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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Metro Baltic | LSE:MET | London | Ordinary Share | IM00B1G4ZQ34 | ORD EUR0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 21.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Jun 2019 to Jun 2024
TIDMMET
RNS Number : 1923I
Metro Baltic Horizons PLC
28 June 2013
Metro Baltic Horizons plc (MET.L)
Annual Report and Accounts 31 December 2012
Overview
-- The St Petersburg property increased in value by EUR1.54m to EUR7.72m. The valuation is based on the sale price subsequent to the year-end.
-- On 19 April 2013, subsequent to year-end, the Company sold Goldbrick, Pedragon and OOO Gruppa KUB. The litigation between Pedragon, Goldbrick, Bap Holding OU in Estonia and BAP Holding OOO in Russia is no longer a concern of the Company. As a consequence of the sale, the purchaser of Pedragon and Goldbrick assumed liability for the BAP Loan, as defined herein.
-- OU Pirita Tee 26 filed for insolvency during the year and as a result was derecognised as a subsidiary. The filing for insolvency was a result of the foreclosure of a loan agreement with that entity's principal bankers, which resulted in the repossession of the property situated at 26 Pirita Road, Tallinn, Estonia. The insolvency of Pirita Tee did not have a negative impact on results for the year.
-- The Company engaged in extensive pre-action correspondence with its former board and professional advisers before commencing legal proceedings against them in October 2012. The Company has recently also issued a counterclaim against its former auditors, Ernst & Young.
-- Net asset value per share (NAV) increased by 100% to EUR0.25 (31 December 2011: EUR0.125). The NAV is derived from the Group's cash holdings and the Russian property, classified within the disposal group held for sale.
-- Group profit after tax was EUR3.156m (2011: loss of EUR7.523m).
-- The total gross property portfolio was valued at EUR7.72m (31 December 2011: EUR8.9m), albeit it is now classified as part of a disposal group held for sale.
-- The deconsolidation of OU Pirita Tee 26 removed all asset level backed bank debt from the statement of financial position.
-- Focus for the near future is on maximising shareholder returns through litigation against the Company's former directors and advisers.
Copies of the Company's Annual Report and Accounts for the year ended 31 December 2012 will shortly be sent to shareholders and will be available from the Company's website http://www.metrobaltichorizons.com/
Enquiries
Metro Baltic Horizons PLC
Ronan Reid Tel: +353 1 6333843
S. P. Angel Corporate Finance LLP
Stuart Gledhill Tel: 020 3463 2260
This announcement will be available on MBH's website http://www.metrobaltichorizons.com/ as soon as practicable in accordance with AIM Rule 26.
Chairman's Statement
Dear Shareholders
Both fellow Board members and I continue to work to recover financial value in the company through disposition of assets and recompense from those responsible for the destruction of value in prior years.
In this regard the wind-down and sale of assets is complete and as of the date of this report, the Company is in a strong cash position with cash in hand of approximately EUR6m.
The final asset sale was the sale of the St Petersburg property which was completed in April 2013. This sale was executed via the sale of the entire issued share capital of our subsidiary company Pedragon Investments Limited for an initial consideration of EUR5.5m and further deferred consideration of up to EUR0.25m. Pedragon owned the Company's St. Petersburg development asset and the sale to the manager of this property followed on from a competitive bidding process. In addition to the property asset, Pedragon also contained an alleged EUR2.3 million of the BAP Loan Notes originally subscribed for by parties relating to the former investment manager MCM and which were secured over the St. Petersburg Property. The purchaser of Pedragon assumed all liabilities on foot of these loan notes, as part of the sale of Pedragon. The Board considers this a satisfactory result given the circumstances.
The Group no longer owns the Pirita Tee property in Estonia following foreclosure on the property by Unicredit. On 19 November, 2012, the shareholders resolved to liquidate the entity which held this property, OU Pirita Tee 26 and, as a result, the entity was deconsolidated from that date as the Group no longer had control of the entity. The insolvency of Pirita Tee did not have a negative impact on results for the year.
The Pedragon sale and the Pirita Tee foreclosure have been reflected in these financial statements under IFRS standards which require that the assets and liabilities of the "disposal group" are shown as single line items on the balance sheet. The same standards require that the income statement reflects the results of the disposal group as a single line item under the description of profit from discontinued operations. While assets/liabilities held for sale and discontinued operations are summarised into single line items in the balance sheet and income statement respectively, these amounts are analysed in detail within Note 8 to the financial statements.
During the year the Board successfully defended a takeover approach by Eagleheads, an entity established by the former Investment Adviser who opportunistically sought to acquire the Company for EUR2.3m.
Our focus is now solely on seeking legal remedies against the former board and advisors to the Company.
The profit attributable to the shareholders in the parent for the year ended 31 December 2012 was EUR3.2m, primarily reflecting the fair value uplift to the St. Petersburg property resulting from the deemed disposal proceeds received through thesale of Pedragon in April 2013, the write back of certain accrued fees to MCM, deferred taxation and other provisions to the profit and loss account offset in part by an increase in administration costs due to legal and related fees. This has resulted in an increase in the NAV per share from EUR0.125 per share to EUR0.25 per share.
Our litigation against the Company's previous board and advisers commenced last October with a claim against four groups of defendants in the amount of EUR26.6m and a counter claim by the Company against its former auditors Ernst and Young in the amount of approximately EUR6m. The Board believes there may potentially be substantial value recovered from this litigation. Such litigation can however be costly and there is no guarantee of success but, having regard to the issues described above and pursuant to legal advice, the Board believes that such litigation should be pursued. I believe that the steps taken by your Board are in the best interests of the Company and your Board is resolved to maximise the remaining value in the Company and to seek restitution for losses wherever possible and from those responsible.
As advised post the sale of Pedragon the preference of the Board was to make a distribution to long suffering shareholders but the former directors, Mr Robin James, Ms Kristel Meos and Mr Gunnar Okk together with fellow defendants, Mr James Kenny, Mr Mart Habakuk, Metro Capital Management AS and Tolmain Advisory Services Limited, have sought to restrict the ability of the Board to make such a distribution as part of their defence to the proceedings. Mr Paul McGuinness and his entities MG Capital Limited and McGuinness Investments OU have failed to submit a defence in the proceedings. We will provide an update in due course in regard of any potential distribution.
The Company does not intend to make further property investments and further is seeking to contain the ongoing costs of the Company and is likely to consider a delisting of the shares from AIM.
The Board will keep shareholders appraised on both of these matters.
Ronan Reid
Chairman
Directors' Report
The Directors present their annual report and audited financial statements for the year ended 31 December 2012.
Principal activities
The principal activity of the Group was investing in and developing land and buildings in the Baltic States and in the St. Petersburg area of Russia. Following the deconsolidation of the Group's Estonian subsidiary, OU Pirita Tee 26, and the sale, subsequent to the year end, of the Company's shareholding in Pedragon Limited and therefore the Group's St. Petersburg property, the future activities of the Group are expected to be that of pursuing legal actions against its former directors and professional advisors.
Business Review
A review of the business during the year is contained in the Chairman's Statement.
Results for the period
The profit attributable to the shareholders in the parent for the year ended 31 December 2012 was EUR3,248k (loss for the year ended 31 December 2011: EUR7,090k). The results for the year are set out in the Consolidated Statement of Comprehensive Income on pages 12 and 13. The profit for the year has been transferred to reserves. The loss attributable to the Group's non-controlling interest totalling EUR92k (2011: EUR423k) was added to their share of losses forward prior to deconsolidation.
Basis of Preparation
The Board have considered and reviewed the current financial status and the cash-flow projections of the Group. Having completed this review and given consideration to the other factors detailed in Note 2.2 to the financial statements, the Directors are of the opinion that there are adequate financial resources available to enable the Company and Group meet its obligations as they fall due for a period of at least 12 months from the date of approval of these financial statements. Accordingly, although the Group disposed of its last remaining investment property subsequent to the balance sheet date, the Group will continue in operational existence for the foreseeable future and the financial statements have therefore been prepared on a Going Concern basis.
Dividend
The Directors have not declared any dividends in the year ended 31 December 2012 (2011: Nil).
