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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Terra Capital | LSE:TCA | London | Ordinary Share | IM00BFMXG143 | ORD USD0.10 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMTCA
RNS Number : 2114J
Terra Capital PLC
27 June 2017
Terra Capital plc/ Market: AIM/ Epic: TCA/ Sector: Equity Investment Instruments
27 June 2017
Terra Capital Plc ('Terra' or 'the Fund')
Annual Results for the Year Ended 31 December 2016
Terra Capital Plc, the AIM quoted investment company focussed on investing in value opportunities globally, primarily in frontier markets, announces annual results for the year ended 31 December 2016.
The Fund undertakes its activities in line with its strategy to provide high absolute returns by investing in under-evaluated companies which present significant deep value opportunities. Due to market inefficiencies, the Fund and its Investment Manager, Terra Partners Asset Management Limited, believe that frontier markets provide many such prospects.
For more information, please visit www.terracapitalplc.com or contact:
Galileo Fund Services Limited (Administrator)
Frazer Pickering
+44 1624 692600
Panmure Gordon (UK) Limited (Nominated adviser and corporate broker)
Paul Fincham or Jonathan Becher
+44 20 7886 2500
Terra Capital plc.
Ian Dungate, Director
+44 1624 692600
NOTES:
Terra Capital plc is an AIM quoted investment trust focussed on generating high absolute returns while ensuring volatility is kept to a minimum. The fund predominantly invests in under-researched and under-valued companies. The Fund Manager targets companies that are trading at less than their intrinsic worth and so, aside from any potential growth prospects, provide scope for capital appreciation as a result of a reversion towards underlying value. Investments are also made in companies which are viewed as fair value but offer opportunities for growth at a reasonable price. Due to inherent market inefficiencies, the Investment Manager believes many such 'value' opportunities can be found in Frontier Markets and utilises in-house teams of analysts on the ground in areas of interest to investigate suitable opportunities rather than rely on third party research.
Chairman's statement
Our year end net asset value per share stood at $1.016 against $0.925 for 2015. This represents an increase for the year of 9.8% and a gross return of 13.34% for the year taking account of the dividend of 3.24 cents per share paid in February 2016. This compares to the MSCI Frontier Markets Index performance of 3.16% in 2016 and continues to demonstrate the benefits of the Investment Manager's value based approach.
In accordance with the policy adopted following the extraordinary general meeting held in January 2015, as a result of the average discount at which shares traded during 2016, a tender offer was made to purchase up to ten percent. of the shares in issue at 31 December 2016.The tender was effected on 1 March 2017 and was taken up in full. As a result of the tender offer it was determined that no dividend be paid in respect of 2016.
The Investment Manager has continued to maintain a diverse portfolio of undervalued assets throughout 2016 and equity exposure at December 31 2016 stood at 86% spread across 64 positions in 35 different markets. Further details can be found on the Company's website http://terracapitalplc.com/ under News and Reporting "Company Reports".
Sincerely yours,
Dirk Van den Broeck
Chairman
26 June 2017
Report of Terra Partners Asset Management Limited, the Investment Manager
The Fund's NAV increased to $1.016 at December 31, 2016 from $0.925 as of December 31, 2015 with a net total return of 1.9% for the fourth quarter. For the calendar year, the Fund's NAV increased 13.9% with income re-invested, which includes the dividend payment in February 2016.
The Fund's investment level (equity, fixed income and hedging) increased from 85.8% at September 30 (including commitment to Terra Argentine Fund, L.P.) to 86.3% at December 31. The Fund retained an excess of cash in order to fund the take-up of the tender offer that was announced on December 12, 2016.
Specific Areas of Investment
Americas
The allocation to the Americas increased from 23.5% to 25.5% and is the Fund's largest regional allocation. The Fund continued to allocate to its investment strategy in Brazil. The only other portfolio change was a decrease in its position Refineria La Pampilla (Peru).
Europe
The Fund's exposure to Europe decreased from 20.2% to 18.9% and is the second largest regional allocation. The Fund liquidated its position in Hrvatski Telekom (Croatia) and decreased its positions in X5 Retail (Russia) and Silvano Fashion Group (Estonia). The Fund added a new position in Fabryki Mebli Forte (Poland).
Asia
The Fund's exposure to Asia decreased marginally from 16.4% to 16.3%. The Fund liquidated its position in Century Pacific Food (Philippines) and decreased its position in Bank of Georgia (Georgia). The Fund added a new position in Great Wall Motor Company (China) and increased its position in Summit Power (Bangladesh).
Middle East
The Fund's exposure to the Middle East increased on the quarter from 15.7% to 16.2%. The Fund increased its positions in Blom Bank (Lebanon), Abu Dhabi Commercial Bank (UAE), and Solidere (Lebanon) and initiated a new position in Ooredoo (Oman). The Fund liquidated its position in Seef Properties (Bahrain).
Africa
The allocation to Africa decreased slightly from 10.0% to 9.4%. The Fund decreased its positions in UACN (Nigeria), Residences Dar Saada (Morocco) and liquidated its position in Umeme (Uganda). The Fund initiated new positions in Emaar Misr for Development (Egypt) and Co-operative Bank of Kenya (Kenya). There were no other portfolio changes during the period.
Fund Details
The following pages detail the Fund's holdings, changes from the prior quarter, and the total return of each company's shares over the quarter in both U.S. dollars and local currency. The numbers provided are based on TPAM's internal calculations.
Respectfully submitted,
Terra Partners Asset Management Limited
Portomaso Tower Suite 8/5A
Portomaso Ave
St. Julian's Malta STJ4011
Telephone +356-2371-7000
Regulated by Malta Financial Services Authority, Reg No. C56353
Embedded image removed - please refer to the Financial Statements on the Company's website http://www.terracapitalplc.com/ for a table showing detailed investment positions.
Investing Policy
Investment Objective and Policy - Adopted at the Extraordinary General Meeting held on 26 January 2015
The Company's investment objective is to provide capital appreciation to Shareholders. To achieve this objective, the Company may invest up to 100 per cent of its assets in investments that, for the purposes of the Company's investment policy, are categorised as "Frontier Market Investing". The Investment Manager believes that such markets provide opportunities to take advantage of market inefficiencies. The Company may also invest up to 30 per cent of its assets in a variety of instruments that do not meet the Company's definition of Frontier Market Investing and any such assets will be invested using the same approach applied to investing in Frontier Markets.
"Frontier Market Investing", shall mean:
1. An investment made into a "Frontier Market" which, at the time of the investment, is defined for the purposes of the Company's investment policy as:
1.1 Any country that is not included in all of the following indices, or their successors (the "Indices"):
-- MSCI World Index: A stock market index of 1,612 'world' stocks maintained by MSCI Inc., formerly Morgan Stanley Capital International, and is used as a common benchmark for 'world' or 'global' stock funds. The index includes a collection of stocks of all the developed markets in the world, as defined by MSCI.
-- MSCI Emerging Markets Index: An index created by Morgan Stanley Capital International (MSCI) designed to measure equity market performance in global emerging markets.
-- S&P Developed BMI Index: A comprehensive benchmark index that includes stocks from 25 developed markets and which is a member of the S&P Global BMI series.
-- S&P Emerging Markets BMI Index: An index that captures all companies domiciled in the emerging markets within the S&P Global BMI with a float-adjusted market capitalization of at least USD 100 million and a minimum annual trading liquidity of USD 50 million. The index is segmented by country/region, size (large, mid and small), style (value and growth), and GICS (sectors/industry groups).
