TIDMMET
RNS Number : 1355K
Metro Baltic Horizons PLC
20 June 2014
Metro Baltic Horizons plc (MET.L)
Annual Report and Accounts 31 December 2013
Metro Baltic Horizons plc ("MBH" or the "Company") announces its
full year results for the year ended 31 December 2013.
Highlights
-- The Company sold its last property in April 2013 for net cash consideration of EUR5.5m.
-- Post year end, the Company reached settlements with the
members of its previous Board and with its previous auditors
resulting in the Company receiving EUR3.6m (GBP2.5m plus
GBP425k).
-- Net asset value per share (NAV) as of year end
(pre-litigation settlements) decreased by 16% to EUR0.21 (31
December 2012: EUR0.25). The NAV is derived from the Group's cash
holdings and the Russian property, classified within the disposal
group held for sale at 31 December 2012 and sold during the year
ended 31 December 2013.
-- Group (loss)/profit after tax was EUR(1,011k) (2012: EUR3,156k).
-- The total gross property portfolio was valued at EUR0 (31
December 2012: EUR7.72m), due to the sale of the final property
during the year ended 31 December 2013.
-- Focus for the near future is on maximising shareholder
returns through litigation against the Company's former investment
manager, advisers and related parties.
Copies of the Company's Annual Report and Accounts for the year
ended 31 December 2013 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
In the past year your Board has made considerable progress in
recovering shareholder value in the company.
As notified last year, the final asset sold was the St
Petersburg property. This was completed in April 2013 for
consideration of EUR5.5m with the purchaser also taking over
disputed loan notes and other liabilities of EUR2.3m relating to
the property.
Our litigation against the Company's previous board and auditors
was settled in 2014 and resulted in an aggregate cash payment of
EUR3.6m (GBP2.925m).
Our focus is now solely on continuing our case against the
former advisors to the Company namely Mr James Kenny, Mr Mart
Habakuk, Metro Capital Management AS, Tolmain Advisory Services
Limited, Mr Paul McGuinness, MG Capital Limited and McGuinness
Investments OU and we expect these proceedings to come to trial in
2015.
The loss attributable to the shareholders of EUR1.0m in 2013
primarily reflected the costs of the above litigation as well as
the limited ongoing costs of the Company.
The Company is currently in a strong cash position with cash,
including restricted cash held with the Isle of Man Court pursuant
to an Order for security for costs or with legal advisors, of
approximately EUR8.8m as of today's date.
The Company does not intend to make further property investments
and is further seeking to contain the ongoing costs of operation.
The Company, in conjunction with its professional advisers, is
considering proposals to be put to shareholders relating to a
potential distribution and the continued listing of the Company's
shares. . The Company intends that a circular setting out these
proposals will be published prior to the suspension of trading in
the Company's shares due to take effect from 7:30am on Tuesday 15
July 2014.
The Board will keep shareholders appraised on the outcome of
these proposed resolutions.