Directors
The Directors who served during the year were Ronan Reid, Brendan Murphy and Tim Crowley.
Auditors
Grant Thornton, Chartered Accountants & Registered Auditors were the appointed auditors during the current financial year and have indicated their willingness to continue in office
Directors' interests
The beneficial interests of the Directors and Secretary in the shares of the Group and Company are as noted below. All interests are in the ordinary share capital of the parent company, Metro Baltic Horizons plc:
Hot Features
Premium
31 December 2012 31 December 2011
Number of shares Number of shares
Tim Crowley 440,537 440,537
Ronan Reid 601,275 1,275
Brendan Murphy 10,725 10,725
Directors Remuneration
Remuneration to Directors during each of the financial years ending 31 December 2012 and 31 December 2011 consisted entirely of Directors' fees and can be analysed as follows;
2012 2011
EUR EUR
Ronan Reid 25,000 25,000
Brendan Murphy 17,500 -
Tim Crowley 17,500 10,983
60,000 35,983
======= =======
Secretary
The Secretary who served during the year was Philip Scales.
Substantial Holdings
The following entities had substantial holdings in the share capital of the Group at 31 December 2012;
Shares held Perc. of total
Pershing International Nominees Limited 14,973,499 57.15%
Chase Nominees Limited 4,560,914 17.41%
Vidacos Nominees Limited 1,523,522 5.81%
The Board and subcommittees
The Board considers all Directors, including the Chairman, to be independent. All the Directors are non-executive. The Group and Company has an audit committee consisting of all the Board members.
Directors' Responsibility Statement
The Directors are responsible for preparing this report and the financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
The Directors are required to prepare financial statements for each financial period which present fairly the financial position of the Group and Company and the financial performance and cash flows of the Group for that period. In preparing those 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 all applicable accounting standards have been followed; and
-- Prepare the financial statements on the going concern basis unless it is inappropriate to assume that the Company or Group will continue in business.
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and of the Group and enable them to ensure that the financial statements comply with the Companies Acts 1931 to 2004. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
By Order of the Board
P Scales
Secretary
Independent Auditors' Report
To the members of Metro Baltic Horizons plc
We have audited the financial statements of Metro Baltic Horizons plc for the year ended 31 December 2012 which comprise the Consolidated Statement of Total Comprehensive Income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity, the Consolidated Statement of Cash Flows, the Company Statement of Cash Flows and the related notes 1 to 25. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards.
This report is made solely to the Company's members, as a body, pursuant to Section 15 of the Companies Act 1982. 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 auditor
As explained more fully in the Directors' Responsibilities Statement set out on page 9, the Directors are responsible for the preparation of the financial statements and for being satisfied that they 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 Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion the financial statements:
- give a true and fair view of the state of the Group's and Company's affairs as at 31 December 2012 and of the Group's profit for the year then ended;
- have been properly prepared in accordance with International Financial Reporting Standards; and
- have been prepared in accordance with the requirements of the Companies Acts 1931 to 2004.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Acts 1931 to 2004 requires us to report to you if, in our opinion:
- adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
- the financial statements are not in agreement with the accounting records and returns; or - certain disclosures of Directors' remuneration specified by law are not made; or - we have not received all the information and explanations we require for our audit.
Grant Thornton
Chartered Accountants & Registered Auditors
24-26 City Quay
Dublin 2
Date: 28 June 2013
Consolidated Statement of Total Comprehensive Income
For the year ended 31 December 2012
31 December 31 December
2012 2011
Note EUR'000 EUR'000
Continuing operations
Administrative expenses 3 178 (1,332)
Net foreign currency gain 9 25
Gain/(loss) arising on loss of control
in former subsidiary entity 8 746 (536)
_______ _______
Net operating profit/(loss) before tax
and finance income and expense 933 (1,843)
_______ _______
Profit/(loss) before tax 933 (1,843)
Income tax credit 5 - -
_______ _______
Profit/(loss) for the year - continuing
operations 933 (1,843)
====== ======
Profit/(loss) for year from discontinued
operations 8 2,223 (5,680)
_______ _______
Profit/(loss) for financial year 3,156 (7,523)
Other comprehensive income - 10
_______ _______
Total comprehensive income/(loss) 3,156 (7,513)
====== ======
31 December 31 December
2012 2011
Note EUR'000 EUR'000
Total comprehensive income
Total comprehensive income/(loss) 3,156 (7,513)
Total Comprehensive income/(loss) attributable
to:
Equity holders of the parent - continuing
operations 933 (1,843)
Equity holders of the parent - discontinued
operations 2,315 (5,247)
Non-controlling interest - discontinued
operations (92) (423)
_______ _______
3,156 (7,513)
====== ======
31 December 31 December
2012 2011
EUR'cents EUR'cents
Basic and Diluted Earnings per share
Earnings/(loss) per share from continuing
operations 6 3.56 (7.03)
Earnings/(loss) per share from discontinued
operations 6 8.84 (20.03)
_______ _______
Total earnings/(loss) per share 12.40 (27.06)
====== ======
The Directors have chosen not to include the Company Statement of Total Comprehensive Income as permitted by the Isle of Man Companies Acts.
Consolidated Statement of Financial Position
As at 31 December 2012
Note 31 December 31 December
2012 2011
EUR'000 EUR'000
Assets
Non-current assets
Investment property 7 - 8,948
Other assets - 16
______ ______
Total non-current assets - 8,964
_________ _________
Current assets
Trade and other receivables 10 - 154
Cash and cash equivalents 11 1,152 2,128
_______ _______
Current assets 1,152 2,282
__________ __________
Assets included in disposal
group as held for sale 8 8,022 -
______ ______
Total assets 9,174 11,246
====== ======
Equity
Issued capital 15 262 262
Distributable Reserve 17 36,186 36,186
Retained earnings (29,888) (33,136)
Foreign currency translation
reserve (30) (30)
________ ________
Total equity attributable
to equity holders of the
parent 6,530 3,282
Non-controlling interest - (1,279)
________ ________
Total equity 6,530 2,003
====== ======
Note 31 December 31 December
2012 2011
EUR'000 EUR'000
Liabilities
Non-current liabilities
Interest bearing loans
- Other loans 13 - 1,052
Deferred tax liabilities 5 - 1,235
_______ _______
Total Non-Current Liabilities - 2,287
====== ======
Current liabilities
Trade and other payables 14 172 1,196
Interest bearing loans
- Bank loans 12 - 3,777
- Other loans 13 - 1,902
Income tax payable - 81
_______ _______
Total current liabilities 172 6,956
====== ======
Liabilities included in disposal
group as held for sale 8 2,472 -
====== ======
Total liabilities 2,644 9,243
_______ _______
Total equity and liabilities 9,174 11,246
====== ======
Net asset value per ordinary
share - basic (cents) 16 0.25 0.125
The financial statements were approved by the Board and authorised for issue on the 28 day of June 2013.
Ronan Reid Brendan Murphy
Director Director
Company Statement of Financial Position
As at 31 December 2012
31 December 31 December
2012 2011
Note EUR'000 EUR'000
Assets
Non-current assets
Investment in subsidiaries 19 - 3,500
Current assets
Cash and cash equivalents 11 1,152 1,971
_______ _______
Total current assets 1,152 1,971
Assets classified as held for sale 19 5,675 -
_______ _______
Total assets 6,827 5,471
====== ======
Equity
Issued capital 15 262 262
Distributable reserves 17 36,186 36,186
Retained earnings (deficit) (29,721) (31,077)
_______ _______
Total equity 6,727 5,371
====== ======
Liabilities
Current liabilities
Trade and other payables 14 100 100
_______ _______
Total liabilities 100 100
_______ _______
Total equity and liabilities 6,827 5,471
====== ======
The financial statements were approved by the Board and authorised for issue on the 28 day of June 2013.