1.2 Any country included in any of the Indices but which the Investment Manager believes is undergoing macroeconomic deterioration or political turbulence, a state often signalled by a departure of institutional fund flows or impositions of currency controls, or annual inflation of 15 per cent or more; or
1.3 Any country that the Investment Manager believes is characterised by rules, laws or other barriers which either (a) hinder capital flows; (b) limit or prevent the dissemination of public information concerning securities; or (c) limit otherwise make access to the country difficult; or (d) other technical methods which create difficulties in trading, clearing; or (e) in which access to timely information or market liquidity is in the process of serious deterioration, or
1.4 Any country whose market accounts for less than 3 per cent of the MSCI Emerging Markets Index; or
1.5 Any country that had been upgraded to Emerging Market status by either of S&P or MSCI at any time during the two years prior to the Company making its investment.
2 An investment in any security of a company that the Investment Manager believes, at the time of investing, derives a substantial amount of its income from goods produced or sold, investments made, or services provided in a Frontier Market (as defined above);
Provided that if, following investment by the Company, an investment subsequently fails to fall within one of the categories of Frontier Market Investing as outlined above, the allocation to such market will continue to be viewed as having been made in the market as it was originally categorised.
The Company intends to invest primarily in common equity listed on regulated exchanges; however, as opportunities arise, and depending on market conditions, it may also invest in any of the following instruments:
-- preferred and preference shares; -- debt securities; -- factoring and trade loans; -- baskets of non-performing and other distressed loans;
-- participation notes or other such instruments (when they act as a proxy for investing directly in a country's securities);
-- privately traded funds and shares on non-regulated markets; -- convertible bonds;
-- Transferable Rights to buy additional shares directly from the company, either granted to a company's existing shareholders or to new subscribers
-- Closed-end funds; -- Investment trusts;
as well as other instruments as such opportunities may arise.
The Company may use derivatives and other instruments such as forward contracts, options, and futures for hedging both market and currency risks, either directly and indirectly (for example, when hedging a currency partially linked to the Euro by hedging the Euro if there are no opportunities to hedge the currency directly, hedging macroeconomic risks related to a specific country's equity by purchasing credit default notes on a country's bond securities, and so on).
The Manager intends to invest principally by performing an in-house "bottom-up" analysis. This means it will first determine whether a stock presents the opportunity for capital appreciation through an examination of its most recent publically available information, such as its balance sheet, income statement, cash flow, business model, and micro-competitive environment and only then examining the general industry and macro-economic environment in which the target company issuing the security operates in. Under certain circumstances, the Investment Manager may perform a "top-down" analysis, meaning that it will first gauge a market's overall macroeconomic growth potential and then endeavour to identify specific instruments likely to allow the Company to take advantage of that market's growth potential.
The Company's principal focus will be on "value" investments - that is, investments that, in the Investment Manager's opinion are trading for less than their true value and which provide an opportunity for capital appreciation through a reversion to their true valuation, in addition to whatever potential growth prospects the investments might have. Some of the Company's investments will be in companies which the Investment Manager believes are fairly valued but which offer an opportunity for growth at a reasonable price. The Investment Manager will be under no obligation to sell an investment once it no longer falls into the category of investment within which it was originally made and will sell investments at its sole discretion and when it deems appropriate.
The Company may invest in instruments which represent interests in financially distressed companies that the Investment Manager believes have an opportunity to provide capital returns upon recovery; it may also make investments in distressed macroeconomic environments and/or take positions for the purpose of activist investing.
Directors' Report
The Directors hereby submit their annual report together with the audited consolidated financial statements of Terra Capital plc (the "Company") for the financial year ended 31 December 2016.
The Company
The Company was incorporated in the Isle of Man as Speymill Macau Property Company to invest in the high quality commercial and residential real estate market in the Macau Special Administrative Region of the People's Republic of China. Following an extraordinary general meeting held on 24 May 2012, the shareholders resolved for the company to change its name to Terra Capital plc and to adopt the current investment policy.
Results and dividends
The results and position of the Company at the year-end are set out on pages 12 to 39 of the annual report.
Directors The Directors during the year and up to the date of this Report were as follows: Dirk Van den Broeck Ian Dungate Peter Bartlett
Directors' interests in the shares of the Company
The interests of the Directors in the share capital of the Company as at 31 December 2016 are set out below:
Director No. of shares Dirk Van den Broeck*** 854,068 Peter Bartlett*** 63,000
Worldwide Opportunity Fund ("WWOF") A class, which owns 5,435,555 shares or 7.81% of the Company is managed by Terra Partners Asset Management Limited ("TPAM") which is also the Company's Investment Manager. The principals of TPAM are Filip Montfort and Yarden Mariuma. Mr Montfort holds 1.30% of the shares in issue in WWOF (in addition to his direct holding of 863,393 Ordinary Shares in the Company); Mr Mariuma holds 1.20% in WWOF (and 865,820 Ordinary Shares directly in the company)
***Director Dirk van den Broeck holds the total of 854,068 shares noted above together with his wife, but not jointly.
***Director Peter Bartlett holds the total of 63,000 shares noted above together with his wife, but not jointly.
Director's interests
Ian Dungate is a director of Galileo Fund Services Limited (the "Administrator").
Save as disclosed above, none of the Directors had any interest during the year in any material contract for the provision of services which was significant to the business of the Company.
Corporate governance
Although the Company is not obliged by the listing rules to do so, the Board intends, where appropriate for a Company of its size, to comply with the main provisions of the principles of good governance and code of best practice set out in the UK Corporate Governance Code ('the Code').
Independent Auditors
KPMG Audit LLC, being eligible, have expressed their willingness to continue in office in accordance with Section 12 (2) of the Companies Act 1982.
Responsibilities of the Board
The Directors are responsible for the determination of the Company's investment policy and strategy and have overall responsibility for the Company's activities including the review of the investment activity and performance.
All of the Directors are non-executive.
The Board of Directors delegates to the Investment Manager through the Investment Management Agreement the responsibility for the management of the Company's assets in accordance with the Company's investment policy.
The Company has no executives or employees.
The Articles of Association require that all Directors submit themselves for election by shareholders at the first opportunity following their appointment and shall not remain in office longer than three years since their last election or re-election without submitting themselves for re-election.
The Board meets formally at least 4 times a year and between these meetings there is regular contact with the Investment Manager. Other meetings are arranged as necessary. The Board considers that it meets sufficiently regularly to discharge its duties effectively. The Board ensures that at all times it conducts its business with the interests of all shareholders in mind and in accord with Directors' duties.
Audit Committee
All audit committee responsibilities are performed by the Board, with specified terms of reference.
The principal terms of reference are to appoint auditors, to set their fees, to review the scope and results of the audit, to consider the independence of the auditors, to review the internal financial and non-financial controls, to approve the contents of the draft interim and annual reports to shareholders and to review the accounting policies. In addition, the Board reviews the quality of the services of all the service providers to the Company and reviews the Company's compliance with financial reporting and regulatory requirements.
The Company's internal financial controls and risk management systems have been reviewed with the Investment Manager and Advisors. The audit report is considered by the Board and discussed with the Auditors prior to approving and signing the Financial Statements.
On behalf of the Board
Dirk Van den Broeck
Chairman
26 June 2017
Statement of Directors' Responsibilities in Respect of the Directors' Report and the Financial Statements
The Directors are responsible for preparing the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year, which meet the requirements of Isle of Man company law. In addition, the Directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards as adopted by the EU.
The financial statements are required by law to give a true and fair view of the state of affairs of the Group and Parent Company and of the profit or loss of the Group and the Company for that period.
In preparing these financial statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently; -- make judgements and estimates that are reasonable and prudent;
-- state whether they have been prepared in accordance with International Financial Reporting Standards as adopted by the EU; and
-- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Parent Company will continue in business.
