Concepta Share Discussion Threads

[papy02] 07/7/2012 20:41

Hi RBCRBC.

yes, the diary notes (/estimates) I have are:

11 July Litigation discontinued and non-appealable
22 Aug Earliest for release of Eur 4.8m cash by Polish court - latest 5 Sep
12 Sep Earliest for repatriation of Eur 4.8m cash from Polish dispute - latest 10 Oct

Dunno which if any of these they will RNS (though they should RNS the final distribution and windup plans shortly after the repatriation of the cash..)

[rbcrbc] 07/7/2012 18:55

RNS Number : 2008D

Carpathian PLC

11 May 2012

..... Whilst there is no prescribed timetable for this, it is expected that the discontinuation should be achieved within 2 months from today. ......

Will we get an RNS at this stage ?
If so it could come next week...

[papy02] 13/6/2012 19:43

Got some more answers via Redleaf Polhill, which I think are very helpful:

Re the Eur 2.046m receivables owed to the Fund segment: they would not give any more details (which I wanted to help assess collectability), beyond the previous description as VAT-recoverable, plus sales-proceeds held in escrow,
but they stated "KPMG has signed off that the amounts are fully recoverable".

They confirmed that no further DCP is potentially payable in 2012, eg on the release of the above VAT-recoverable or escrow-amounts, (In my question I'd excluded the potential sale of Baia Mare, which after the writedowns is now not material).

Re the Eur 1.3m DCP recently paid to Carpathian Asset Management on the Promenada Eur 5.2m, they confirmed that no payment had been made to CPT LLP on any part of this Eur 5.2m. (so there's been no DCP double-dipping on that amount, which I was concerned might have been possible).

My conclusion: DCP stated as paid or payable so far is therefore the final definitive amount (bar non-material extra from potential Baia Mare sale). I calculate this DCP declared so far points to 3.17c /share further distribution to shareholders from here (barring any "funny business" where DCP ends up not reflecting shareholder returns).

I think I will now take the Zen approach advocated by RBCRBC and put my CPT holding into a drawer and hope/wait!

[papy02] 07/6/2012 21:50

I think this is consistent with what they said in their Mar 1st RNS on Galleria, and it's the same that they told me (which I summarised in post 1243).

I agree Nav is approx 3.1c. The DCP payouts also point to that shareholder return (unless any funny business).

Re the accounts, yes it's amazing that in the Prelims they had no detail of Galleria transaction, and in the finals there is still no ref to the Promenada dispute. Without understanding these, any attempt by shareholders to assess valuation is meaningless, so these situations should have been covered in the AR.

The main remaining "known unknown" (other than successfull execution to repatriate the cash from Galleria and Promenada transactions to the holding co) is the further Eur 2m "other receivables", that they told me is recoverable-VAT and sales-proceeds held in escrow. (I'm still waiting for any details from them that would help us assess how likely these items are to be "collected"). A failure to collect this £2m would reduce NAV correspondingly - i.e. worst case by 27%, so certainly material. Together with the Galleria and Promenada status, the details and dependencies should have been disclosed/discussed in the Prelims!

Given their reluctance to disclose material info, my main concern is whether there are any "unknown unknowns" that will get sprung on us.
So fingers crossed for no more surprises (or at least, no negative ones!).

[steve36] 07/6/2012 13:05

The difference between 8.3m and 7.5m is the sales costs of 0.8m. I think that Papy identified an expected net increase of 3.2c, but I agree it isn't easy to follow the accounting. With the litigation settlement reducing nav by 1.6m, the net increase from year end should I think be 5.9/230 = 2.5c. The nav at year end was 0.6, so still hoping to eventually receive 3c.

[grahamg8] 07/6/2012 12:59

News to me. But then I noted 'the sale decreased liabilities by 6m Euros in addition to net proceeds of 2.3m after commission. So perhaps we were really told that the NAV had gone up by 8.3m and now they say 7.5m? The whole purpose of accounts is to make clear what a company is up to and what it is worth (according to ACCA), so that potential investors can make an informed decision on whether to buy shares. In this respect CPT singularly fail. But at the end of the day we might actually make some money.