Ronan Reid Brendan Murphy Director Director
Consolidated Statement of Changes in Equity
For the year ended 31 December 2012
Issued Distributable Foreign Retained Total Non- Total
Capital Reserves Currency Earnings EUR'000 Controlling Equity
EUR'000 EUR'000 Translation EUR'000 Interest EUR'000
Reserve EUR'000
EUR'000
As at 1 January
2011 262 36,186 (176) (26,046) 10,226 (2,253) 7,973
Loss for year - - - (7,100) (7,100) (423) (7,523)
Other
Comprehensive
Income - - (10) 10 - - -
______ _________ _______ _______ _______ _______ ______
Total
comprehensive
income for year - - (10) (7,090) (7,100) (423) (7,523)
Transactions with
owners
De-recognition
of
non-controlling
interest on
loss of control
(Note 8) - - 156 - 156 1,397 1,553
_____ _________ _______ _______ _______ _______ ______
As at 31 December
2011 262 36,186 (30) (33,136) 3,282 (1,279) 2,003
Profit/(loss)
for year - - - 3,248 3,248 (92) 3,156
______ _________ _______ _______ _______ _______ ______
Total
comprehensive
income for year - - - 3,248 3,248 (92) 3,156
Transactions
with owners
De-recognition
of
non-controlling
interest on
loss of control
(Note 8) - - - - - 1,371 1,371
_____ _________ _______ _______ _______ _______ ______
As at 31 December
2012 262 36,186 (30) (29,888) 6,530 - 6,530
==== ======= ====== ====== ====== ====== ======
Company Statement of Changes in Equity
For the year ended 31 December 2012
Issued Distributable Retained
Capital Reserves Earnings Total
EUR'000 EUR'000 EUR'000 EUR'000
At 1 January 2011 262 36,186 (28,985) 7,463
Total comprehensive
income - - (2,092) (2,092)
_______ ______ _______ _______
At 31 December 2011 262 36,186 (31,077) 5,371
====== ===== ====== ======
Issued Distributable Retained
Capital Reserves Earnings Total
EUR'000 EUR'000 EUR'000 EUR'000
At 1 January 2012 262 36,186 (31,077) 5,371
Total comprehensive
Income - - 1,356 1,356
_______ ______ _______ _______
At 31 December 2012 262 36,186 (29,721) 6,727
====== ===== ====== ======
Consolidated Statement of Cash Flows
For the year ended 31 December 2012
2012 2011
Note EUR'000 EUR'000
Cash flows from operating activities
Profit/(loss) before tax 933 (1,843)
Non-cash adjustment to reconcile profit/(
loss) before tax to net cash flows
Foreign exchange gain (9) (25)
(Gain)/loss arising from loss of control
in former subsidiary entity 8 (746) 536
Taxes paid and other miscellaneous items 28 (31)
Working capital adjustments
Decrease in accounts receivable and other
current assets - (38)
(Decrease)/increase in trade and other
payables (955) 398
Net cash flows from continuing operations (749) (1,003)
Net cash flows from discontinued operations 8 83 (64)
---------- ----------
Net cash flows from operating activities (666) (1,067)
---------- ----------
Cash flows from investing activities
Proceeds from sale of subsidiaries, net
of cash 8 - 3,000
Net cash generated from investing activities
from continuing operations - 3,000
Net cash used in investing activities from
discontinued operations (2) (4)
---------- ----------
Net cash generated from investing activities (2) 2,996
Cash flows from financing activities
Net cash used in financing activities from
discontinued operations 8 (81) (274)
---------- ----------
Net cash flows from financing activities (81) (274)
---------- ----------
Net (decrease) increase in cash and cash
equivalents (749) 1,655
Cash and cash equivalents at the beginning
of the year 11 2,128 473
---------- ----------
Cash and cash equivalents at the end of
the year 11 1,379 2,128
========== ==========
Company Statement of Cash Flows
For the year ended 31 December 2012
31 December 31 December
2012 2011
Note EUR'000 EUR'000
Cash flows from operating activities
Profit/(loss) before tax 1,356 (2,092)
Non-cash adjustment to reconcile profit
before tax to net cash flows
Net impairment adjustment 19 (1,820) 1,123
Working capital adjustments
Increase in creditors - (66)
_______ _______
Net cash used in from operating activities (464) (1,035)
Cash flows from investing activities
Received from subsidiaries 3,278
Advanced to subsidiaries 19 (355) (319)
_______ _______
Net cash generated from investing activities (355) 2,959
_______ _______
Net increase in cash and cash equivalents (819) 1,924
Cash and cash equivalents at the beginning
of the year 11 1,971 47
_______ _______
Cash and cash equivalents at the end
of the year 11 1,152 1,971
====== ======
1. General Information
The Company was incorporated in the Isle of Man on 18 September 2006 as Metro Baltic Hermitage plc. On 13 November 2006 the Company passed a special resolution to change its name to Metro Baltic Horizons plc. The Company was established to invest in and develop property in the Baltic States and in the St. Petersburg area of Russia.
This report of the Company for the year ended 31 December 2012 comprises the Company and its subsidiaries (together referred to as the "Group").
The Company's registered address is IOMA House, Hope Street, Douglas, Isle of Man. The Company was admitted to trading on the AIM market of the London Stock Exchange and commenced operations on 11 December 2006. The shares were suspended on 11 November 2010 and relisted on 3 August 2011.
2. Principal Accounting Policies
A summary of the principal accounting policies, all of which have been applied consistently throughout the year, is set out below. Certain comparative amounts have been reclassified to conform to the current year's presentation.
2.1 Statement of Compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The IFRS applied are those effective for accounting periods beginning on or after 1 January 2012.
2.2 Basis of preparation
The consolidated financial statements have been prepared on a historical cost basis, except for investment properties, which have been measured at fair value.
Previously, the primary purpose of the Group was the investment in and development of property in the Baltic States and the St. Petersburg area of Russia. At 31 December 2012, the Group owned one property.
During the current financial year, Unicredit foreclosed on the property previously owned by the Group's subsidiary OU Pirita Tee 26 and, as a result, the directors resolved to file for insolvency and dissolve that entity. Accordingly, OU Pirita Tee 26 was deconsolidated during the current financial year.
The remaining property situated in St. Petersburg, Russia, was disposed of subsequent to the balance sheet date as part of a transaction involving the sale of the share capital in the Group's Cypriot subsidiary, Pedragon Limited. This transaction generated cash of EUR5.5m and also resulted in the assumption, by the acquirer, of the "BAP Loan" which had a carrying value of EUR2.3m (2011: EUR1.9m).
The Board have considered and reviewed the current financial status and the cash-flow projections of the Group. Having completed this review and given consideration to the other factors detailed above, the Directors are of the opinion that there are adequate financial resources available to enable the Company and Group meet its obligations as they fall due for a period of at least 12 months from the date of approval of these financial statements. Accordingly, although the Group disposed of its last remaining investment property subsequent to the balance sheet date, the Group will continue in operational existence for the foreseeable future and the financial statements have therefore been prepared on a Going Concern basis.
2.3 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and the subsidiaries controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefit from its activities.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the Company.
All intra-Group transactions, balances, income and expenses are eliminated on consolidation. A change in the ownership interest of a subsidiary, without a change of control, is accounted for as an equity transaction. Losses are attributed to the non-controlling interest even if that results in a deficit balance.
If the Group loses control over a subsidiary, it:
-- Derecognises the assets (including goodwill) and liabilities of the subsidiary at the carrying amounts at the date when control is lost;
-- Derecognises the carrying amount of any non-controlling interests in the former subsidiary at the date when control is lost (including any components of other comprehensive income attributable to them);
-- Derecognises the cumulative translation differences, recorded in equity;
-- Recognises the fair value of the consideration received, if any, from the transaction, event or circumstances that resulted in the loss of control;
-- Recognises any investment retained in the former subsidiary at its fair value at the date that control is lost; and
-- Recognises any resulting difference as a gain or loss in profit or loss attributable to parent.
