,474 415,911
Net cash used in operating activities (1,768,522) (726,217) (2,283,610)
------------------------------------------- ------------- ------------ ------------
Cash flows from investing activities
Increase in investment property (696,619) - -
Interest received 65,465 60,230 114,913
Loan repayment received 1,069,410 - -
Net cash from investing activities 438,256 60,230 91,636
Net decrease in cash and cash equivalents (1,330,266) (665,987) (2,191,974)
Cash and cash equivalents at start
of the period 5,645,997 7,840,423 7,840,423
Effect of foreign exchange rate
changes 17,255 699 (2,452)
------------------------------------------- ------------- ------------ ------------
Cash and cash equivalents at period
end 4,332,986 7,175,135 5,645,997
------------------------------------------- ------------- ------------ ------------
Notes to the interim accounts
For the six months ended 30 September 2019
1. General information
The Company is incorporated in England and Wales and is
domiciled in the UK. Its registered office is at 3(rd) Floor, 11-12
St. James's Square, London, United Kingdom, SW1Y 4LB.
These unaudited condensed interim financial statements for the
six months ended 30 September 2019 have been prepared in accordance
with International Financial Reporting Standards (IFRS) and IAS 34
"Interim Financial Reporting" as adopted by the European Union and
do not constitute statutory accounts as defined in Section 434 of
the Companies Act 2006. This condensed set of financial statements
has been prepared on a consistent basis with the Company's
published financial statements for the year ended 31 March 2019,
after the adoption of new accounting standards disclosed in note 2,
and is presented in pounds sterling.
The comparative figures for the financial year ended 31 March
2019 have been extracted from the Company's statutory accounts
which have been reported on by the Company's auditor and delivered
to the Registrar of Companies. The report of the auditors was
unqualified and did not contain a statement under the Companies Act
2006 regarding matters which are required to be noted by exception.
The interim results have been reviewed by Grant Thornton UK LLP but
have not been audited.
2. Changes in accounting policies
During the period the Group has adopted IFRS 16 "Leases", the
adoption of IFRS 16 has not led to a change in accounting or the
need restate the prior period figures.
In applying IFRS 16 for the first time, the Group has used the
practical expedient permitted by the standard, which allows the
accounting for operating leases, with a remaining lease term of
less than 12 months as at 1 April 2019, as short-term leases.
Payments associated with short-term leases, and leases of low-value
assets are recognised on a straight-line basis as an expense in
profit or loss. Short-term leases are leases with a lease term of
12 months or less. Low-value assets comprise IT equipment and small
items of office furniture. The adoption of IFRS 16 has had no
impact to the consolidated financial statements based on
management's assessments.
All other accounting policies remain unchanged since the year
ended 31 March 2019.
3. Going concern
The Directors have prepared cash flow forecasts for a period of
at least 12 months from the date of this announcement and have a
reasonable expectation that the funds from the Mohriner Allee sale
will be received early in January 2020, allowing the Group to meet
its liabilities as they fall due. As a result, the Directors
continue to prepare these condensed financial statements on a going
concern basis.
The proceeds from the sale of the Mohriner Allee property are
due to be received in early January 2020 and this is anticipated to
result in net proceeds of EUR1,879,000 to the Group (being the
equivalent of GBP1,673,584 at the projected period end foreign
exchange rate). Costs of sale of GBP14,251 were accrued for and
off-set within the valuation of the Mohriner Allee property as at
30 September 2019.
The proceeds were originally expected to be received prior to
announcing these interim results, but delays in the legal process
have resulted in those proceeds now being expected in early January
2020. The receipt of these proceeds are included within the Group's
cash flow forecasts and allow the Group to meet its current and
forecast liabilities as they fall due. The delays that have already
taken place in finalising the sale have left the Board unable to
conclude with sufficient certainty that the funds will be received
without further delay which would cast significant doubt on the
ability of the Group to continue as a going concern. As those funds
have yet to be received, the Board have concluded that a material
uncertainty exists in relation to this matter and its potential
impact on the Company's cash flows.