Ronan Reid
Chairman
Metro Baltic Horizons Plc
June 2014
Consolidated statement of total comprehensive income
for the year ended 31 December 2013
31 December 31 December
2013 2012
Note EUR'000 EUR'000
Continuing operations
Administrative expenses 3 (1,077) 178
Net foreign currency (loss)/gain (59) 9
Gain arising on loss of control in former
subsidiary entity 7 - 746
Net operating (loss)/profit before tax
and finance income and expense (1,136) 933
(Loss)/profit before tax (1,136) 933
Income tax credit 4 - -
(Loss)/profit for the year - continuing
operations (1,136) 933
Profit for year from discontinued operations 7 125 2,223
(Loss)/profit for financial year (1,011) 3,156
Other comprehensive income - -
Total comprehensive income (loss)/profit (1,011) 3,156
31 December 31 December
2013 2012
Note EUR'000 EUR'000
Total comprehensive income
Total comprehensive (loss)/income (1,011) 3,156
Total Comprehensive (loss)/income attributable
to:
Equity holders of the parent - continuing
operations (1,136) 933
Equity holders of the parent - discontinued
operations 125 2,315
Non-controlling interest - discontinued
operations - (92)
(1,011) 3,156
31 December 31 December
2013 2012
EUR'cents EUR'cents
Basic and diluted earnings per share
(Loss)/earnings per share from continuing
operations 5 (4.34) 3.56
Earnings per share from discontinued
operations 5 0.48 8.84
Total (loss)/earnings per share (3.86) 12.40
Consolidated statement of financial position
as at 31 December 2013
Note 31 December 31 December
2013 2012
EUR'000 EUR'000
Assets
Current assets
Restricted cash 11 1,567 -
Cash and cash equivalents 10 4,153 1,152
Current assets 5,720 1,152
Assets included in disposal
group as held for sale 7 - 8,022
Total assets 5,720 9,174
Equity
Issued capital 14 262 262
Distributable Reserve 16 36,186 36,186
Retained earnings (30,899) (29,888)
Foreign currency translation
reserve (30) (30)
Total equity attributable to
equity holders of the parent 5,519 6,530
Liabilities
Current liabilities
Trade and other payables 13 201 172
Interest bearing loans
- Bank loans 12 - -
- Other loans - -
Income tax payable - -
Total current liabilities 201 172
Liabilities included in disposal
group as held for sale 7 - 2,472
Total liabilities 201 2,644
Total equity and liabilities 5,720 9,174
Net asset value per ordinary
share - basic (cents) 15 0.21 0.25
Company statement of financial position
as at 31 December 2013
31 December 31 December
2013 2012
Note EUR'000 EUR'000
Assets
Non-current assets
Investment in subsidiaries 18 443 -
Current assets
Restricted cash 11 1,567 -
Cash and cash equivalents 10 4,152 1,152
Total current assets 5,719 1,152
Assets classified as held for sale 18 - 5,675
Total assets 6,162 6,827
Equity
Issued capital 14 262 262
Distributable reserves 16 36,186 36,186
Retained earnings (deficit) (30,371) (29,721)
Total equity 6,077 6,727
Liabilities
Current liabilities
Trade and other payables 13 85 100
Total liabilities 85 100
Total equity and liabilities 6,162 6,827
Consolidated statement of changes in equity
for the year ended 31 December 2013
Foreign
currency Retained Non-
Issued Distributable translation earnings/ controlling Total
capital reserves reserve (deficit) Total interest equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
As at 1 January
2012 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 7) - - - - - 1,371 1,371
------------- --------------- ------------ ------------ -------- ------------- -------------
As at 31 December
2012 262 36,186 (30) (29,888) 6,530 - 6,530
Loss for year - - (1,011) (1,011) - (1,011)
------------- --------------- ------------ ------------ -------- ------------- -------------
Total
comprehensive
loss for year - - - (1,011) (1,011) - (1,011)
------------- --------------- ------------ ------------ -------- ------------- -------------
As at 31 December
2013 262 36,186 (30) (30,899) 5,519 - 5,519
------------- --------------- ------------ ------------ -------- ------------- -------------
Company statement of changes in equity
for the year ended 31 December 2013
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
Issued Distributable Retained
capital reserves earnings Total
EUR'000 EUR'000 EUR'000 EUR'000
At 31 January 2013 262 36,186 (29,721) 6,727
Total comprehensive loss - - (650) (650)
At 31 December 2013 262 36,186 (30,371) 6,077
Consolidated statement of cash flows
for the year ended 31 December 2013
2013 2012
Note EUR'000 EUR'000
Cash flows from operating activities
(Loss)/profit before tax (1,136) 933
Non-cash adjustment to reconcile (loss)/profit
before tax to net cash flows
Foreign exchange loss/(gain) 59 (9)
Gain arising from loss of control in former
subsidiary entity 7 - (746)
Taxes paid and other miscellaneous items (9) 28
Working capital adjustments
Increase in restricted cash (1,567) -
Increase /(decrease) in trade and other
payables 29 (955)
Net cash flows from continuing operations (2,624) (749)