2.4 Changes in accounting policy and disclosures
New IFRS Standards and Interpretations not applied
The IASB and IFRIC have issued additional standards and interpretations which are effective for periods starting after 1 January 2012. The following standards and interpretations have yet to be adopted by the Group:
International Financial Reporting Standards Effective date
(IFRS/IAS)
IAS 1 Presentation of Items of Other 1 July 2012
Comprehensive Income - Amendments
to IAS 1
IAS 19 Employee Benefits (Amendment) 1 January 2013
IAS 27 Separate Financial Statements 1 January 2013
(Revised 2011)
IAS 28 Investments in Associates and 1 January 2013
Joint Ventures (Revised 2011)
IFRS 1 Government Loans (Amendments 1 January 2013
to IFRS 1)
IFRS 7 Disclosures - Offsetting Financial 1 January 2013
Assets & Financial Liabilities
(Amendments to IFRS 7)
IFRS 9 Financial Instruments - Classification 1 January 2015
and Measurement
IFRS 10 Consolidated Financial Statements 1 January 2013
IFRS 11 Joint Arrangements 1 January 2013
IFRS 12 Disclosure of Interests in 1 January 2013
Other Entities
IFRS 13 Fair Value Measurement 1 January 2013
IFRIC 20 Stripping Costs in the Production
Phase of a Surface Mine 1 January 2013
Various Annual Improvements in the
Production Phase of a Surface 1 January 2013
Mine
IAS 32 Offsetting Financial Assets
and Financial Liabilities (Amendments 1 January 2014
to IAS 32)
IFRS 10, Investment entities (Amendments
12 & IAS to IFRS 10, IFRS 12 and IAS 1 January 2014
27 27)
The Group does not anticipate that the adoption of these standards and interpretations will have a material effect on its financial statements on initial adoption.
The Group has adopted IAS 12 Income Taxes (amendment) and IFRS 7 Financial Instruments: Disclosures (amendment) in respect of the 2012 year-end. The application of the above standards did not result in material changes in the Group's Consolidated Financial Statements.
2.5 Summary of significant accounting policies
a) Revenue recognition
Revenue is recognised when it is probable that the economic benefits associated with the transaction will flow to the Group and the amount of revenue can be measured reliably.
Rental income
Rental revenues are accounted for on an accruals basis.
Interest income
Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable. Interest income is included in finance income in the Consolidated Statement of Total Comprehensive Income.
b) Investment property
Property held to earn rentals and/or for capital appreciation and that is not occupied by the companies in the Group, is classified as investment property. Investment property is initially measured at cost including transaction costs. Subsequent to initial recognition investment property is carried at fair value and adjustments to fair value are reflected in the Consolidated Statement of Total Comprehensive Income as part of the profit or loss for that period.
Properties held by the Group are derecognised when either they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. Any gains or losses on the retirement or disposal of a property are recognised in the Consolidated Statement of Total Comprehensive Income in the year of retirement or disposal.
Transfers are made to or from investment property only when there is a change in use. For a transfer from investment property to owner occupied property, the deemed cost for subsequent accounting is the fair value at the date of change in use. If owner occupied property becomes an investment property, the Group accounts for such property in accordance with the policy stated under property, plant and equipment up to the date of change in use.
All directly attributable transaction costs associated with the purchase of the investment properties are included within the cost of the property. Development costs and borrowing costs are also capitalised where appropriate.
c) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for its intended use or sale, are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
d) Expenses
Expenses are accounted for on an accruals basis. Fees payable to the Property Adviser are calculated with reference to the cost or valuation of the underlying properties held by the Group in accordance with contractual agreements.
All administration expenses are charged through the Consolidated Statement of Total Comprehensive Income.
e) Cash and cash equivalents
Cash and cash equivalents consist of cash in hand and short-term deposits which are short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
f) Income tax and deferred tax
Income tax
Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, by the reporting date, in the countries where the Group operates and generates taxable income.
Deferred tax
Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised for all taxable temporary differences, except:
- Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
- In respect of taxable temporary differences associated with investments in subsidiaries where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
- Deferred tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.
- In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates, tax laws, and tax plans that have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised in other comprehensive income. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Where evidence is available that a deferred tax liability will not crystallise, the liability is reversed.
g) Business combinations
Business combinations from 1 January 2009
There were no business combinations during the year ended 31 December 2012 or in the three financial years prior to the current financial year.
Business combinations prior to 31 December 2008
The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured at the aggregate of the fair values at the date of exchange of assets given, liabilities incurred or assumed and any equity instruments issued by the Group in exchange for control of the acquiree, plus any contingent liabilities that meet the conditions for recognition under IFRS 3 (revised).
The non-controlling interest (formerly known as minority interest) is measured at the proportionate share of the acquiree's identifiable net assets.
Goodwill is initially measured at cost being the excess of the consideration transferred over the Group's net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in the Consolidated Statement of Total Comprehensive Income as part of the profit or loss for the year.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's cash generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
h) Foreign currency translation
The consolidated financial statements are presented in Euro which is the Company's functional currency and the presentation currency of the Company and Group.
Functional and presentation currency
Items included in the financial statements of each of the Group entities are measured in the currency of the primary economic environment in which the entity operates (the "functional currency"). Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency.
The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
(i) assets and liabilities are translated at the closing rate at the date of the statement of financial position;
(ii) income and expenses are translated at the average exchange rate prevailing in the period and gains or losses are dealt with in the Consolidated Statement Total of Comprehensive Income as part of the profit or loss for the period.
Any gain or losses that arise on consolidation from the retranslation of the subsidiary entity from its functional currency to the presentation currency of the Group are taken directly to other comprehensive income and included within the foreign currency exchange reserve.
On disposal or derecognition of a foreign entity, the related cumulative translation differences recognised in equity are reclassified to profit and loss and are recognised as part of the gain or loss on disposal or derecognition.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Consolidated Statement of Total Comprehensive Income as part of the profit or loss for the period.
h) Foreign currency translation (cont'd)
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when fair value is determined.
i) Operating segments
IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are reviewed regularly by the chief operating decision maker in order to allocate resources and to assess their performance.
j) Financial assets
All financial assets are recognised initially at fair value. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.
k) Investments in subsidiaries and associate undertakings
All investments in subsidiary companies and associate undertakings are recorded at cost less provision for any permanent diminution in value.
l) Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of IAS 39 are classified as accounts payable, accruals and other liabilities, loans or borrowings and are initially recorded at fair value and subsequently at amortised cost. The Group determines the classification of its financial liabilities at initial recognition.
Subsequent measurement
The measurement of financial liabilities depends on their classification as follows:
Loans and borrowings
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the profit or loss when the liabilities are derecognised as well as through the effective interest rate method (EIR) amortisation process.
l) Financial liabilities (cont'd)
Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in the Consolidated Statement of Total Comprehensive Income as part of the profit or loss for the period.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the Consolidated Statement of Total Comprehensive Income as part of the profit or loss for the period.
m) Non - current assets and disposal groups classified as held for sale and profit or loss from discontinued operations
Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered principally 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 or disposal group 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.
A discontinued operation is a component that is disposed of or classified as held for sale. In the Consolidated Statement of Total Comprehensive Income of the reporting period, and of the comparative period, income and expenses from discontinued operations are reported separately from income and expenses from continuing operations, down to the level of profit after taxes, even when the Group retains a non-controlling interest in the subsidiary after the sale. The resulting profit or loss (after taxes) is reported separately in the Consolidated Statement of Total Comprehensive Income.
n) Judgements
In the preparation of the Group's consolidated financial statements, management is required to make certain judgements and estimates that affect the reported amounts of its assets and liabilities, revenues and expenses at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities. Significant areas requiring management's judgement include assessment of the fair value of investment properties and properties under construction and also the determination of deferred tax balances.
Deferred tax assets / liabilities
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits.
Revaluation of investment properties
The Group carries its investment properties at fair value, with changes in fair value being recognised in the Consolidated Statement of Total Comprehensive Income as part of the profit or loss for the period.
Impairment of non-financial assets
The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset's recoverable amount. An asset's recoverable amount is the higher of the asset's fair value less the cost of selling the asset and its value in use. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing recoverable amounts, the Company relies on independent valuers.