Separately, your Board are seeking to raise short to mid-term
debt finance, secured against the property portfolio, in order to
accelerate the development of the properties and to generate rental
income. However, these arrangements have yet to be finalised.
Nevertheless, having considered the uncertainties described
above and after making appropriate enquiries, the Directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future and
accordingly continue to adopt the going concern basis in preparing
these condensed financial statements.
4. Loss per share
The calculation of the basic and fully diluted loss per share is
based on the loss for the period after tax of GBP10,373,566 (30 Sep
2018: GBP1,291,385; 31 Mar 2019: GBP2,586,891) divided by the
weighted average issued ordinary shares of 367,731,269 (30 Sep
2018: 199,750,418; 31 Mar 2019: 199,750,418). Where a loss has been
recorded for the year the diluted loss per share does not differ
from basic loss per share as the exercise of any options or
warrants would have the effect of reducing loss per share and is
therefore not dilutive under the terms of IAS 33.
5. Investment property
Management determined in the year to 31 March 2019 that the
properties held by the Group should be reclassified as investment
properties on the basis that they will be retained for rental
income and/or long-term capital appreciation. During the period to
30 September 2019 the Group acquired six new properties, five of
which were classified as Investment Properties, as the initial
assessment was that they would be retained for rental income and/or
long-term capital appreciation. The other property, Mohriner Allee,
was classified as development property as the expectation was to
always to sell the site, the site is in the process of being sold
as outlined in note 7. In the prior interim period to 30 September
2018 the properties were classified as development properties
within stock and held at the lower of cost and net realisable
value, see note 7.
Rental income of GBP115,587 (30 Sep 2018: GBP80,670; 31 Mar
2019: GBP174,268) was recognised in respect of investment
properties (30 Sep 2018: development properties).
The fair value of the investment properties was established
using the residual value method and carried out by Jones Lang
LaSalle, external independent qualified valuers with recent
experience valuing investment properties in the location held by
the Group. For all investment properties, their current use equates
to the highest and best use.
All fair value estimates for investment properties are included
in level 3 under the fair value hierarchy for determining the fair
value of non-financial assets. The valuation of each of the
properties was determined using the residual value method, as the
properties are intended for development, with the sales comparison
approach the key initial input. Properties valued using the sales
comparison approach take into account comparable properties in
close proximity. These values are adjusted for differences in key
attributes such as location, size and quality of interior
fittings.
During the six month period to 30 September 2019 five new
investment properties were purchased with shares issued for
consideration. The valuations were performed by Jones Lang LaSalle
prior to purchase on the same basis as the previous valuations
prepared for the existing four properties. Transaction costs
incurred on the purchases have been capitalised on initial
recognition, at the foreign exchange rate agreed in the contract,
and comprised: Introducer and Broker fees, that were also settled
through the issue of shares, totalling GBP3,516,892, Real Estate
Transfer Tax accruing on the transactions of GBP2,606,695 and Other
professional fees of GBP274,317.
At 30 September 2019, in line with the fair value accounting
policy adopted under IAS 40, the Group is required to hold each
Investment Property at its fair value. As the new Board are having
to revisit the strategy associated with each of the ten properties
held by the Group the transaction costs incurred by the previous
management were not considered to have added value at the period
end and therefore these are all to be written off as part of the
loss incurred in writing the initial costs down to their period end
fair value being the amounts included within the JLL valuations. In
addition the previous management incurred professional fees of
GBP501,257 across the property portfolio relating to their previous
strategy, which again was not considered to have added to the fair
value of the properties as at 30 September 2019.