[rbcrbc] 07/6/2012 10:56

Note 33

On 20 March 2012, the Group disposed of its various interests held in the Galleria shopping centre in Riga, Latvia for an aggregate consideration of €2.3 million; sales costs are estimated to be €0.8 million (note 31). The significant interests included in the Statements of Financial Position were other investments (note 17: €nil), loans receivable (note 18: €nil), assets held for sale (note 21: €2.7 million) and related party payables (note 26: €8.7 million). The Group's subsidiary, Stringybark SIA, was also included in the disposal. The overall impact of the disposal is an increase in the Group net asset value of approximately €7.5 million.

Did we see that before ?

7.5m / 232m shares in issue = 3.2c per share.

[rbcrbc] 06/6/2012 17:34

A bit of light reading :-)

[rbcrbc] 02/6/2012 16:03

I've totally given up on trying to understand the accounts, I have put my shares in the bottom drawer and will wait to see what the last divi is and then laugh all the way to the bank or cry into a bucket :-)

[papy02] 01/6/2012 11:35

Well, they missed the "late May" date they gave me for publication of the full accounts!

This is looking pretty sick in my portfolio monitor - but is not tradeable at current spread, and I'm still hopeful (hope over experience?) that we'll get north of 3c back in the end.

I've got a few answers back recently, but a bit like swimming in treacle.

- I asked what the Eur 2046k "other receivables" due to the "fund segment" (holding co's in Luxembourg and Isle of Man) is, as this is now the main unexplained receivable (to understand collection risk). Answer: "this relates to VAT recoverable and sale proceeds held in escrow accounts. As current assets, they are recoverable within 12 months". I've asked for a breakdown and what properties these items relate to, but no answer yet.

- I asked about the Eur 1.3m DCP to be paid as a result of the resolution of Warsaw construction dispute (recent Promenada RNS). Answer: "as per note 31, it is payable to Carpathian Asset Management under the 2012 AGMT. Per the RNS, the monies receivable are courts deposits of 4.8m, release of cash reserves of 0.85m less a contribution of 0.4m, so a net 5.2m at 25%".
They confirmed this 1.3m DCP was not accrued for in the Dec 31st NAV.
I've asked for confirmation that no DCP was paid to CPT LLP (the previous incarnation of the property adviser), under the previous agreement, on this 5.2m amount. I.e. that no double-dipping is going on (seems unlikely but the chronic reticence on disclosing info is making me paranoid!).

Any thoughts/comments welcome.

[steve36] 14/5/2012 14:10

Yes I think you're right Papy, it must have been included in trade and other receivables. I'm still not sure why there was no provision though - either there was a risk that the escrow monies would not be released in which case there should have been a provision against non recovery, or they felt there was no risk that they would not be released, in which case they needed a 25% provision for the DCP payment.

[rbcrbc] 14/5/2012 12:11

Maybe we should wait for the full annual report to come ? towards the end of may. I am ever hopeful that all will become abundatly clear.....

[papy02] 14/5/2012 11:19

RBCRBC, I would be *very* interested, but am a full-time carer with no possibility of "time off", so unfortunately I would not be able to make it.

Re the cash, in addition to Steve36's point re the escrow cash, I think the cash held by the court was shown as Other Receivables (the Eur 4.7m receivables in Polish Zloty in the Prelims).

[steve36] 14/5/2012 10:59

I agree it's not at all obvious, but I think the conclusion must be that the escrow cash was already included as cash in the balance sheet, so the only nav impact of its release is the 0.4m contribution plus the DCP. I'm not sure why the conversion of cash into cash should qualify for the DCP though. At the least I would have thought there should have been a provision for this because it seems that even in the best case 25% would be paid out.

[rbcrbc] 14/5/2012 10:47

Does anyone live on/near the Isle of Man ?
Maybe we should turn up at the AGM, or request a London meeting shortly after the official AGM.

Last years was on 5th August.

I'm not sure if they would agree to a shareholder meeting (?in London) before that to discuss the situation, but with the size of our combined holdings they may not.

Who would be interested ? if there is enough interest I may try and organise something.

[grahamg8] 13/5/2012 20:10

Glad you two guys can't work it out. I'm as mystified as you. If money was held in escrow for a legal dispute then you would have thought it would have been included in liabilities. But that doesn't seem to be the case as although the cash available has increased the NAV has gone down. My target recovery is now way down on the ~5cps of just a couple of months ago; but still fortunately above the current share price But we do seem to be waiting a very long time for everything to unravel. Pretty hopeless when you condider they only have one tiny plot of land left.