3. Administrative Expenses
Administrative expenses include the following:
31 December 31 December
2012 2011
Group Group
EUR'000 EUR'000
Investment management fees (714) 171
Legal and other professional fees 153 706
Administrators fees 99 130
Directors' remuneration 60 36
Auditors' remuneration - audit services 50 40
Accountancy Services 30 63
Other administrative expenses 144 259
_______ _______
(178) 1,405
Reclassified to discontinued operations (Note 8) - (73)
_______ _______
(178) 1,332
====== ======
Investment management fees were accrued at 1.5% per annum of gross assets under management in Russia and 1% per annum of all other gross assets until 7 August 2011. The above fees were accrued based on the investment management contract of the former investment manager and investment adviser. Litigation is currently being pursued against both parties by the Group and it is the view of the Directors that no management fees will be paid to the former investment manager or investment adviser. This view is supported by legal opinion received. Accordingly, the Directors have reversed all amounts previously accrued in respect of same.
4. Finance Income and Expense
31 December 31 December
2012 2011
Group Group
EUR'000 EUR'000
Interest payable on bank and other loans - 548
______ ______
Finance Expense - 548
Reclassified to discontinued operations (Note 8) - (548)
_______ _______
- -
====== ======
5. Income Tax
31 December 31 December
2012 2011
Group Group
EUR'000 EUR'000
Deferred tax
Released to profit and loss 1,235 1,078
______ ______
Tax credit for the year 1,235 1,078
Reclassified to discontinued operations (Note 8) (1,235) (1,078)
______ ______
- -
===== =====
Previously, deferred tax was recognised for capital gains tax or equivalent that would be payable on the disposal of investment or other property assets at their fair market value. Given the structure of the sale of the Group's St. Petersburg property post year end, no tax liability arose. Accordingly, the liability was released to profit at year end and reclassified as part of discontinued operations.
Group 31 December 31 December
Deferred tax asset and liability 2012 Liabilities 2012 Liabilities
------------------ ------------------
EUR'000 EUR'000
Opening Deferred tax assets - -
Opening Deferred tax liabilities 1,235 2,313
------------------ ------------------
1,235 2,313
------------------ ------------------
Consolidated Statement of Comprehensive Income
Revaluation of land & property
- Tax credit - (1,078)
Release of liability as reversal is
no longer probable (1,235) -
Closing balance - 1,235
------------------ ------------------
The Company is resident in the Isle of Man. Its activities in the Isle of Man are liable to tax at a 0% tax rate.
The Group has significant accumulated tax deductible losses which are available for offset against future taxable profits. No deferred tax has been recognised in respect of these losses on the basis that there is uncertainty as to whether or not there will be suitable taxable profits against which these losses can be utilised.
6. Earnings per share
The calculation of basic earnings per share at 31 December 2012 was based on the profit attributable to shareholders of EUR3,248k (2011: loss of EUR7,090k) split between a profit from continuing operations of EUR933k (2011: loss of EUR1,843k) and profit from discontinued operations of EUR2,315k (2011: loss of EUR5,247k). The weighted average number of ordinary shares in issue during the year ended 31 December 2012 was 26,200,270 (2011: 26,200,270).
Diluted earnings per share amounts are calculated by dividing the net profit attributable to the ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all dilutive potential ordinary shares into ordinary shares. There were no potentially dilutive shares at 31 December 2012 or 31 December 2011.
31 December 31 December
2012 2011
Group Group
EUR'000 EUR'000
Basic and diluted earnings per share
Profit/(loss) attributable to
equity holders of the parent - continuing operations 933 (1,843)
_______ _______
Profit/(loss) attributable to
equity holders of the parent - discontinued operations 2,315 (5,247)
_______ _______
31 December 31 December
2012 2011
Group Group
Weighted average number of ordinary shares 26,200,270 26,200,270
in issue during the year
EUR' cents EUR' cents
Earnings/(loss) per share from continuing
operations 3.56 (7.03)
Earnings/(loss) per share from discontinued
operations 8.84 (20.03)
_______ _______
Total earnings/(loss) per share 12.40 (27.06)
====== ======
7. Investment Property
Investment Property
EUR'000
At 31 December 2010 and 1 January 2011 18,074
Adjustment in respect of foreign exchange 108
Fair value adjustment - discontinued operations (Note 8) (6,043)
Derecognised following loss of control (Note 8) (3,191)
________
At 31 December 2011 and 1 January 2012 8,948
Fair value adjustment - discontinued operations (Note 8) 1,444
Reclassification of investment property to held for sale (Note 8) (7,722)
Derecognised following loss of control (Note 8) (2,670)
________
At 31 December 2012 -
=======
At year end, the Group owned one investment property which it has included as part of its disposal group held for sale. The Group utilised subsequent sales data to determine the valuation of the St Petersburg investment property at year-end. As the investment property was sold shortly after year-end, and there were no significant events that occurred between year-end and the date of sale, the Directors determined that the subsequent sales price was a reasonable approximation of the fair value of the property at year-end. The valuation of the Pirita Tee property (derecognised following the loss of control) was performed by the Directors.
8. Gain / (loss) on derecognition of subsidiary entity, assets classified as held for sale and discontinued operations
The profit/(loss) for the year from discontinued operations arises as follows;
2012 2011
EUR'000 EUR'000
-------- --------
Arising on loss of control of Pirita
Tee during the current financial year
(see below) (142) (1,408)
Arising from subsidiary undertakings
classified as held for sale (see below) 2,365 (4,144)
Arising on loss of control of SIA
D Tilts Holdings during the 2011 financial
year (see below) - (128)
Profit/(loss) for year from discontinued
operations 2,223 (5,680)
======== ========
In November 2012 the Group lost control of its 80% holding in OU Pirita Tee 26, the entity that owned the Pirita site in Tallinn, Estonia, realising a gain on derecognition of EUR746k. The Group ceased to consolidate the results, assets and liabilities of this entity from the date of the loss of control. Amounts previously included in respect of non-controlling interests (EUR1,371k) were also derecognised from the date control was lost. The gain on derecognition was calculated as follows:
2012
EUR'000
--------
Net liabilities at date of loss of control 2,117
Non-controlling interest (1,371)
Gain on derecognition of subsidiary 746
========
The results of this operating segment have been included in the Consolidated Statement of Total Comprehensive Income within the single line item "Profit/(loss) for year from discontinued operations". The detailed analysis of the segment's results is set out below. The comparative financial statement amounts have been adjusted to reflect the fact that the segment is now discontinued.
2012 2011
EUR'000 EUR'000
-------- --------
Net rental income 6 53
Changes in value of investment property
(Note 7) (100) (1,090)
Administration expenses - (73)
-------- --------
Operating loss (94) (1,110)
Finance costs (48) (298)
-------- --------
Loss from discontinued operations
before tax (142) (1,408)
Taxation - -
-------- --------
Loss for year from discontinued operations (142) (1,408)
-------- --------
The carrying amounts of assets and liabilities derecognised upon the loss of control are summarised below as are the details of the amounts consolidated in the previous financial year.
2012 2011
EUR'000 EUR'000
Non-current assets
Investment property - 2,770
Current assets
VAT and other receivables - 3
Cash and cash equivalents 9 21
Total assets 9 2,794
-------- -------------
Current liabilities
Trade and other payables - 23
Bank loans 1,074 3,778
Other loans 1,052 1,052
-------- -------------
Total liabilities 2,126 4,853
-------- -------------
Net liabilities at date of loss of control (2,117) (2,059)
-------- -------------
Cash flows generated by this operating segment for the
reporting periods under review can be summarised as follows:
2012 2011
EUR'000 EUR'000
Operating activities (14) (16)
Investing activities - -
Financing activities* 2 (210)
-------- --------
(12) (236)
-------- --------
*Financing activities are net of transfers from other group
companies totalling EUR80,000.
Subsequent to the year end, the Group disposed of its subsidiary
entities Pedragon Limited, Goldbrick Limited, and OOO Gruppa
Kub. The assets and liabilities of these entities are classified
as being part of a disposal group held for sale. As this
disposal group was an operating segment for the purposes
of management reporting the results of the operations of
this operating segment have been included in the Consolidated
Statement of Total Comprehensive Income within the single
line item "Profit/(loss) for year from discontinued operations".
The detailed analysis of the segment's results is set out
below. The comparative financial statement amounts have
been adjusted to reflect the fact that the segment is now
discontinued.