GBP
Fair value at 1 April 2018 (audited) and 30 -
September 2018 (unaudited)
Transfer from development properties 15,586,442
------------
Fair value at 31 March 2019 (audited) 15,586,442
------------
Additions:
* Direct acquisitions 56,639,212
* Subsequent expenditures 501,257
Net loss from fair value adjustments (7,951,024)
Currency translation difference in OCI 1,463,847
------------
Fair Value at 30 September 2019 (unaudited) 66,239,734
============
6. Financial assets at amortised cost
Non-current financial assets at amortised cost of GBP941,712 (30
Sep 2018: GBP2,075,278; 31 Mar 2019: GBP2,011,122) relate to 3rd
party loans from Vordere Capital S.a.r.l. to JV11 Eiendom AS and
MV13 Eiendom AS, with the loan to MV13 fully repaid during the
period to 30 September 2019.
On the 2nd August 2017, Vordere Capital S.a.r.l. agreed to
provide MV13 Eiendom AS with a secured term loan facility of NOK
13,000,000 with interest of aggregate of 6 per cent per annum and 1
percent per annum. On the 15th November 2017, Vordere Capital
S.a.r.l. agreed to provide JV Eiendom AS with a secured term loan
facility of NOK 9,500,000 with interest of aggregate of 6 per cent
per annum and 1 percent per annum.
The loans were repayable 5 years from the Drawndown Dates of the
loans, as described above. Interest receivable for the period
amounts to GBP65,465 (30 Sep 2018: GBP60,230; 31 Mar 2019:
GBP114,913). Vordere Capital S.a.r.l. has a security over the
properties bought with the proceeds of the above loan.
On 24 September 2019 repayment of NOK 12,541,832 (cGBP1.2m) was
sent to the Group representing the full final repayment of the
outstanding principal and interest in relation to the MV13 Eiendom
AS loan. The remaining loss allowance recognised under IFRS 9 in
relation to this loan was released on repayment, which totalled
GBP22,443.
7. Development property
Six months Six months Year
ended 30 ended 30 ended 31
Sep 2019 Sep 2018 Mar 2019
GBP GBP GBP
Assets held for development and
resale in the ordinary course of
business 1,673,584 16,120,568 -
1,673,584 16,120,568 -
---------- ---------- ---------
The property acquired at Mohriner Allee has been classified as
development property (inventory) as the expectation was always to
sell the site. The sale is due to concluded in early January 2020
and is expected to result in net proceeds of EUR1,879,000 to the
Group (being the equivalent of GBP1,673,584 at the period end
foreign exchange rate).
In the prior interim period to 30 September 2018 the first four
German properties were classified as development properties within
stock and held at the lower of cost and net realisable value, these
were reclassified as investment properties during the second half
of the year ended 31 March 2019, see note 5.
8. Total current liabilities
Six months Six months Year
ended 30 ended 30 ended 31
Sep 2019 Sep 2018 Mar 2019
GBP GBP GBP
Trade payables 1,324,743 432,050 305,505
Other payables 70,929 12,255 196,043
Accruals 2,166,589 225,675 346,330
3,562,261 669,980 847,878
---------- ---------- ---------
The increase in current liabilities during the period ended 30
September 2019 is due mainly to Real Estate Transfer Tax and partly
due to the increase in the number of properties. As at 30 September
2019 Real Estate Transfer Tax had been paid for two of the six new
sites, invoiced and included in trade payables for one site and
accrued for the final three sites.
9. Issued share capital
Authorised, allotted and called up share capital:
Six months Six months Year
ended 30 ended 30 ended 31
Sep 2019 Sep 2018 Mar 2019
GBP GBP GBP
Ordinary shares of GBP0.02 each
at the beginning of the period 3,995,008 3,995,008 3,995,008
Shares issued during the period 5,558,639 - -
9,553,647 3,995,008 3,995,008
---------- ---------- ---------
Six months Six months Year
ended 30 ended 30 ended 31
Sep 2019 Sep 2018 Mar 2019
Number Number Number
Ordinary shares of GBP0.02 each
at the beginning of the period 199,750,418 199,750,418 199,750,418
Shares issued during the period 277,931,954 - -
477,682,372 199,750,418 199,750,418
----------- ----------- -----------
Share issue and investment property purchase
On 12 June 2019, the Company announced that it had signed
binding agreements to acquire six properties in Germany, for a
total purchase price of EUR59,290,000 (the "Acquisition
Agreements"), in accordance with its published investment strategy.