The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Parent Company and to enable them to ensure that its financial statements comply with the Companies Acts 1931 to 2004. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation governing the preparation and dissemination of financial statements may differ from one jurisdiction to another.
On behalf of the Board
Dirk Van den Broeck
Chairman
26 June 2017
Report of the Independent Auditors, KPMG Audit LLC, to the members of Terra Capital plc
We have audited the financial statements of Terra Capital plc ("the Parent Company") and its subsidiaries (together "the Group") for the year ended 31 December 2016 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated and Parent Company Balance Sheets, the Consolidated and Parent Company Statements of Changes in Equity and the Consolidated and Parent Company Statements of Cash Flows and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the EU.
This report is made solely to the Company's members, as a body, in accordance with 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 Auditors
As explained more fully in the Directors' Responsibilities Statement set out on page 9, the Directors are responsible for the preparation of financial statements that give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the 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 and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on the financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the Group's and Parent Company's affairs as at 31 December 2016 and of the Group's profit for the year then ended;
-- have been properly prepared in accordance with IFRSs as adopted by the EU; and
-- have been properly prepared in accordance with the provisions of 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 require us to report to you if, in our opinion:
-- proper books of account have not been kept by the Parent Company and proper returns adequate for our audit have not been received from branches not visited by us; or
-- the Parent Company's balance sheet and income statement are not in agreement with the books of account 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.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man, IM99 1HN
26 June 2017
Consolidated Income Statement
Hot Features
Premium
Notes For the year For the year
ended 31 ended 31
December December
2016 2015
US$'000 US$'000
Net changes in fair value on financial assets at fair value through
profit or loss 3,143 (6,266)
Realised gain on sale of financial assets at fair value through
profit or loss 2,977 4,206
Interest income on cash balances 9 7
Bond Interest income - 27
Dividend income on quoted equity investments 2,942 2,691
Total Income 9,071 665
--------------------------------------------------------------------- ------------- ------------- -------------
Manager's fees 11,12.4 (581) (820)
Incentive fees 11,12.4 (712) -
Audit and professional fees 12.3 (84) (173)
Other expenses 12.1,12.2,18 (657) (536)
Administrative and other expenses (2,034) (1,529)
--------------------------------------------------------------------- ------------- ------------- -------------
Profit/(loss) before tax 7,037 (864)
Taxation 19 1,375 (276)
Profit/(loss) for the year 8,412 (1,140)
Basic and diluted earnings/(loss) per share (cents per share) for
year 15 12.32 (1.67)
The Directors consider all activities to derive from continuing activities.
Consolidated Statement of Comprehensive Income
For the year For the year
ended 31 December 2016 ended 31 December 2015
US$'000 US$'000
------------------------------------------------ ------------------------ ------------------------
Profit/(loss) for the year 8,412 (1,140)
------------------------------------------------- ------------------------ ------------------------
Other comprehensive income/(loss) for the year - -
------------------------------------------------ ------------------------ ------------------------
Total comprehensive income/(loss) for the year 8,412 (1,140)
------------------------------------------------- ------------------------ ------------------------
Consolidated Balance Sheet
Notes 31 December 2016 31 December 2015
US$'000 US$'000
------------------------------------------------------- ------ ----------------- -----------------
Financial assets at fair value through profit or loss 8 58,143 51,835
Funds held in escrow - 2,256
Trade and other receivables 13 208 237
Cash and cash equivalents 14 12,430 11,182
Total current assets 70,781 65,510
-------------------------------------------------------- ------ ----------------- -----------------
Total assets 70,781 65,510
-------------------------------------------------------- ------ ----------------- ----------------- Issued share capital 16 7,726 7,726 Retained earnings 56,377 50,177 Capital redemption reserve 5,274 5,274 Total equity 69,377 63,177 -------------------------------------------------------- ------ ----------------- ----------------- Taxation 19 - 1,940 Withholding tax 19 373 229 Trade and other payables 17 1,031 164 Total current liabilities 1,404 2,333 -------------------------------------------------------- ------ ----------------- ----------------- Total liabilities 1,404 2,333 -------------------------------------------------------- ------ ----------------- ----------------- Total equity & liabilities 70,781 65,510 -------------------------------------------------------- ------ ----------------- ----------------- Net asset value per share 10 1.02 0.93 -------------------------------------------------------- ------ ----------------- -----------------
Approved by the Board of Directors on 26 June 2017
Ian Dungate Dirk Van den Broeck Director Director
Company Balance Sheet
Notes 31 December 2016 31 December 2015
US$'000 US$'000
------------------------------------------ ------ ----------------- -----------------
Trade and other receivables 13 35 34
Intercompany balances 5 67,680 57,741
Cash and cash equivalents 14 2,540 3,867
------------------------------------------- ------ ----------------- -----------------
Total current assets 70,255 61,642
------------------------------------------- ------ ----------------- -----------------
Total assets 70,255 61,642
------------------------------------------- ------ ----------------- -----------------
Issued share capital 16 7,726 7,726
Retained earnings 56,377 48,568
Capital redemption reserve 5,274 5,274
Total equity 69,377 61,568
------------------------------------------- ------ ----------------- -----------------
Trade and other payables 17 878 74
Total current liabilities 878 74
------------------------------------------- ------ ----------------- -----------------
Total liabilities 878 74
------------------------------------------- ------ ----------------- -----------------
Total equity & liabilities 70,255 61,642
------------------------------------------- ------ ----------------- -----------------
Net asset value per parent company share 1.02 0.90
------------------------------------------- ------ ----------------- -----------------
The gain made by the Company for the year ended 31 December 2016 was US$8,643,000 (year ended 31 December 2015, loss US$1,164,000).