2012 2011
EUR'000 EUR'000
-------- --------
Net rental income 2 (4)
Changes in value of investment property
(Note 7) 1,544 (5,063)
Foreign exchange gain 23 95
-------- --------
Operating profit (loss) 1,569 (4,972)
Finance costs (439) (250)
-------- --------
Profit/(loss) from discontinued operations
before tax 1,130 (5,222)
Taxation credit 1,235 1,078
-------- --------
Profit/(loss) for year from discontinued
operations 2,365 (4,144)
-------- --------
The carrying amounts of assets and liabilities classified
as part of a disposal group held for sale are as follows:
2012 2011
EUR'000 EUR'000
Non-current assets
Investment property (Note 7) 7,722 6,178
Other assets 18 16
Current assets
Trade and other receivables 55 148
Cash and cash equivalents 227 132
Total assets 8,022 6,474
-------- --------
Current liabilities
Trade and other payables 131 128
Deferred taxation - 1,235
Other loans 2,341 1,902
-------- --------
Total liabilities 2,472 3,265
-------- --------
Net assets 5,550 3,209
-------- --------
Cash flows generated by this operating segment for the
reporting periods under review can be summarised as follows:
2012 2011
EUR'000 EUR'000
Operating activities 97 (101)
Investing activities (2) (4)
Financing activities - -
-------- --------
95 (105)
-------- --------
In July 2011 the Group lost control of its 80% holding
in SIA D Tilts Holdings (and its subsidiary SIA E1 Mart),
the entity that owned the "Krasta 99" property in Riga,
Latvia, realising a loss on derecognition of EUR536k. The
Group ceased to consolidate the results, assets and liabilities
from the date of the loss of control. Amounts previously
included in respect of non-controlling interests (EUR1,397k)
and cumulative translation adjustments (EUR156k) were also
derecognised as of that date.
The gain on derecognition was calculated as follows:
2011
EUR'000
--------
Net liabilities at date of loss of control 1,017
Non-controlling interest (1,397)
Foreign currency reserve / cumulative translation
adjustments (156)
--------
Loss on derecognition of subsidiary (536)
========
The results of this operating segment have been included
in the Consolidated Statement of Total Comprehensive Income
within the single line item "Profit/(loss) for year from
discontinued operations". The detailed analysis of the
segments results are set out below.
2011
EUR'000
--------
Changes in value of investment property (Note
7) 110
Administration expenses (161)
--------
Operating loss (51)
Finance costs (77)
--------
Loss from discontinued operations before tax (128)
Taxation -
--------
Loss for year from discontinued operations (128)
--------
The carrying amounts of assets and liabilities derecognised
upon the loss of control is summarised below.
2011
EUR'000
Non-current assets
Investment property (Note 7) 3,191
Current assets
VAT and other receivables 111
Cash and cash equivalents 21
Total assets 3,323
--------
Current liabilities
Bank loans 2,982
Other loans 1,358
--------
Total liabilities 4,340
--------
Net liabilities at date of loss of control (1,017)
--------
Cash flows generated by this operating segment for the
prior year reporting period under review can be summarised
as follows:
2011
EUR'000
Operating activities 53
Investing activities -
Financing activities (64)
------------------
(11)
------------------
9. Operating Segment Information
For management purposes, the Group is organised into business units based on their activities. At the previous year end the Group had two operating segments comprising the Pirita Road and Bolshaya Pusharskaya (St. Petersburg) properties. As detailed in Note 8, the results of the activities of these operating segments have been classified within discontinued operations during the current financial year on the basis that either:
- the subsidiary entity owning the property has been deconsolidated at year end; or
- the assets and liabilities of the entities comprising that segment have been classified as part of a disposal group held for sale.
All of the disclosures required by IFRS 8 in respect of these segments are included within Note 8.
In addition, the previous year's financial statements also provided information by way of a note about expenses, assets and liabilities managed centrally and not allocated to individual components. Given that all property related activities are now classified as discontinued, the information about expenses, assets and liabilities managed centrally is outlined on the face of the Consolidated Statement of Total Comprehensive Income and the Consolidated Statement of Financial Position.
10. Trade and Other Receivables and Amounts Due from Group Companies
31 December 31 December
2012 2011
Group Group
EUR'000 EUR'000
Trade receivables, prepayments and other assets - 39
VAT receivable - 115
_______ _______
Total trade and other receivables - 154
====== =====
As at 31 December, the ageing analysis of trade receivables of the Group is as follows:
Aging of past due
31 December 31 December
2012 2011
EUR'000 EUR'000
0 - 90 days - 39
>90 days - -
___ ___
Total - 39
=== ===
31 December 31 December
2012 2011
Company Company
EUR'000 EUR'000
Interest due from Group companies 10,204 9,814
Impairment of interest due (10,204) (9,814)
_______ ______
- -
====== =====
The net carrying amount of trade and other receivables is considered to be a reasonable approximation of fair value.
11. Cash and Cash Equivalents
31 December 31 December
2012 2011
Group Group
EUR'000 EUR'000
Sterling cash 526 901
Euro cash 671 1,154
Rouble cash 182 50
Estonian cash - 23
_______ ______
Total cash and cash equivalents 1,379 2,128
Cash and cash equivalents in entities
classified as held for sale (227) -
_______ _______
Cash and cash equivalents 1,152 2,128
====== =====
For the purpose of the Consolidated Statement of Cash Flows, cash and cash equivalents comprise the following:
31 December 31 December
2012 2011
Group Group
EUR'000 EUR'000
Cash at banks and on hand 1,379 2,128
=== ===
31 December 31 December
2012 2011
Company Company
EUR'000 EUR'000
Sterling cash 526 901
Euro cash 626 1,070
_______ _______
Cash and cash equivalents 1,152 1,971
====== =====
11. Cash and Cash Equivalents
For the purpose of the Consolidated Statement of Cash Flows, cash and cash equivalents comprise the following:
31 December 31 December
2012 2011
Company Company
EUR'000 EUR'000
Cash at banks and on hand 1,152 1,971
=== ===
12. Interest Bearing Bank Loans
31 December 31 December
2012 2011
Group Group
EUR'000 EUR'000
At beginning of year as originally
reported 3,777 6,749
Accrued interest 48 274
Repaid during year (81) (264)
Settled on foreclosure (2,670) -
_______ ______
At end of year / date of loss of control 1,074 6,759
Derecognised on loss of control (Note 8) (1,074) (2,982)
_______ ______
- 3,777
====== =====
During July 2012, Unicredit exercised their security and foreclosed on the property situated at Pirita Road. There was no recourse to other assets or subsidiaries of the Group for the shortfall between the outstanding loan balance and the proceeds recovered by the bank.
There were no Group interest bearing bank loans at 31 December 2012.
Group interest bearing bank loans at 31 December 2011
Current
Loan Interest Rate Maturity Amount
EUR'000
Unicredit bank, EUR 3.96% 19/5/2010* 3,777
=====
* Rolling credit term facility which was secured by the assets of the Group's subsidiary OU Pirita Tee 26.
13. Other Loans
31 December 31 December
2012 2011
Group Group
EUR'000 EUR'000
Non-current loans
Non-controlling interest loans - 1,052
====== =====
As detailed in Note 8, the non-controlling interest loan recognised at the previous year end was derecognised in the current year following the deconsolidation of OU Pirita Tee 26 arising from the loss of control prior to the statement of financial position date. The loan had no fixed maturity date and accrued interest at 6% per annum.
31 December 31 December
2012 2011
Group Group
EUR'000 EUR'000
Current loans
BAP Holding - 1,902
====== =====
BAP Holdings OU provided a loan to the Group in 2008 details of which are given in Note 20. As detailed in Note 8, as a result of the sale of Pedragon Limited post year end, the liability has been classified within liabilities of a disposal group held for sale. The balance outstanding at 31 December 2012 was EUR2,341,000.
14. Trade and Other Payables
31 December 31 December
2012 2011
Group Group
EUR'000 EUR'000
Directors' fees 38 -
Management fees and related interest - 714
Other trade payables and accruals 134 482
_______ _______
Total trade and other payables 172 1,196
====== =====
31 December 31 December
2012 2011
Company Company
EUR'000 EUR'000
Other trade payables and accruals 100 100
====== =====
The net carrying amount of trade and other payables is considered to be a reasonable approximation of fair value.