The consideration for the properties under the Acquisition
Agreements, along with fees to the Introducer (EUR2,668,050) and
GFG Limited (EUR1,482,250), were to be satisfied by the issue of
new ordinary shares in the Company at a value of GBP0.20 per
share.
On 4 July 2019, the Company announced that it had allotted
277,931,954 new ordinary shares (the "Consideration Shares"), as
outlined in the Acquisition Agreements, of nominal value GBP0.02 in
the capital of the Company (the "Share Allotment") by way of the
issuance of certificated shares which are not open to trading on
any clearing system. Accordingly, at the Company's request the
listing of its ordinary shares has been suspended pursuant to
Chapter 5 of the Listing Rules. As noted in the Chairman's
Statement, the shares in the Company remain suspended and are
likely to be so in the near future.
The Company's total issued share capital prior to 4 July 2019
was 199,750,418 shares of nominal value GBP0.02. Following the
Share Allotment, the issued share capital is 477,682,372 shares.
There are 10,426,780 Ordinary Shares which shall be held in
Treasury pending completion of conditions in respect of one
acquisition agreement, as set out in the Prospectus. The total
voting rights are therefore 467,255,592 shares as at 4 July
2019.
10. Related parties
Mr Nicholas Hofgren, a former Director of Vordere PLC is also a
director of GFG Limited. On 30 September 2016, the Company signed a
2--year Corporate advisory agreement with GFG Limited, under the
agreement the Company has agreed to pay GFG a fee of GBP7,500 per
month until such time that the Company asset value exceeds
GBP10,000,000 whereupon the fee will be calculated at the rate of
1.5% of the gross asset value or GBP15,000, whichever is greater,
per month. During the six month period ended 30 September 2019, the
Company paid GBP351,651 (2018: GBP212,235) for monthly advisory
services to GFG and GBP50,000 (2018: GBP50,000) for monthly Board
services. As at 30 September 2019 the outstanding balance was
GBP91,723 (2018: GBP43,706). GFG were paid GBP1,298,747 of fees in
relation to the acquisition of the six new properties in the
period, which were settled by the issue of new shares at 20p per
share (2018: GBPnil).
On the 2 June 2018 the Company signed a revised agreement for
3-years for a Corporate advisory agreement with GFG, with no other
changes.
Mr Nicholas Hofgren, a former Director of Vordere PLC received
GBP18,000 (2018: GBP18,000) in directors' remuneration during the
six months ended 30 September 2019. As at 30 September 2019 the
outstanding balance with Nicholas Hofgren was GBPnil (2018:
GBPnil).
Mr G Johnson, a former Director of Vordere PLC is also a
Director of Granite and Pine Investments International Ltd. During
the six months period ended 30 September 2019 Directors' fees of
GBP90,340 (2018: GBP12,500) were recognised from Granite and Pine
Investments International Ltd on behalf of Mr G Johnson. As at 30
September 2019 the outstanding balance due to Granite and Pine
Investments International Ltd was GBP80,037 (2018: GBPnil).
Mr B Fitzpatrick, a Director of Vordere PLC is also a Director
of Ocean Park Developments Ltd. During the six months period ended
30 September 2019 Directors' fees of GBP23,750 (2018: GBP12,500)
were recognised from Ocean Park Developments Ltd on behalf of Mr B
Fitzpatrick. As at 30 September 2019 the outstanding balance due to
Ocean Park Developments Ltd was GBP11,250 (2018: GBP6,250). The
outstanding amount is repayable on demand.
