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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
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Ucp | LSE:UCP | London | Ordinary Share | IM00B1HWL911 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 2.60 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
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0 | 0 | N/A | 0 |
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
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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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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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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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