Terms and conditions of the above financial liabilities:
Directors' fees are non-interest bearing and are normally settled on 30-day terms. Other trade payables and accruals are non-interest bearing and are normally settled on 30-day terms.
31 December 31 December
15. Issued Capital 2012 2011
Number of Number of
shares EUR'000 shares EUR'000
Authorised
Ordinary shares of
EUR0.01 250,000,000 2,500 250,000,000 2,500
========= ======= ========= =======
Issued and fully paid
Ordinary shares of
EUR0.01 26,200,270 262 26,200,270 262
========= ======= ========= =======
Two shares were issued on 18 September 2006 on incorporation. 26,200,268 shares were issued on 11 December 2006 for the total proceeds of EUR38,775,000. Share issue expenses associated with the issue totalled EUR2,327,000. The ordinary shares carry the right to receive, and shall participate in, any dividends or other distributions out of the profits of the Company available for dividend and resolved to be distributed in respect of any accounting period.
16. Net asset value per share
31 December 31 December
2012 2011
Group Group
EUR'000 EUR'000
Net asset value attributable to
ordinary shareholders 6,530 3,282
Deferred taxation - 1,235
_______ _______
Net asset excluding deferred tax 6,530 4,517
====== =====
Ordinary shares in issues at the end
of the period 26,200,270 26,200,270
Net asset value per share (cents per share) 0.25 0.125
Net asset value per share excluding
deferred tax (cents per share) 0.25 0.17
17. Share Premium and Distributable Reserves
By virtue of a special resolution passed on 5 December 2006 with confirmation of the High Court of the Isle of Man on 13 August 2007, the amount standing to the credit of the Share Premium Account of EUR36,186,000 was transferred to a Distributable Reserve and the share premium account was cancelled.
18. Financial Instruments
The Group holds cash and has received interest bearing loans from external parties.
Risk Management
The main risks arising from the Group's financial instruments are credit risk, liquidity risk, foreign exchange risk and interest rate risk. The Board regularly reviews and agrees policies for managing each of these risks and these are summarised below.
Capital management
The Group is not subject to any external capital management requirements. The Group is primarily focused on its Net Asset Value per share to manage its equity and as a key measure of performance. In prior financial periods, the Net Asset Value was affected by market movements, particularly changes in the value of investment properties whose value changes are affected by factors outside the Group's control. Given the factors disclosed in Note 8, movements in the value of investment properties is no longer a risk to the Group's Net Asset Value.
In prior financial periods, the Group used gearing in the normal course of its business. Debt is managed on a non-recourse basis at the subsidiary level with the exception of the BAP loans, details of which are given in Note 20.
31 December 31 December
2012 2011
Group Group
EUR'000 EUR'000
Total assets 9,174 11,246
Total liabilities 2,644 9,243
Working capital is managed in each subsidiary on a standalone basis.
Collateral and guarantees
The Group had given mortgages over land and buildings in various subsidiaries as collateral to providers of finance. These mortgages were given in the normal course of business. At year-end the only mortgage remaining is with respect to the BAP Loan which itself is classified within liabilities of a disposal group held for sale.
Mortgages have been provided over the following properties:
Property Property Value Mortgage Value
EUR'000 EUR'000
Bolshaya Pushkarskaya* 7,722 2,341
===== =====
* Details of the BAP Holdings loans and any related securities are given in Note 20. The property is classified within the financial statements as part of a disposal group held for sale (see Note 8).
Credit risk
Credit risk is the risk that an issuer or counter party will be unable or unwilling to meet a commitment that it has entered into with the Group. In the event of a default by an issuer or counterparty the Group may suffer losses.
The Group is also exposed to credit risk on deposits with banks. Barclays Bank held the majority of the Group's cash at year end. Barclays Bank was rated by S&P as having a credit rating on short term deposits of "A-1".
The Company is exposed to credit risk on its loans to subsidiaries and capital contributions to subsidiaries. Credit risk is managed through monitoring changes in the Net Asset Value of its subsidiaries. Previously, this was principally affected by changes in the value of the underlying properties which were re-valued annually.
Liquidity risk
Liquidity risk is the risk that the Group will encounter in realising assets or otherwise raising funds to meet financial commitments.
Investments in property are relatively illiquid. Previously, the Group aimed to mitigate this risk by investing in properties in good locations. The Group's objective was to maintain a balance between continuity of funding and flexibility through use of long term borrowing to finance the acquisition of properties. Given the factors outlined in Note 8, the Group is no longer exposed to liquidity risk associated with investments in property subsequent to the year end.
The maturity profile of the Group's liabilities, excluding those classified as held for sale, is as follows:
Maturity Profile
2012 < 3 Months 3-12 Months 1-5 Years >5Years Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Bank loans - - - - -
Other loans - - - - -
Trade and other payables 172 - - - 172
_____
172
=====
2011 < 3 Months 3-12 Months 1-5 Years >5Years Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Bank loans - 3,857 - - 3,857
Other loans 1,987 - 1,052 - 3,039
Trade and other payables 1,196 - - - 1,196
_____
8,092
=====
The above amounts are inclusive of the estimated interest cost and therefore will not agree to the loan balances as set out elsewhere in the accounts. Trade and other payables at 31 December 2011 included management fees and related interest.
Foreign exchange risk
Foreign currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. In all of the regions in which the Group operates, with the exception of Russia, assets and liabilities are denominated in Euro or currencies with fixed exchange rates to the Euro. In Russia the assets and income are typically denominated in US dollars. To mitigate the foreign exchange risk the Group will typically arrange its bank funding in the same currency in which the assets are denominated. At this point the Group has decided not to engage in foreign currency hedging or other derivative instruments to further reduce this risk.
Change in US$ / Euro Rate Effect on Profit
% Change before Tax
EUR'000
2012 +10% -
-10% -
2011 +10% 820
-10% (672)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market interest rates. The Group's exposure to the risk of changes in market interest rates relates primarily to the Groups long-term debt obligations which have floating interest rates. The Group does not use interest rate swaps or other hedging instruments to manage this risk.
The interest rate profile of the Group at 31 December 2012 was as follows:
Total Fixed Variable Non-interest Weighted
Rate Rate Bearing Avg. Rate
EUR'000 EUR'000 EUR'000 EUR'000 %
Cash and cash equivalents 1,379 1,379 - - .1%
BAP holdings loan (2,341) (2,341) - - 20.0%
______ ______ ______ ______
(962) (962) - -
====== ====== ====== ======
As detailed in Note 8, the BAP Holdings Loan and certain cash balances have been classified as part of a disposal group held for sale.
The interest rate profile of the Group at 31 December 2011 was as follows:
Total Fixed Variable Non-interest Weighted
Rate Rate Bearing Avg. Rate
EUR'000 EUR'000 EUR'000 EUR'000 %
Cash and cash equivalents 2,128 2,128 - - 0.1%
Bank loans (3,777) - (3,777) - 6%
BAP holdings loan (1,902) (1,902) - - 20.0%
Non-controlling
interest loans* (1,052) (1,052) - - 6%*
______ ______ ______ ______
(4,603) (826) (3,777) -
====== ====== ====== ======
Impact of a 1% rise in the Euro floating rate
Effect on Profit
% Change before Tax
EUR'000
2012 +1% -
-1% -
2011 +1% 38
-1% (38)
19. Subsidiaries and Non-Controlling Interest
Investments in subsidiaries
31 December 31 December
2012 2011
Company Company
EUR'000 EUR'000
Share capital of subsidiaries - -
Loans to subsidiaries 33,596 33,596
Impairment of loans to subsidiaries (30,096) (30,096)
Capital contributions to subsidiaries 355 35
Impairment of capital contributions to subsidiaries (355) (35)
Reversal of previously recognised impairment
provisions 2,175 -
_______ _______
Total investments in subsidiaries 5,675 3,500
====== ======
The Company has made loans and capital contributions to subsidiaries whose net asset values have fallen below the value of the loans granted. The Board has decided therefore to write down the value of the loans, capital contributions and any accrued interest on those loans to bring the value into line with the cash that would be available to repay them if the assets of the subsidiaries were disposed of at their book value and their existing liabilities repaid. This was completed through accumulated impairment charges totalling EUR28.3 million (2011: EUR30.1 million).