Mr S Cheek, a former Director of Vordere PLC is also a Director
of Randall Duke Limited. During the six months period ended 30
September 2019 Directors' fees of GBP57,500 (2018: GBP10,417) were
recognised from Randall Duke Limited on behalf of Mr S Cheek. As at
30 September 2019 the outstanding balance was GBP45,000 (2018:
GBP2,083).
A General Meeting was held on 24 October 2019, at which all
Resolutions were passed resulting in the removal of Nicholas
Hofgren, Stuart Cheek and Graeme Johnson as Directors of the
Company.
11. Principal risks and uncertainties
The principal risks and uncertainties for the six months of
ending 30 September 2019 are laid out on page 7 of this interim
report.
12. Events occurring after the reporting period
On 21 October 2019, and shortly before the General Meeting was
held, the then Board announced that it had allotted 129,277,975
ordinary shares in consideration for the acquisition of five
properties in Brazil for a total purchase price of GBP25.9m.
The Mohriner Allee property disposal was agreed, as disclosed in
note 7.
13. Board Approval
These interim results were approved by the Board of Vordere Plc
on 23 December 2019.
DIRECTORS RESPONSIBILITY STATEMENT AND REPORT ON PRINCIPAL RISKS
AND UNCERTANTIES
Responsibility statement
We confirm to the best of our knowledge:
(a) The condensed set of financial statements have been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU;
(b) The interim management report includes a fair review of the
information required by:
(1) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(2) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
the period; and any changes in the related party described in the
last annual report that could do so.
Strategic Decisions
The Board will provide leadership within a framework of
appropriate and effective controls. The Board will set up, operate
and monitor the corporate governance values of the Company, and
will have overall responsibility for setting the Company's
strategic aims, defining the business objective, managing the
financial and operational resources of the Company and reviewing
the performance of the officers and management of the Company's
business both prior to and following an acquisition.
Financial Risk Management
The Company has a simple capital structure and its principal
financial asset is cash. At 30 September 2019 the Company had
currency risk relating to financial assets and liabilities
denominated in Euros, as well as having currency risk on its
property assets that are also valued in Euros. The Company has no
material exposure to market risk, and the Directors manage its
exposure to liquidity risk by maintaining adequate cash reserves
and the close monitoring of cash requirements going forward.
23 December 2019
Independent review report to the members of Vordere Plc
Introduction
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report of
Vordere Plc for the six months ended 30 September 2019 which
comprises the Condensed Consolidated Income Statement, the
Condensed Consolidated Statement of Comprehensive Income, the
Condensed Consolidated Statement of Financial Position, the
Condensed Consolidated Statement of Changes in Equity, the
Condensed Cash Flow Statement and the related notes. We have read
the other information contained in the half-yearly financial report
which only comprises the Chairman's Report and Chief Executive's
Report set out on pages 2 to 8.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards as adopted by the European Union. The condensed
set of financial statements included in this half-yearly financial
report has been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union.
Our responsibility
Our responsibility is to express a conclusion on the condensed
set of financial statements in the half-yearly financial report
based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
September 2019 is not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
Emphasis of matter - Material uncertainty related to going
concern
We draw attention to Note 3 to within these interim financial
statements, which indicates the delays that have taken place in
finalising the sale of the Mohriner Allee property. The delays that
have already taken place in finalising the sale have left the Board
unable to conclude with sufficient certainty that the funds will be
received without further delay which would cast significant doubt
on the ability of the Group to continue as a going concern. As
those funds have yet to be received, the Directors have concluded
that a material uncertainty exists in relation to this matter and
its potential impact on the Company's cash flows. Our conclusion is
not modified in respect of this matter.
Use of our report
This report is made solely to the company, in accordance with
International Standard on Review Engagements (UK and Ireland) 2410,
'Review of Interim Financial Information performed by the
Independent Auditor of the Entity' issued by the Auditing Practices
Board. Our review work has been undertaken so that we might state
to the company those matters we are required to state to it in an
independent review 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 for our review work, for this
report, or for the conclusion we have formed.
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
Crawley
23 December 2019
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR ZMMZZLDZGLZG
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