Approved by the Board of Directors on 26 June 2017 Ian Dungate Dirk Van den Broeck Director Director
Consolidated Statement of Changes in Equity
Share capital Retained earnings Capital redemption reserve Total
US$'000 US$'000 US$'000 US$'000
------------------------------------------- -------------- ------------------ --------------------------- --------
Balance at 1 January 2015 7,726 53,858 5,274 66,858
------------------------------------------- -------------- ------------------ --------------------------- --------
Loss for the year - (1,140) - (1,140)
Other comprehensive income - - - -
Total comprehensive expense for the year - (1,140) - (1,140)
------------------------------------------- -------------- ------------------ --------------------------- --------
Transactions with owners
Dividends paid - (2,541) - (2,541)
Total contributions by and distributions
to owners - (2,541) - (2,541)
Balance at 31 December 2015 7,726 50,177 5,274 63,177
------------------------------------------- -------------- ------------------ --------------------------- --------
Share capital Retained earnings Capital redemption reserve Total
US$'000 US$'000 US$'000 US$'000
------------------------------------------- -------------- ------------------ --------------------------- --------
Balance at 1 January 2016 7,726 50,177 5,274 63,177
------------------------------------------- -------------- ------------------ --------------------------- --------
Gain for the year - 8,412 - 8,412
Other comprehensive income - - - -
Total comprehensive income for the year - 8,412 - 8,412
------------------------------------------- -------------- ------------------ --------------------------- --------
Transactions with owners
Dividends paid - (2,212) - (2,212)
Total contributions by and distributions
to owners - (2,212) - (2,212)
Balance at 31 December 2016 7,726 56,377 5,274 69,377
------------------------------------------- -------------- ------------------ --------------------------- --------
Company Statement of Changes in Equity
Share
Capital Retained earnings Capital redemption reserve Total
US$'000 US$'000 US$'000 US$'000
------------------------------------------- ---------- -------------------- ----------------------------- --------
Balance as 1 January 2015 7,726 52,273 5,274 65,273
------------------------------------------- ---------- -------------------- ----------------------------- --------
Loss for the year - (1,164) - (1,164)
------------------------------------------- ---------- -------------------- ----------------------------- --------
Total comprehensive expense for the year - (1,164) - (1,164)
------------------------------------------- ---------- -------------------- ----------------------------- --------
Transactions with owners:
Dividends paid - (2,541) - (2,541)
Total contributions by and distributions
to owners - (2,541) - (2,541)
------------------------------------------- ---------- -------------------- ----------------------------- --------
Balance at 31 December 2015 7,726 48,568 5,274 61,568
------------------------------------------- ---------- -------------------- ----------------------------- --------
Share Retained Capital redemption
Capital Earnings Reserve Total
US$'000 US$'000 US$'000 US$'000
------------------------------------------- ---------- -------------------- ----------------------------- -------- Balance as 1 January 2016 7,726 48,568 5,274 61,568 ------------------------------------------- ---------- -------------------- ----------------------------- -------- Profit for the year - 10,021 - 10,021 ------------------------------------------- ---------- -------------------- ----------------------------- -------- Total comprehensive income for the year - 10,021 - 10,021 ------------------------------------------- ---------- -------------------- ----------------------------- -------- Transactions with owners: Dividends paid - (2,212) - (2,212) Total contributions by and distributions to owners - (2,212) - (2,212) Balance at 31 December 2016 7,726 56,377 5,274 69,377 ------------------------------------------- ---------- -------------------- ----------------------------- --------
Consolidated Statement of Cash Flows
Notes For the year ended For the year ended
31 December 2016 31 December 2015
US$'000 US$'000
---------------------------------------------------------- ------ ------------------- -------------------
Operating activities
Group profit/(loss) before tax 7,037 (864)
Adjustments for:
Net changes in fair value on financial assets (3,143) 6,266
Realised gain on sale of investments (2,977) (4,206)
Interest income (9) (34)
Operating income before changes in working capital 908 1,162
Decrease/(increase) in trade and other receivables 29 (76)
Increase/(decrease) in trade and other payables 867 (125)
Cash generated from operations 1,804 961
Interest received 9 34
Income tax paid (421) (206)
Cash flows generated from operating activities 1,392 789
---------------------------------------------------------- ------ ------------------- -------------------
Investing activities
Net purchase of financial assets (188) (1,208)
Decrease in funds held in escrow 2,256 23
Cash flows generated from/(used in) investing activities 2,068 (1,185)
---------------------------------------------------------- ------ ------------------- -------------------
Financing activities
Dividends paid (2,212) (2,541)
Cash flows used in financing activities (2,212) (2,541)
---------------------------------------------------------- ------ ------------------- -------------------
Net increase/(decrease) in cash and cash equivalents 1,248 (2,937)
Cash and cash equivalents at beginning of year 11,182 14,057
Difference on foreign exchange - 62
---------------------------------------------------------- ------ ------------------- -------------------
Cash and cash equivalents at end of year 16 12,430 11,182
---------------------------------------------------------- ------ ------------------- -------------------
Company Statement of Cash Flows
Note For the year ended For the year ended
31 December 2016 31 December 2015
US$'000 US$'000
---------------------------------------------------------- ----- ------------------- -------------------
Operating activities
Company profit/(loss) before tax 10,021 (1,164)
Operating expense before changes in working capital 10,021 (1,164)
(Increase)/decrease in trade and other receivables (1) 16
Increase/(decrease) in trade and other payables 804 (2)
Cash flows generated/(used in) from operating activities 10,824 (1,150)
---------------------------------------------------------- ----- ------------------- -------------------
Investing activities
Advance of intercompany loans (9,939) (4,751)
Cash flows used in investing activities (9,939) (4,751)
---------------------------------------------------------- ----- ------------------- -------------------
Financing activities
Dividends paid (2,212) (2,541)
Cash flows used in financing activities (2,212) (2,541)
---------------------------------------------------------- ----- ------------------- -------------------
Net decrease in cash and cash equivalents (1,327) (8,442)
Cash and cash equivalents at beginning of year 3,867 12,309
Cash and cash equivalents at end of year 14 2,540 3,867
---------------------------------------------------------- ----- ------------------- -------------------
Notes to the Consolidated Financial Statements
1 The Company
Terra Capital plc (formerly Speymill Macau Property Company plc) (the "Company") was incorporated and registered in the Isle of Man under the Isle of Man Companies Acts 1931 to 2004 on 31 October 2006 as a public company with registered number 118202C.
The annual report of the Company as at and for the year ended 31 December 2016 comprises the Company and its subsidiaries (together referred to as the "Group").
The Company's investment objective is to achieve capital appreciation while attempting to reduce risk primarily by applying a disciplined and diversified value investing philosophy.
2 Basis of preparation 2.1 Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU.
The consolidated financial statements were authorised for issue by the Board of Directors on 26 June 2017.
2.2 Basis of measurement
These consolidated financial statements have been prepared in accordance with IFRS as adopted by the EU. The financial statements have been prepared under the historic cost convention, as modified by the revaluation of financial assets held at fair value through profit or loss.
2.3 Functional and presentation currency
These consolidated financial statements are presented in United States Dollars (US$), which is the Company's presentation currency. The functional currency of Terra Capital Cayman a subsidiary company is the United States Dollar. This subsidiary holds the investment portfolio. The United States Dollar is the currency of the primary economic environment in which the Company operates ("the functional currency").
2.4 Use of estimates and judgements
The preparation of the consolidated financial statements in conformity with IFRSs as adopted by the EU requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.
Certain investments are in illiquid/inactive markets and classified as Level 2 in the IFRS 7 fair value Hierarchy (see note 7). The pricing for these investments is based on last traded price or NAV prepared by the fund administrator and is a key estimate in the preparation of the financial statements.
3. Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.
The accompanying financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU. The Fund's accounting principles are summarised below, all of which have been applied consistently throughout the year.
Certain comparatives have been restated in order to ensure consistent presentation with the current year figures.
3.1 Basis of consolidation
Subsidiaries
Subsidiaries are those enterprises controlled by the Company. Control exists where the Company has the power, directly or indirectly, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control effectively commences until the date that control effectively ceases.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in full in preparing the consolidated financial statements.
3.2 Foreign currency
The individual financial statements of each group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group entity are expressed in United States Dollars, which is the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences are recognised in profit or loss in the period in which they arise.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the subsidiaries are expressed in United States Dollars using exchange rates prevailing at the end of the reporting period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (attributed to non-controlling interests as appropriate).
3.3 Financial instruments (i) Non-derivative financial assets
IFRS13 has been adopted from 1 January 2013. It establishes a single source of guidance for measuring fair value and requires disclosures about fair value measurements. Fair value under IFRS13 is an exit price regardless of whether that price is directly observable or estimated using another valuation technique.
"Fair value" is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Fund has access at that date. The fair value of a liability reflects its non-performance risk.
When available, the Fund measures the fair value of an instrument using quoted prices in an active market for that instrument. A market is regarded as active if quoted prices are readily and regularly available and represent actual and regularly occurring market transactions on an arm's length basis.
The fair value of financial assets and liabilities traded in active markets (such as publicly traded derivatives and trading securities) are based on quoted market prices at the close of trading on the year end date. The fair value of financial assets and liabilities traded in relatively illiquid/inactive markets is based on the last traded price.
Investments are designated at fair value through profit or loss on initial recognition. The Group invests in quoted equities and debt securities for which fair value is based on quoted market prices. The Group also has one investment in a limited partnership, which is valued at the audited net asset value.