Net cash flows from discontinued operations 7 (102) 83
---------- ----------
Net cash flows from operating activities (2,726) (666)
---------- ----------
Cash flows from investing activities
Proceeds from sale of subsidiaries 5,500 -
Net cash used in investing activities from
discontinued operations 7 - (2)
---------- ----------
Net cash generated from investing activities 5,500 (2)
Cash flows from financing activities
Net cash used in financing activities from
discontinued operations 7 - (81)
---------- ----------
Net cash flows from financing activities - (81)
---------- ----------
Net increase /(decrease) in cash and cash
equivalents 2,774 (749)
Cash and cash equivalents at the beginning
of the year 10 1,379 2,128
---------- ----------
Cash and cash equivalents at the end of
the year 10 4,153 1,379
========== ==========
Company statement of cash flows
for the year ended 31 December 2013
31 December 31 December
2013 2012
Note EUR'000 EUR'000
Cash flows from operating activities
(Loss)/profit before tax (650) 1,356
Non-cash adjustment to reconcile (loss)/profit
before tax to net cash flows
Net impairment adjustment 18 175 (1,820)
Working capital adjustments
Increase in restricted cash (1,567) -
Decrease in trade and other payables (15) -
Net cash used in operating activities (2,057) (464)
Cash flows from investing activities
Proceeds from sale of subsidiaries 5,500 -
Advanced to subsidiaries 18 (443) (355)
Net cash generated from/(used in) investing
activities 5,057 (355)
Net increase/(decrease) in cash and cash
equivalents 3,000 (819)
Cash and cash equivalents at the beginning
of the year 10 1,152 1,971
Cash and cash equivalents at the end
of the year 10 4,152 1,152
============ ==============
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 2013
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 2012.
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 2013.
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. During the current financial year the
last of these properties was disposed of.
The remaining property was situated in St. Petersburg, Russia
and was disposed of in April 2013 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.
The Board has 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 to
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, the Group is in the process of undertaking
significant legal action and as such, 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 commencing later
than 1 January 2013. The following standards and interpretations
have yet to be adopted by the Group:
International Financial Reporting Effective date
Standards (IFRS/IAS)
IAS 16 Property, Plant and Equipment 1 January 2016
(Amendment)
IAS 19 Employee Benefits (Amendment) 1 July 2014
IAS 27 Separate Financial Statements 1 January 2014
(Amendment)
IAS 32 Financial Instruments: Presentation 1 January 2014
(Amendment)
IAS 36 Impairment of Assets (Amendment) 1 January 2014
IAS 38 Intangible Assets (Amendment) 1 January 2016
IAS 39 Financial Instruments: Recognition 1 January 2014
and Measurement (Amendment)
IFRIC Levies 1 January 2014
21
IFRS Financial Instruments - Classification 1 January 2018
9 and Measurement
IFRS Consolidated Financial Statements 1 January 2014
10 (Amendment)
IFRS Disclosure of Interest in 1 January 2014
12 Other Entities (Amendment)
IFRS Fair Value Measurement (Amendment) 1 July 2014
13
IFRS Regulatory Deferral Accounts 1 January 2016
14
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 the following standards and amendments
during the year:
-- IAS 1 Presentation of Financial Statements (Amendment)
-- IAS 19 Employee Benefits (Amendment)
-- IFRS 10 Consolidated Financial Statements
-- IFRS 13 Fair Value Measurement
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 may be 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) Restricted cash
Restricted cash balances relate primarily to amounts held by the
High Court of Isle of Man for on-going legal cases. The remainder
of restricted cash relates to cash held by the Company's UK and
Isle of Man legal advisers.
g) 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.
g) Income tax and deferred tax (cont'd)
- 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.
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 of Total Comprehensive Income as part of
the profit or loss for the period.
Any gains 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 de-recognition 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 de-recognition.
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.
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 (EIR) method. Gains and losses are recognised in
profit or loss when the liabilities are de-recognised as well as
through the EIR method amortisation process.
Amortised cost is calculated by taking into account any discount
or premium on acquisition and fees 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.