The reversal of provision for impairment charges previously recorded arises as a result of actual proceeds recovered following the sale of Pedragon Limited post period end exceeding carrying value (Note 8).
The following were the companies in the Group at 31 December 2012:
Securities Country of
Name in issue Principal activity incorporation Beneficial interest
2012 2011
Metro Baltic 2 shares of Intermediate
Guernsey ltd. EUR1 each holding company Guernsey 100% 100%
Pedragon Investments 2,000 shares Intermediate
ltd. of EUR1 each holding company Cyprus 100% 100%
Metro Baltic
Netherlands 18,000 shares
B.V. of EUR1 each Non-trading Netherlands 100% 100%
Goldbrick Investments 4,417,288 shares Development
ltd. of EUR1 each company Cyprus 100% 100%
OOO Gruppa 1 share of
Kub RUB 10,000 Property management Russia 100% 100%
1 share of
8,000 EEK and
OU Pirita tee 1 of 32,000 Development
26 EEK company Estonia -% 80%
As detailed in Note 8, subsequent to the year end, the Company sold its interest in Pedragon Limited, Goldbrick Limited, and OOO Gruppa Kub and, at the balance sheet date, the investment in these entities are classified as non-current assets held for sale.
During the year, the Group's Pirita Tee subsidiary was subject to insolvency proceedings. Accordingly, the Group ceased to have control of the entity and the entity was deconsolidated effective 19 November 2012 (See Note 8).
During the year ended 31 December 2011, the Group's Latvian subsidiaries were subject to insolvency proceedings. Accordingly, the Group ceased to have control of these entities and the entities were deconsolidated effective 6 July 2011 (See Note 8).
During the year ended 31 December 2011, the Company disposed of its remaining 50% of its shareholding in Focus Kinnisvara OU. The interest was classified as held for sale at 31 December 2010.
There have been no other changes in the Company's investments during the year or since the period end.
20. BAP Holdings Loan
In or about April 2009, MCM, the former Investment Adviser to the Group, arranged that certain Group companies, Goldbrick Investments Ltd ("Goldbrick") and Pedragon Investments Limited ("Pedragon"), enter into a series of transactions with OÜ BAP Holding ("BAP Estonia"), a special purpose vehicle incorporated in Estonia by MCM to issue high yield bonds. The transactions included a loan agreement dated 4 April 2009 (referred to above as the BAP Loan) secured by a mortgage over the St Petersburg property (the "Mortgage").
On 15 June 2011, BAP Holding OOO, a Russian incorporated entity ("BAP Russia"), issued proceedings against the Company's subsidiary Goldbrick in the Arbitration Court of St Petersburg. Pedragon, was subsequently joined into the proceedings as a third party. The proceedings were primarily for the purpose of enforcing a mortgage over the Company's property asset in St Petersburg, Bolshaya Pushkarskay 10, owned by Goldbrick. BAP Russia is acting as assignee of the mortgage from BAP Estonia which lent money to Pedragon pursuant to a credit line agreement dated 4 April 2009.
On 21 July 2011, Pedragon issued proceedings against BAP Estonia and BAP Russia in the Harju County Court, Estonia, seeking to establish that the credit line agreement between Pedragon and BAP Estonia is invalid and BAP Russia (as purported assignee of BAP Estonia's claims against Pedragon) does not have any claims against Pedragon arising out of the credit line agreement.
On 19 April 2013, subsequent to year-end, the Group sold Pedragon, Goldbrick and OOO Gruppa KUB. As a consequence of the sale, the claim by BAP Russia is no longer against a subsidiary of the Group and the claim against BAP Estonia and BAP Russia is no longer being pursued by a subsidiary of the Group. As referred to in note 2.2, the purchaser of Pedragon, Goldbrick, and OOO Gruppa KUB has assumed the liability of the BAP Loan.
21. Employees
At 31 December 2012 the Group had 41 (2011: 41) employees. The average number of employees for the year ended 31 December 2012 was 41 (2011: 43).
31 December 31 December
2012 2011
Group Group
EUR'000 EUR'000
Wages and salaries 260 259
Social security cost 58 57
________ ________
318 316
________ ________
22. Related Party and Key Management Transactions
Transactions between the Company and its subsidiaries which are related parties have been eliminated on consolidation and are not disclosed in this note.
Key management during the prior year comprised the former Investment Manager, former Investment Adviser, Property Managers and Directors. Key management during the current year comprised the Property Managers and Directors.
As disclosed in Note 3, a credit of EUR714k in the current year arises as a result of a decision to reverse the accrual in respect of amounts owing at 31 December 2011 to the former Investment Manager on the basis that the Directors have received legal advice that the likelihood of the amounts accrued at the previous year end becoming payable was remote. There is no performance fee expense and performance fee payable for the year ended 31 December 2012 (2011: Nil).
Directors' fees for the year ended 31 December 2012 amounted to EUR60k (2011: EUR36k). Directors' fees payable at the year ended 31 December 2012 amounted to EUR38k (2011: EUR25k).
During the financial year ended 31 December 2009, the Group arranged a "BAP Loan" from BAP Estonia, a special purpose vehicle established and part-funded by the former Investment Adviser to raise funds for the Group. The balance outstanding at 31 December 2012 was EUR2.3m which is included in liabilities held for sale (2011: EUR1.9m). The former Investment Adviser invested EUR625k in BAP Estonia during 2008. The balance of the funding of BAP Estonia was sourced through the issue of secured, high yield bonds (the "Loan Notes"), approximately 90% of which were issued to parties connected to or related to the former Investment Adviser. In 2011 the Loan Notes and ownership of BAP Estonia were transferred to another Estonian entity whose relationship to the former Investment Manager is unknown. The purchaser of Pedragon, Goldbrick and OOO Gruppa KUB has assumed the liability of the BAP Loan as disclosed at Note 20 above.
As detailed elsewhere in these financial statements, subsequent to the year end, the entity disposed of Pedragon Limited, Goldbrick Limited and OOO Gruppa KUB for EUR5.5 million. The transaction resulted in the sale of the Group's final investment property situated in St. Petersburg. The purchaser of the entities was Fitzroy Ventures Limited. Fitzroy Ventures Limited is a related party by virtue of the fact that it is owned by Mr Boris A. Petrov, the former St. Petersburg property manager.
23. Commitments
The Group has no un-provided commitments as at year end (2011: Nil).
24. Investment Policy
The Company was established in 2006 to invest in and develop a portfolio of high quality property assets spread across the Baltic States with a focus on prime office, residential and retail development and investment opportunities. As a matter of current record and fact the current Investment Policy is as defined in more detail below. However the Company's predominant assets and activities are cash and litigation against the former Board and advisers. With the completion of the sale of the last remaining property the Company would consider in fulfilment of its on-going obligation to AIM a revised investment policy. In the first instance the Board is however considering the de-listing of the shares which would pre-empt such a revised Investment policy statement and approval. In the event the listing is preserved the Board will propose a revised Investment Policy.
Current Permitted Investment Policy
The Company is approved to invest in and develop high quality property assets spread across the capital cities of the three Baltic States (although principally Tallinn in Estonia and Riga in Latvia) and St Petersburg, Russia.
In the unlikely event that the Company were to consider future investment the Company, as matters stand, could only consider a focus on prime office, residential and retail development and investment opportunities which the Company would believe could generate a target minimum internal rate of return of 25%. The Company could also invest selectively in land acquisition and in joint ventures with reputable developers. In such circumstances the Company would expect to immediately dispose of any completed residential developments but could lease out and keep any developed commercial properties as cash yielding part of an investment portfolio. But as stated the Company is unlikely to make any further property investments
25. Subsequent Event
Subsequent to the balance sheet date, the Group sold its shares in Pedragon Limited, Goldbrick Limited and OOO Gruppa KUB for EUR5.5m. The purchaser of these entities has assumed all assets and liabilities of those subsidiaries as of the date of sale (19 April 2013).
26. Approval of Financial Statements
The financial statements were approved by the Board of Directors on 28 June 2013.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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