The Group derecognises a financial asset when its contractual rights expire or it is transferred.
(ii) Non-derivative financial liabilities
Purchases and sales of investments are recognised on trade date - the date on which the Group commits to purchase or sell the asset. Investments are initially recorded at fair value, and transaction costs for all financial assets and financial liabilities carried at fair value through profit and loss are expensed as incurred.
Gains and losses arising from changes in the fair value of the financial assets and liabilities are included in the income statement in the year in which they arise.
The Group initially recognises financial liabilities on the date at which the Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire.
The Group has the following non-derivative financial liabilities: amounts due to broker for investment purchases falling due after the balance sheet date and other payables.
(iii) Share capital
Ordinary Shares
Ordinary Shares are classified as equity. Incremental costs directly attributable to the issue of Ordinary Shares and share options are recognised as a deduction from equity, net of any tax effects.
3.4 Revenue recognition
Interest income and dividend income
Interest income is recognised on a time-proportionate basis using the effective interest rate method. Dividend income is recognised when the right to receive payment is established.
Foreign currency gains and losses are reported on a net basis and are recognised in profit or loss.
3.5 Impairment
Financial assets
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
Losses are recognised in profit or loss and reflected in an allowance account against receivables. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
Non-financial assets
The carrying amounts of the Group's non-financial assets, other than investment property are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. For goodwill, the recoverable amount is estimated each year at the same time. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
3.6 Income tax expense
Income tax expense comprises current tax. Income tax expense is recognised in the consolidated income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
3.7 Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for its Ordinary Shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of Ordinary Shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of Ordinary Shares outstanding, adjusted for own shares held, for the effects of all dilutive potential Ordinary Shares.
3.8 Dividends
Dividends are recognised as a liability in the period in which they are declared and approved.
3.9 Segment reporting
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. The operating result of the single operating segment is reviewed regularly by the Group's Board of Directors to make decisions about resources to be allocated and assess its performance.
4. Financial risk management
Overview
The Group has exposure to the following risks from its use of financial instruments:
-- credit risk -- liquidity risk -- market risk (including foreign exchange risk) -- operational risk
This note presents information about the Group's exposure to each of the above risks, the Group's objectives, policies and processes for measuring and managing risk, and the Group's management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.
Risk management framework
The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework.
The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities. The Group aims to develop a disciplined and constructive control environment.
The Group Audit Committee oversees how management monitors compliance with the Group's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Group's financial assets.
Cash and cash equivalents
The Group limits its exposure to credit risk by investing only with counterparties that have high credit ratings. Management actively monitors credit ratings and does not expect any counterparty to fail to meet its obligations.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset.
The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation. The Group manages liquidity risk by maintaining adequate reserves and banking facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
Market risk (including foreign exchange risk)
The Group's strategy for the management of investment risk is driven by the Group's investment objective. The main objective of the Group is to achieve capital appreciation while attempting to reduce risk primarily by applying a disciplined and diversified value investing philosophy.
All investments present a risk of loss of capital through movements in market prices. The Investment Manager moderates this risk through a careful selection of securities within specified limits. The Investment Manager reviews the position on a day to day basis and the Directors review the position at Board meetings.
The Group's market price risk is managed through the diversification of the investment portfolio.
The Group operates internationally and is exposed to foreign exchange risk (see note 20). Foreign exchange risk arises in respect of those recognised monetary financial assets and liabilities, income and expense that are not in the functional currency of the Group.
Operational risk
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group's processes, service providers, technology and infrastructure, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of corporate behaviour. Operational risks arise from all of the Group's operations.
The Group's objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the Group's reputation with overall cost effectiveness. The Group has developed standards for the management of operational risk in the following areas:
-- requirements for appropriate segregation of duties -- requirements for the reconciliation and monitoring of transactions -- compliance with regulatory and other legal requirements -- documentation of controls and procedures
-- requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the risks identified
-- ethical and business standards
Capital management
The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.
The capital structure of the Group consists of the equity of the Group (comprising issued capital as detailed in note 16, reserves and retained earnings). The Board reviews the capital structure of the Group on a semi-annual basis.
The Board of Directors monitors the net asset value per share, which the Group defines as the total shareholders' equity divided by the total number of shares in issue. The Board of Directors also monitors the level of dividends to ordinary shareholders.
5 The subsidiaries
At the end of the year, the Company owned a controlling interest in the following subsidiaries:
Country of incorporation Percentage of shares held
-------------------------------------------------- -------------------------- --------------------------
Terra Capital Cayman Cayman Islands 100%
Armando Global Limited (dissolved 23 March 2016) British Virgin Islands 100%
Inter Company loans from the Company to Terra Capital Cayman are repayable on demand and bear interest at the US Prime rate per annum.
6 Segment reporting
No additional disclosure is included in relation to segment reporting as the Group's activities are limited to one business segment, being investing in accordance with the Company's investment objective.
7 Fair value hierarchy
IFRS 7 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
-- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
-- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
US$49,328,000 (2015: US$41,016,000) of the Company's investments are classed as level 1 investments and US$8,815,000 (2015: US$10,819,000) of the Company's investments are classed as level 2 investments.
8 Financial assets at fair value through profit or loss
Group
31 December 2016: Financial assets at fair value through profit or loss; principally quoted equity securities:
Security name Number US$'000 ABU DHABI Commercial Bank 593,000 1,114 AIR ARABIA 2,947,000 1,067 Al Meera Consumer Goods Co 21,218 1,019 Allami Nyomda (Hungarian Printing Co) 553,679 2,139 Ardent Leisure Group NPV 372,606 628 Artes SA 246,934 838 Bank Muscat 995,671 1,221 Bank of Georgia Holdings PLC 12,480 460 BB Votorantim 54,300 921 Belle Corp 12,000,000 773 BLOM Bank GDS* 173,272 1,889 Co-operative Bank of Kenya 2,974,100 383 Copa Holdings 15,265 1,387 Crnogorski Telekom AD Podgoric 222,624 661 Doha Bank 83,692 802 Emaar Misr for Development 2,998,000 476 Emperador Inc 4,279,000 603 Fabryki Mebli Forte 34,955 634 FDO S F Lima 589,582 398 Ferreycorp SAA 1,827,387 918 FI IMOB Projecto Agua Branca 1,800 162 Fii BM Edificio Galeria 39,200 612 Fii Torre Almirante 1,020 582 Fii Vila Olimpia Corporate 34,000 761 Galenika Fitofarmacija* 79,115 1,834 Gorenje Velenje 175,399 1,106 Great Wall Motor Company 569,000 531 Gulf Hotel Group 444,273 754 Gulf Warehousing 40,750 626 Holdsport Limited 230,501 988 IRSA-SP ADR 81,433 1,502 JMMB Group Limited 8,500,000 953 KCELL JT 318,630 1,020 Kernel Holdings SA 86,323 1,316 Komercijalna Banka AD 28,845 1,413
Kumho Petro Chem 17,850 433
Lotte Chilsung Beverage Co-PFD* 749 441
National Commercial Bank Jamaica Ltd 5,431,719 2,099
Nigerian Breweries 70,000 34
Oman Cement Company 464,950 572
Oman Refreshment Company* 175,000 980
Onatel BF 29,509 562
One Tech Holding 248,305 917
Onelogix Group Limited 2,128,792 519
Ooredoo 59,031 101
Polis Banc QF 1,789 1,538
QF BNL Portfolio IMM 845 415
Qingling Motors Co Ltd 3,042,615 922
Refineria La Pampilla SA 12,664,695 877
Residences Dar Saada 55,843 1,020
RFM Corporation 11,003,750 1,129
Scotia Group Jamaica 5,429,031 1,542
SDI Logistica Rio Fii 25,244 623
Shinyoung Securities Co Ltd 8,370 347
Silvano Fashion Group 148,299 462
Solidere 109,849 1,098
Speedy EAD-Sofia* 16,818 327
Square Pharma 692,707 2,167
Summit Power Ltd 2,596,398 1,207
Terra Argentina Fund LP - Series 1* 340,000 583
Terra Argentina Fund LP - Series 2* 510,000 894
Terra Argentina Fund LP - Series 3* 510,000 781
Terra Argentina Fund LP - Series 4* 340,000 414
Travellers International Hotel 9,300,000 616
Tunisie Leasing* 84,522 674
Tunisie Leasing Rights 3,296 26
UAC of Nigeria 1,043,009 57
X5 Retail Group NV 39,416 1,276
--------------------------------------- --------------------------- --------
Total 58,143
-------
*Level 2 investments: stated at last traded price or NAV reported by the fund administrator (for Terra Argentina Fund).