[papy02] 12/5/2012 11:04

Hi RBCRBC

I haven't got my head round it – needs a forensic accountant to make sense of the CPT accounts and RNS's!

They do seem to emphasise the cash, but I'm not sure how to calculate from that (vs NAV etc which should give the overall picture).

My thoughts so far FWIW:

1) Calculation based on DCP: the Eur 1.3m extra DCP in the Promenada RNS adds to the 10.5m in the Dec 31 accounts and 0.5m Galleria for 12.3m total DCP. Not clear who the 1.3m is being paid to, and under what rules (last year the adviser was CPT LLP and DCP would now be paid at 25% of "cash available for return to shareholders", this year it is Carpathian Asset Management Ltd and "reduced" DCP is calculated on "net distributable reserves generated on disposal" (= weasel wording?)). I've asked for clarification. Assuming a 25% rate applies re the 1.3m (to be conservative), and that the "cash available" or "net distributable reserves" DO get distributed to shareholders, the 12.3m DCP maps to 44.6c/share total to shareholders, so 3.1c to go from here (as existing distributions have totalled 41.5c/share). Potential upside if Galeria and/or Promenada recent DCP is being paid at less than 25% rate, or if there is any additional distribution coming from amounts not subject to DCP like the 6m liabilities reduction on Galleria, or if Baia Mare ends up being sold for a material amount (unlikely?).


2) Calculation based on NAV: NAV = 1.5m as at Dec 31 + 7.5m Galleria – 1.6m Promenada after payment of the related DCP = a total NAV of Eur 7.4m or 3.2c / share. Given that windup costs have been accrued for and Baia Mare is immaterial after the savage writedown, that should be what is distributed, bar further surprises(?). If so, this indicates that any upside on top of the DCP-based calc above is going to be minimal.


3) Downside risks: mainly failure to collect remaining receivables, or windup-costs in excess of the amount accrued for (eg another round of bonuses to the non-exec board, who have presided over major value destruction since original capital raising). Currency risk if your CPT investment is not currency-hedged and Euro drops further.


4) Timescale is looking like Sept for the announcement of the final distribution, with distribution "within a few weeks thereafter"



But I've lost confidence in my ability to work out what is going on here. Am hoping that Laxey/Weiss are looking out for shareholder interests, but I don't like all the related-party transactions and lack of disclosure (e.g. why wasn't the Promenada position disclosed in the Prelims!). There are still significant receivables that could potentially go sour. The major one being Eur 2m owed to the Fund segment, (the holding companies in Isle of Man and Luxembourg), and which must be non-trade receivables - could be from a related-party, or linked with a legal dispute as was the case with Promenada-related receivables?

I don't understand the reference to provisions being released, in the latest Promenada RNS. There were only Eur 63k of Provisions (at Group level) in the Prelims, anyway.

Prior to the Prelims my estimate was for shareholder-return from here of 5.5c/share, if the Galleria liability-reduction proved to be real (which it has). That was assuming Baia Mare was written down to Eur 1.2m, so, given it was actually written down to near zero, that's where 1.2m (0.5c/share) of the delta from 5.5c to the new lower estimates above comes from. But having read the Prelims I've not arrived at a conclusion where the rest went – would appreciate anyone's thoughts on that – given that we all had similar estimates, albeit via different calculation approaches. (Needed as part of my ongoing education please!)

Also any comments/ corrections on the above would be very welcome.

[rbcrbc] 11/5/2012 19:07

Does anybody have their head in the right gear to understand this ?

Do we have an additonal 3.1m to distribute = 1.24c ?

[papy02] 27/4/2012 17:31

I got a reply from Redhill/CPT stating the NAV impact of the Galleria transaction is €7.5m (which I make 3.25c/share), broken down as follows :

Aggregate consideration 2,300,000
Sales costs -800,000 Note 31
Assets held for sale -2,700,000 Note 21
Related Party payables 8,700,000 Note 26

Total increase in NAV 7,500,000
NAV increase in c/share 3.25

I queried whether the Sales costs above weren't already accrued for in the Dec 31 balance sheet - answer was no (I have gone back a second time to be sure).