De-recognition
A financial liability is de-recognised when the obligation under
the liability is discharged, 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 de-recognition 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.
o) Fair values
For financial reporting purposes, fair value measurements are
categorized into Level 1, 2 or 3 based on the degree to which
inputs to the fair value measurements are observable and the
significance of the inputs to the fair value measurement in its
entirety, which are described as follows:
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities
Level 2: valuation techniques for which the lowest level of
inputs which have a significant effect on the recorded fair value
are observable, either directly or indirectly
Level 3: valuation techniques for which the lowest level of
inputs that have a significant effect on the recorded fair value
are not based on observable market data
3. Administrative expenses
Administrative expenses include the following:
31 December 31 December
2013 2012
Group Group
EUR'000 EUR'000
Investment management fees - (714)
Legal and other professional fees 598 153
Administrators fees 65 99
Directors' remuneration 60 60
Auditors' remuneration - audit services 38 50
Accountancy Services 23 30
Other administrative expenses 118 144
Provision for doubtful account expense (Note 18) 175 -
1,077 (178)
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 contracts with the former
investment manager and former 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, in the prior
year, the Directors reversed all amounts previously accrued in
respect of same.
4. Income tax
31 December 31 December
2013 2012
Group Group
EUR'000 EUR'000
Deferred tax
Released to profit and loss - 1,235
Tax credit for the year - 1,235
Reclassified to discontinued operations (Note 7) - (1,235)
- -
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 in
April 2013, no tax liability arose. Accordingly, the liability was
released to profit in the year ended 31 December 2012 and
reclassified as part of discontinued operations.
Group 31 December 31 December
Deferred tax asset and liability 2013 Liabilities 2012 Liabilities
------------------ ------------------
EUR'000 EUR'000
Opening deferred tax assets - -
Opening deferred tax liabilities - 1,235
------------------ ------------------
- 1,235
------------------ ------------------
Consolidated statement of comprehensive income
Release of liability as reversal
is no longer probable - (1,235)
Closing balance - -
------------------ ------------------
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.
5. Earnings per share
The calculation of basic earnings per share at 31 December 2013
was based on the (loss)/profit attributable to shareholders of
(EUR1,011k), (2012: EUR3,248k) split between a (loss)/profit from
continuing operations of (EUR1,136k), (2012: EUR933k) and profit
from discontinued operations of EUR125k, (2012: EUR2,315k). The
weighted average number of ordinary shares in issue during the
years ended 31 December 2013 and 31 December 2012 was
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 2013 or 31 December
2012.
31 December 31 December
2013 2012
Group Group
EUR'000 EUR'000
Basic and diluted earnings per share
(Loss)/profit attributable to equity holders of the
parent - continuing operations (1,136) 933
Profit attributable to equity holders of the
the parent - discontinued operations 125 2,315
31 December 31 December
2013 2012
Group Group
EUR'000 EUR'000
Weighted average number of ordinary shares
in issue during the year 26,200,270 26,200,270
EUR' cents EUR' cents
(Loss)/earnings per share from continuing
operations (4.34) 3.56
Earnings per share from discontinued
operations 0.48 8.84
Total (loss)/earnings per share (3.86) 12.40
6. Investment property
Investment
Property
EUR'000
At 31 December 2011 and 1 January 2012 8,948
Fair value adjustment - discontinued operations
(Note 7) 1,444
Reclassification of investment property
to held for sale (Note 7) (7,722)
Derecognised following loss of control (Note
7) (2,670)
At 31 December 2012 and 1 January 2013 -
Fair value adjustment - discontinued operations
(Note 7) -
At 31 December 2013 -
During the year, the Group disposed of the remaining investment
property which it had presented as part of its disposal group held
for sale in the prior year. As the sale occurred before the prior
year financial statements were approved, it was possible to
reasonably estimate the fair value as of 31 December 2012. The
valuation of the Pirita Tee property (derecognised following the
loss of control) was performed by the Directors in the prior
year.