31 December 2015: Financial assets at fair value through profit or loss; principally quoted equity securities:
Security name Number US$'000
-------------------------------------------------- ----------- --------
Air Arabia 1,440,000 533
Ardent Leisure Group 372,606 614
Brac Bank Ltd 2,710,489 1,677
Square Pharma 629,734 2,030
Montbat AD-Sofia 115,000 511
Speedy EAD-Sofia 16,818 364
Bahrain Commercial Facility 200,000 406
Gulf Hotel Group 444,273 948
SEEF Properties 1,333,577 714
U-Blox Holding AG 1,969 421
Crnogorski Telekom AD Podgoric 222,624 943
Gorenje Volenje 175,399 876
Polis Banc QF 1,657 1,592
QF BNL Portfolio IMM 817 506
Silvano Fashion Group 267,000 371
VIB Vermoegen 19,378 360
Bank of Georgia 31,280 878
Qingling Motors 3,042,615 946
Hrvatski Telekom 36,228 739
Allami Nyomda 553,679 1,948
JMMB Group Limited 8,500,000 725
National Commercial Bank Jamaica 5,431,719 1,800
Scotia Group Jamaica 5,429,031 1,350
Hyundai Motor Company 2,580 226
Kumho Petro Chem 17,850 520
Lotte Chilsung Beverage Co-Preference Shares 749 589
Shinyoung Securities 8,370 361
Residences Dar Saada 69,843 903
Komercijalna Banka AD (Macedonia) 28,845 1,170
UAC of Nigeria 2,847,886 296
Bank Sohar SAOG 2,049,283 835
Oman Cement Company 720,950 861
Oman Refreshment Company 175,000 1,009
Ferreycorp SAA 2,150,387 850
Refineria La Pampilla SA 17,808,102 600
RFM Corporation 11,003,750 925
Kernel Holdings 86,323 1,056
PKP Cargo SA 42,964 748
Al Meera 21,218 1,281
Doha Bank 77,678 948
Gulf Warehousing 32,600 509
Gulf Warehousing Rights 8,150 86
Galenika Fitofarmacija 82,744 1,757
Komercijalna Banka AD (Serbia) 7,231 105
Artes SA (Automobile Reaseau Tunisien) 246,934 741
One Tech Holding 248,305 857
Tunisie Leasing 84,522 688
Tunisie Leasing Rights 3,296 27
Umeme Limited 2,940,000 547
Blom Bank GDS 144,872 1,399
Copi Holdi NPV 11,165 539
IRSA SP-ADR 81,433 1,002
JSC Acron 308,792 1,559
KCELL JT 127,990 517
Lebanese GDS Class A 89,508 940
Put 100 PHLX US-EUR Options Strike $106 03-18-16 32 3
Put 100 PHLX US-EUR Options Strike $109 03-18-16 10 2
Put 100 PHLX US-EUR Options Strike $110 03-18-16 10 3
Put 100 PHLX US-EUR Options Strike $111 03-18-16 40 13
Put 100 PHLX US-EUR Options Strike $112 03-18-16 40 16
Terra Argentina Fund LP* 1,360,000 1,780
X5 Retail Group 29,846 558
Hung Vuong Corporation 8 -
Imexpharm Pharmaceutical 802,158 1,337
Onatel BF 47,577 1,187
Holdsport 202,501 738
Onelogix Group Ltd 2,281,292 494
-------------------------------------------------- ----------- --------
Total 51,835
-------
9 Net finance income
2016 2015
US$'000 US$'000
------------------------------ -------- --------
Interest income on bank
balances 9 7
------------------------------ -------- --------
Finance income 9 7
------------------------------ -------- --------
Bank charges (9) (13)
Finance cost (9) (13)
------------------------------ -------- --------
Net finance (expense)/income - (6)
------------------------------ -------- --------
10 Net asset value per share
The consolidated net asset value per share as at 31 December 2016 is US$1.02 based on 68,299,236 Ordinary Shares in issue as at that date (2015: US$0.93 based on 68,299,236 shares) excluding shares held in treasury .
11 Related party transactions
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.
Parties are considered to be related if one party has the ability to control the other party or to exercise significant influence over the party making financial or operational decisions.
Directors of the Company
Howard Golden, Filip Montfort and Yarden Mariuma are directors of the Investment Manager. The Investment Manager was appointed at the EGM held on 24 May 2012. Following the EGM, Mr Golden and Mr Mariuma resigned as directors of the Company.
Ian Dungate is a director of the administrator.
Details of director's remuneration is set out in Note 18.
The Investment Manager
Following the EGM held on 24 May 2012, the Company appointed Terra Partners Asset Management ("TPAM") as its Investment Manager. The level of fees payable to the investment manager were adjusted following resolutions passed at an Extraordinary General Meeting held on 27 January 2015.
Term and termination
The Investment Management Agreement may be terminated by either party giving to the other not less than 12 months' notice expiring on or at any time after the third anniversary of the commencement date of the agreement or otherwise, in circumstances, inter alia, where one of the parties has a receiver appointed over its assets or if an order is made or an effective resolution passed for the winding-up of one of the parties.
Management fee
The Investment Manager shall be entitled to receive a management fee equal to 1.25 per cent. per annum of the aggregate Net Asset Value of the Company during the relevant fee payment period, calculated on the first day of each month, accrued on a daily basis and payable monthly in arrears (or pro rata for lesser periods).
Performance fee
The Manager is also entitled to receive a performance fee equal to 12 per cent. of the increase (if any) in the Net Asset Value per Share (with dividends and other distributions added back and ignoring any accrued performance fee) as at each semi-annual performance fee calculation period above the Net Asset Value as at the commencement of each such semi-annual performance fee calculation period, provided that any performance fee shall be payable only to the extent that the Net Asset Value of the Share exceeds the Net Asset Value immediately following the settlement of the Tender Offer or, if a performance fee has been paid, the Net Asset Value per Share when a performance fee was last paid. The performance fee shall be calculated on 30 June and 31 December in each year and paid following such calculation.
Expenses
In addition, the Company shall be responsible for the payment of all out-of-pocket expenses reasonably incurred by the Manager in the proper performance of the Investment Management Agreement up to a maximum of US$75,000 per annum.
Terra Argentine Fund LP
The Group has committed to invest a maximum of US$3,400,000 in Terra Argentine Fund L.P, $1,700,000 of which had been called down at 31 December 2016. Terra Argentine Fund is managed by the Investment Manager. The Company and the Investment Manager have entered into an agreement whereby for so long as it is the Investment Manager, any fees earned in respect of the Groups' investment in Terra Argentine Fund LP will be rebated to the Group, rebate received US$242,210 (2015 US$53,330) .