So with the 0.6c/share NAV in the Prelims I make this a total return of 3.85c /share (providing no other expenses are not accrued for, or other surprises - like your collections point steve).

They confirmed Baia Mare's book-value is Eur 90K as at 31 December 2011 (note 21). So not very material now.

They also say "The RNS does not include all of the notes, which will be distributed in the Company's full Annual Report which will be distributed towards the end of May to all shareholders"

[papy02] 27/4/2012 12:00

steve 36, I agree. It looks like 3c, or 2.8 if DCP etc not accrued for (which seems unlikely). Subject to no further "surprises".

(I will post here if I hear any different from my enquiry to CPT).

[steve36] 27/4/2012 10:47

Papy

Re your comments:
1. Fair point, note 21 suggests that the 2.7m investment property is Galleria, so Baia Mare must have been written down to almost nil.
2. I think the liabilities are included in loans payable (8.7 re Galleria). I don't believe the reduction could have been reflected as at 31 Dec as the deal was not done at that time.
3. Not sure but agree the implication is that these costs are effectively included (possibly the 6m reduction in liabilities is net of these items)
It looks to me as if nav will be boosted by 6m, maybe less the sales fee and DCP, boosting nav by to around 3 cents, assuming receivables are collected and no further expenses materialise. I would hope and expect that these would have been prudently accounted for and that in due course we will receive 3 cents.

[papy02] 26/4/2012 19:34

steve 36

Ref NAV boosted by c€8m from Galleria disposal: the max could be €8.3m, but I have the following concerns (as a non-accountant I should make clear!):

1. Is there anything for Galleria already in the Dec 11 NAV. Note 21, copied above by RBCRBC, could be read as €2.7m included for Galleria (as an investment property) and €90k for Baia Mare (as a development property, but in which case its value has been mega-decimated since the valuation grahamg8 quotes). My take: not sure.

2. Has the €6m reduction in liabilities re Galleria been accrued/ allowed-for in the Dec 11 NAV. That's why I am interested where it is referred to in the Prelims. Notes 17, 18 and 21 say that the SIA Patollo/ Galleria transaction is detailed in Note 33 "Events after balance sheet date". It isn't, but for now I'm hoping that indicates the €6m has *not* been accrued or allowed for in the Dec 11 NAV

3. Have the Sales Fee, Distributed Capital Payout (at 20% to the property adviser) ), and other expenses re Galleria, been accrued for in the Dec 11 NAV. My take: yes probably, as they state that all estimated expenses up to windup have been accrued for.

I would be *very* grateful if anyone here can clarify or comment the position on these 3 points.
(I have asked CPT via their financial PR firm also, but don't know what clarification I'll get).

[papy02] 26/4/2012 19:03

steve36 welcome.

Re the almost €7m of trade receivables there are various analyses of this in the Prelims (edited cut-and-pastes below), from which it looks to me that the largest component is €4.7m "Other receivables" in Polish Zloty. The last property sales in Poland were March to May 2011, (see so I'm in the dark as to what this amount might be - maybe someone else here can guess.

EDITED EXTRACTS:

Note 4 Operating segments

The Fund segment comprises the holding companies in Isle of Man and Luxembourg.
Core assets are those which are considered to retain significant enduring equity value, to protect on a prudent basis. All other assets are classified as non-core.

Trade and other receivables €'000

fund 2,046
Core 4,949
Total 6,995


Note 20 Trade and other receivables €'000

Trade receivables 105
Other receivables 6,797
Prepayments 93
Accrued interest on loans -
Total 6,995


Note 23: Risk Management

Trade and other receivables in other currencies €'000

Pounds Sterling -
Polish Zloty 4,742
Latvian Lats 10
Romanian New Lei 159

[steve36] 26/4/2012 16:36

There is a loan payable of €8.7m which seems to be related to Galleria and presumably this is the main element of the €6m of liabilities released. Any idea what the almost €7m of trade receivables is and whether this will be converted to cash post the quoted end Feb balance? Why not be a bit more helpful and quote the cash balance closer to the RNS date? Am I missing something or should the nav be boosted by c€8m from Galleria disposal?