7. Gain/(loss) on de-recognition of subsidiary entity, assets
classified as held for sale and discontinued operations
The Profit for the year from discontinued operations arises as
follows;
2013 2012
EUR'000 EUR'000
-------- --------
Arising on loss of control of
Pirita Tee during the
previous financial year (see below) - (142)
Arising from subsidiary undertakings
classified as
held for sale (see below) 125 2,365
Profit for year from discontinued
operations 125 2,223
======== ========
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 de-recognition 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
de-recognition was calculated as follows:
2013 2012
EUR'000 EUR'000
-------- --------
Net liabilities at date of loss
of control - 2,117
Non-controlling interest - (1,371)
--------
Gain on de-recognition 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 for year from discontinued operations".
The detailed analysis of the segment's results is set out
below.
2013 2012
EUR'000 EUR'000
-------- --------
Net rental income - 6
Changes in value of investment
property (Note 6) - (100)
-------- --------
Operating loss - (94)
Finance costs - (48)
-------- --------
Loss for year from discontinued
operations - (142)
-------- --------
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.
2013 2012
EUR'000 EUR'000
Current assets
Cash and cash equivalents - 9
Total assets - 9
------------ -----------
Current liabilities
Bank loans - 1,074
Other loans - 1,052
------------ -----------
Total liabilities - 2,126
------------ -----------
Net liabilities at date of loss of
control - (2,117)
------------ -----------
Cash flows generated by this operating segment for the
reporting periods under review can be summarised as follows:
2013 2012
EUR'000 EUR'000
Operating activities - (14)
Financing activities* - 2
-------- --------
- (12)
-------- --------
*Financing activities are net of transfers from other group
companies totalling EUR80,000.
During the year, the Group disposed of its subsidiary entities
Pedragon Limited, Goldbrick Limited, and OOO Gruppa Kub.
The assets and liabilities of these entities were classified
as being part of a disposal group held for sale in the
prior year. 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 for year from discontinued
operations". The detailed analysis of the segment's results
is set out below.
2013 2012
EUR'000 EUR'000
-------- --------
Net rental income 125 2
Changes in value of investment
property (Note 6) - 1,544
Foreign exchange gain - 23
-------- --------
Operating profit 125 1,569
Finance costs - (439)
-------- --------
Profit from discontinued operations
before tax 125 1,130
Taxation credit - 1,235
-------- --------
Profit for year from discontinued
operations 125 2,365
-------- --------
The carrying amounts of assets and liabilities classified
as part of a disposal group held for sale are as follows:
2013 2012
EUR'000 EUR'000
Non-current assets
Investment property (Note 6) - 7,722
Other assets - 18
Current assets
Trade and other receivables - 55
Cash and cash equivalents - 227
Total assets - 8,022
-------- --------
Current liabilities
Trade and other payables - 131
Other loans - 2,341
-------- --------
Total liabilities - 2,472
-------- --------
Net assets - 5,550
-------- --------
Cash flows generated by this operating segment for the
reporting periods under review can be summarised as follows:
2013 2012
EUR'000 EUR'000
Operating activities (102) 97
Investing activities - (2)
-------- --------
(102) 95
-------- --------
8. Operating segment information
For management purposes, the Group was 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 7, the
results of the activities of these operating segments were
classified within discontinued operations during the prior 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 had been classified as part of a disposal group held for
sale.
As there is only one operating segment, there is no need for
detailed operating segment disclosures or reconciliations as
required by IFRS 8. All other disclosures required by IFRS 8 in
respect of these segments are included within Note 7.
9. Trade and other receivables and amounts due from group companies
As at 31 December 2013 and 2012, none of the receivable balances
were overdue.
31 December 31 December
2013 2012
Company Company
EUR'000 EUR'000
Interest due from group companies - 10,204
Impairment of interest due - (10,204)
- -
The net carrying amount of trade and other receivables is
considered to be a reasonable approximation of fair value.