The Administrator
The Administrator was entitled to receive a fee of 0.10 per cent. per annum of the net assets of the Company between GBP0 and GBP100m and 0.075 per cent. of the net asset value of the Company in excess of GBP100m, subject to a minimum monthly fee of GBP4,000, and a maximum monthly fee of GBP11,250 payable quarterly in arrears.
The Administrator assists in the preparation of the financial statements of the Company for which it received a fee of GBP1,750 per set and provides general secretarial services to the Company for which it received a minimum annual fee of GBP5,000.
With effect from 1 October 2015 the following changes were made:
The Administrator shall be paid by the Company a fixed fee of US$100,000 per annum, payable quarterly in arrears.
For the preparation of the financial statements the Administrator shall be paid by the Company US$3,000 per set.
In the event that the Administrator provides secretarial services to the Company, the Administrator shall be paid an annual fee of US$8,000. The Administrator shall be entitled to additional fees for such general secretarial services based on time and charges where the number of board meetings or general meetings exceeds for per annum. The Administrator shall be entitled to an attendance fee of US$750 per day or part thereof where the Administrator attends a board meeting or general meeting which is not held in the Isle of Man.
12 Charges and fees 12.1 Nominated adviser and broker fees
As nominated adviser and broker to the Company for the purposes of the AIM rules, the Nominated Adviser and Broker is entitled to receive an annual fee of GBP60,000 payable quarterly in advance.
Total advisory fees payable to the Nominated Adviser and Broker for the year ended 31 December 2016 amounted to US$40,821 (2015: US$52,206) with US$ Nil due at 31 December 2016 (2015 US$ Nil).
12.2 Administrator and Registrar fees
Administration fees payable for the year ended 31 December 2016 amounted to US$121,500, (31 December 2015: US$97,993) and Crest fees US$8,979 (2015: US$9,122) with administration fees of US$31,500 still due at 31 December 2016 (31 December 2015: US$30,000).
12.3 Audit and professional fees
Audit fees for the year ended 31 December 2016 amounted to US$32,036 (31 December 2015: US$30,000).
Professional fees for the year ended 31 December 2016 amounted to US$52,333 (31 December 2015: US$142,998).
12.4 Manager's fees
Management fees payable for the year ended 31 December 2016 amounted to US$822,894 but owing to the receipt of a rebate from Terra Argentina Fund these were reduced to US$580,894 (2015: US$820,057) and the amount accrued but not paid at the period end was $73,085 (31 December 2015: $39,439).
Performance fees payable for the year ended 31 December 2016 amounted to US$711,673 (2015: US$Nil). Performance fees accrued but not paid for the year ended 31 December 2016 amounted to US$711,673 (31 December 2015: US$Nil)
13 Trade and other receivables
Group Company Group Company
31 December 31 December 31 December 31 December
2016 2016 2015 2015
US$'000 US$'000 US$'000 US$'000
--------------------------------------------- ------------ ------------ ------------ ------------
Prepayments and other receivables (note 20) 208 35 237 34
Total 208 35 237 34
--------------------------------------------- ------------ ------------ ------------ ------------
14 Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and deposits held with banks and amounts held by brokers. All cash and bank balances are available for operational use in the Group and Parent Company.
15 Basic and diluted (loss)/earnings per share
Basic (loss)/earnings per share is calculated by dividing the (loss)/profit attributable to owners of the Company by the weighted-average number of Ordinary Shares in issue during the year.
31 December 2016 31 December 2015
-------------------------------------------------------------------------------- ----------------- -----------------
Profit/(loss) attributable to owners of the Company (US$'000) 8,412 (1,140)
Weighted average number of Ordinary Shares in issue (thousands)(excluding
shares held in Treasury) 68,299 68,299
-------------------------------------------------------------------------------- ----------------- -----------------
Basic and diluted earnings/(loss) per share (cents per share) 12.32 (1.67)
-------------------------------------------------------------------------------- ----------------- -----------------
16 Share capital
31 December 31 December
2016 2015
US$'000 US$'000
------------------------------------- ------------ ------------
Authorised:
------------------------------------- ------------ ------------
400,000,000 Ordinary shares
of US$0.10 each 40,000,000 40,000,000
------------------------------------- ------------ ------------
Allotted, Called-up and Fully-Paid:
------------------------------------- ------------ ------------
68,299,236 (31 December 2015:
68,299,236) Ordinary shares
of US$0.10 each in issue, with
full voting rights 6,830 6,830
8,956,423 (31 December 2015:
8,956,423) Ordinary shares
of US$0.10 each held in Treasury 896 896
------------------------------------- ------------ ------------
7,726 7,726
------------------------------------- ------------ ------------
During the period to 31 December 2016 the Company repurchased Nil (31 December 2015: Nil) Ordinary shares, at a cost of US$Nil (31 December 2015: US$Nil). Nil (31 December 2015: Nil) shares were subsequently cancelled, with 8,956,423 Ordinary shares retained in Treasury (31 December 2015 8,956,423). The Ordinary shares held in Treasury have no voting rights and are not entitled to dividends.
17 Trade and other payables
Group Company Group Company
31 December 31 December 2016 31 31 December 2015
2016 December
2015
US$'000 US$'000 US$'000 US$'000
------------------------------- ------------- ------------------ ---------- ------------------
Current liabilities
Sundry creditors and accruals 1,031 878 164 74
------------------------------- ------------- ------------------ ---------- ------------------
Total 1,031 878 164 74
------------------------------- ------------- ------------------ ---------- ------------------
18 Directors' remuneration
Mr Van den Broeck, as Chairman, is entitled to remuneration of US$45,000 per annum from the date of his appointment and Mr Dungate and Mr Bartlett are each entitled to remuneration of US$30,000 per annum.
At 31 December 2016 Directors fees payable were US$ Nil (2015: US$ Nil)
19 Taxation
2016 2015
US$'000 US$'000
-------------------------------------------------- -------- --------
Balance at 1 January 1,940 1,939
Macau tax (release of)/addition to tax provision (1,940) 1
Balance at 31 December - 1,940
-------------------------------------------------- -------- --------
The Company won its appeal against a claim by the Macau Tax Authorities in regard to the sale of the AIA Tower. As a result of this the provision brought forward was released.
Withholding tax
2016 2015
US$'000 US$'000
------------------------ -------- --------
Balance at 1 January 229 160
Charge for the year 565 276
Paid in the year (421) (207)
Balance at 31 December 373 229
------------------------ -------- --------
Isle of Man taxation
The Company is resident in the Isle of Man for tax purposes and pays income tax at 0%. The Company pays a corporate charge of GBP380 to the Isle of Man Government for each tax year.
20 Financial instruments
The Group's activities expose it to a variety of financial risks: market price risk, foreign exchange risk, credit risk, liquidity risk and cash flow interest rate risk.
All financial instruments are considered to be stated at amounts which approximate their fair value.
Market price risk
The Group's strategy for the management of investment risk is driven by the Group's investment objective. The main objective of the Group is to achieve capital appreciation while attempting to reduce risk primarily by applying a disciplined and diversified value investing philosophy.
All investments present a risk of loss of capital through movements in market prices. The Investment Manager moderates this risk through a careful selection of securities within specified limits. The Investment Manager reviews the position on a day to day basis and the Directors review the position at Board meetings.
The Group's market risk is managed through the diversification of the investment portfolio. Certain investments are in illiquid/inactive markets and classified as Level 2 in the fair value hierarchy.
At 31 December 2016, if the market value of the investment portfolio had increased/decreased by 1.5% with all other variables held constant, this would have increased/decreased net assets attributable to shareholders by approximately US$872,000 (31 December 2015 : US$778,000).
Foreign exchange risk
The Group's operations are conducted in jurisdictions which generate revenue, expenses, assets and liabilities in currencies other than the United States Dollar (the Functional Currency). As a result, the Group is subject to the effects of exchange rate fluctuations with respect to these currencies.
The following table sets out the Group's total exposure to foreign currency risk and the net exposure to foreign currencies of the monetary assets and liabilities:
Monetary Monetary Net
31 December Assets Liabilities Exposure
2016 US$'000 US$'000 US$'000
------------------- --------- ------------- ----------
United Arab
Emirate Dirham 2,226 - 2,226
Australian Dollar 640 - 640
Bangaldeshi
Taka 3,401 (205) 3,196
Bulgarian Lev 328 - 328
Bahraini Dinar 754 - 754
Brazilian Real 4,076 - 4,076
Egyptian Pound 476 - 476
Euro 4,197 - 4,197
British Pound 460 - 460
Hong Kong Dollar 1,453 - 1,453
Croatian Kuna - - -
Hungarian Forint 2,139 - 2,139
Jamaican Dollar 4,593 - 4,593
Kenyan Shilling 383 - 383
South Korean
Won 1,239 (4) 1,235
Moroccan Dirham 1,020 - 1,020
Macedonian Denar 1,538 - 1,538
Nigerian Naira 147 (2) 145
Omani Rial 2,874 - 2,874
Peruvian Nueva
Sol 1,795 - 1,795
Philippine Peso 3,120 - 3,120
Polish Zloty 1,937 - 1,937
Qatari Rial 2,580 - 2,580
Serbian Dinar 1,839 (163) 1,676
Tunisian Dinar 2,455 - 2,455
Uganda Shilling 40 - 40
Vietnamese Dong - - -
CFA Franc 562 - 562
South African
Rand 1,526 - 1,526
US Dollar 22,983 (1,030) 21,953
70,781 (1,404) 69,377
------------------- --------- ------------- ----------
Monetary Monetary Net
31 December Assets Liabilities Exposure
2015 US$'000 US$'000 US$'000
United Arab
Emirate Dirham 537 - 537
Australian Dollar 633 - 633
Bangaldeshi
Taka 3,724 (210) 3,514
Bulgarian Lev 875 - 875
Bahraini Dinar 2,068 - 2,068
Swiss Franc 421 - 421
Euro 4,936 - 4,936
British Pound 892 - 892
Hong Kong Dollar 1,262 (1,959) (697)
Croatian Kuna 739 - 739
Hungarian Forint 1,948 - 1,948
Jamaican Dollar 3,952 (12) 3,940
South Korean
Won 1,723 (6) 1,717
Moroccan Dirham 903 - 903
Macedonian Denar 1,237 - 1,237
Macau Pataca 1,940 - 1,940
Nigerian Naira 1,571 (2) 1,569
Omani Rial 2,705 - 2,705
Peruvian Nueva
Sol 1,450 - 1,450
Philippine Peso 926 926
Polish Zloty 1,804 - 1,804
Qatari Rial 2,827 - 2,827
Serbian Dinar 1,889 - 1,889
Tunisian Dinar 2,313 - 2,313
Uganda Shilling 572 - 572
Vietnamese Dong 1,371 - 1,371
CFA Franc 1,187 - 1,187
South African
Rand 1,253 - 1,253
US Dollar 17,852 (144) 17,708
------------------- --------- ------------- ----------
65,510 (2,333) 63,177
------------------- --------- ------------- ----------
Credit risk
Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Group.
The carrying amounts of financial assets best represent the maximum credit risk exposure at the balance sheet date. This relates also to financial assets carried at amortised cost, as they have a short term maturity.
At the reporting date, the Group's financial assets exposed to credit risk amounted to the following:
31 December 31 December
2016 2015
US$'000 US$'000
----------------------------- ------------ ------------
Financial assets at
fair value through
profit or loss 58,143 51,835
Funds held in escrow - 2,256
Trade and other receivables 208 237
Cash at bank 12,430 11,182
----------------------------- ------------ ------------
70,781 65,510
----------------------------- ------------ ------------
The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet.
The Group manages its credit risk by monitoring the creditworthiness of counterparties regularly. Cash transactions and balances are limited to high-credit-quality financial institutions. The Investment Manager and the Board of Directors do not expect any losses from non-performance by these counterparties.
Liquidity risk
The Group manages its liquidity risk by maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. The Group's liquidity position is monitored by the Manager and the Board of Directors. Residual undiscounted contractual maturities of financial liabilities at the reporting dates were:
Less 3 months
than 1-3 to 1 1-5 No stated
1 month months year years maturity
Financial liabilities US$'000 US$'000 US$'000 US$'000 US$'000
----------------------- --------- -------- --------- -------- ----------
2016
Taxation payable - - - - -
Trade and other 1,404 - - - -
payables
1,404 - - - -
----------------------- --------- -------- --------- -------- ----------
2015
Taxation payable - - 1,940 - -
Trade and other 393 - - - -
payables
393 - 1,940 - -
----------------------- --------- -------- --------- -------- ----------
Interest rate risk
Cash held by the Group is invested at short-term market interest rates. As a result, the Company is not exposed to fair value interest rate risk due to fluctuations in the prevailing levels of market interest rates. However, it is exposed to interest rate cash flow risk.
The table below summarises the Group's exposure to interest rate risks at 31 December 2016. It includes the Groups' financial assets and liabilities at the earlier of contractual re-pricing or maturity date, measured by the carrying values of assets and liabilities:
Less 1-3 Non-interest Total
than months bearing
1 month
31 December US$'000 US$'000 US$'000 US$'000
2016
-------------------- --------- -------- ------------- --------
Financial
assets
Investments
at fair value
through profit
or loss - - 58,143 58,143
Trade and
other receivables - - 208 208
Funds held - - - -
in escrow
Cash 12,430 - - 12,430
-------------------- --------- -------- ------------- --------
Total financial
assets 12,430 - 58,351 70,781
-------------------- --------- -------- ------------- --------
Financial
liabilities
Trade and
other payables - - 1,404 1,404
Taxation payable - - - -
-------------------- --------- -------- ------------- --------
Total financial
liabilities 1,404 1,404
-------------------- --------- -------- ------------- --------
Total interest
rate sensitivity
gap 12,430 - - 12,430
-------------------- --------- -------- ------------- --------
Less 1-3 Non-interest Total
than months Bearing
1 month
31 December US$'000 US$'000 US$'000 US$'000
2015
-------------------- --------- -------- ------------- --------
Financial
assets
Investments
at fair value
through profit
or loss - - 51,835 51,835
Trade and
other receivables - - 237 237
Funds held
in escrow 2,256 - - 2,256
Cash 11,182 - - 11,182
-------------------- --------- -------- ------------- --------
Total financial
assets 13,438 - 52,072 65,510
Financial
liabilities
Trade and
other payables - - 393 393
Taxation payable - - 1,940 1,940
Total financial
liabilities - - 2,333 2,333
-------------------- --------- -------- ------------- --------
Total interest
rate sensitivity
gap 13,438 - - 13,438
-------------------- --------- -------- ------------- --------
21 Post balance sheet events
On 27 February 2017 the shareholders approved a tender for 6,829,924 shares at a price of US$0.98 per share.
22 Capital commitments
At 31 December 2016 The Company had an outstanding commitment to subscribe a total of $1,700,000 at Net Asset Value for shares in the Terra Argentine Fund LP.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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June 27, 2017 02:00 ET (06:00 GMT)
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