10. Cash and cash equivalents
31 December 31 December
2013 2012
Group Group
EUR'000 EUR'000
Sterling cash 177 526
Euro cash 3,976 671
Rouble cash - 182
Total cash and cash equivalents 4,153 1,379
Cash and cash equivalents in entities
classified as held for sale - (227)
Cash and cash equivalents 4,153 1,152
For the purpose of the consolidated statement of cash flows,
cash and cash equivalents comprise the following:
31 December 31 December
2013 2012
Group Group
EUR'000 EUR'000
Cash at banks and on hand 4,153 1,379
31 December 31 December
2013 2012
Company Company
EUR'000 EUR'000
Sterling cash 176 526
Euro cash 3,976 626
Cash and cash equivalents 4,152 1,152
For the purpose of the consolidated statement of cash flows,
cash and cash equivalents comprise the following:
31 December 31 December
2013 2012
Company Company
EUR'000 EUR'000
Cash at banks and on hand 4,152 1,152
11. Restricted Cash
The Company has EUR1,567k of restricted cash at 31 December 2013
(2012: EURNil). This balance is made up of EUR1,471k of cash held
by the High Court of the Isle of Man for on-going litigation at 31
December 2013. The remaining EUR96k relates to cash held by the
Company's UK and Isle of Man legal advisers.
12. Interest bearing bank loans
31 December 31 December
2013 2012
Group Group
EUR'000 EUR'000
At beginning of year - 3,777
Accrued interest - 48
Repaid during year - (81)
Settled on foreclosure - (2,670)
At end of year / date of loss of control - 1,074
Derecognised on loss of control (Note 7) - (1,074)
- -
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
2013.
13. Trade and other payables
31 December 31 December
2013 2012
Group Group
EUR'000 EUR'000
Directors' fees 82 38
Other trade payables and accruals 119 134
Total trade and other payables 201 172
31 December 31 December
2013 2012
Company Company
EUR'000 EUR'000
Other trade payables and accruals 85 100
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.
14. Issued capital
31 December 31 December
2013 2012
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 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.
15. Net asset value per share
31 December 31 December
2013 2012
Group Group
EUR'000 EUR'000
Net asset value attributable to
ordinary shareholders 5,519 6,530
Ordinary shares in issues at the end
of the period 26,200,270 26,200,270
Net asset value per share (cents per share) 0.21 0.25
16. 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.
17. Financial instruments
The Group holds cash, restricted cash and trade and other
payables.
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 7, movements
in the value of investment properties is no longer a risk to the
Group's Net Asset Value.
31 December 31 December
2013 2012
Group Group
EUR'000 EUR'000
Total assets 5,720 9,174
Total liabilities (201) (2,644)
Working capital is managed in each subsidiary on a standalone
basis.
Credit risk
Credit risk is the risk that an issuer or counterparty 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. As the Group no longer holds investment properties
which are relatively illiquid, the Group is no longer exposed to
liquidity risk associated with investments in property.
The maturity profile of the Group's liabilities, excluding those
classified as held for sale, is as follows:
Maturity Profile
2013 < 3 Months 3-12 Months 1-5 Years >5Years Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Trade and other payables 201 - - - 201
201
2012 < 3 Months 3-12 Months 1-5 Years >5Years Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Trade and other payables 172 - - - 172
172
Foreign exchange risk
Foreign currency risk is the risk that the fair value of future
cash flows of a financial instrument or cash balances denominated
in foreign currencies will fluctuate because of changes in foreign
exchange rates. The Group's main exposure is for Sterling balances.
To mitigate the foreign exchange risk the Group will typically
monitor the Euro/Sterling exchange rate on a regular basis and
reviews the Sterling balance held to ensure exposure is not
excessive. 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 GBPGBP/Euro Rate
Effect on profit
% change before tax
EUR'000
2013 +10% -
-10% -
2012 +10% -
-10% -
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 cash
and cash equivalents balances held.
The interest rate profile of the Group at 31 December 2013 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 4,153 - 4,153 - 0.1%
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 - 0.1%
BAP holdings loan (2,341) (2,341) - - 20.0%
(962) (2,341) 1,379 -
As detailed in Note 7, the BAP Holdings Loan and certain cash
balances have been classified as part of a disposal group held for
sale.
Impact of a 1% rise in the Euro floating rate
Effect on profit
% change Before tax
EUR'000
2013 +1% -
- 1% -
2012 +1% -
- 1% -
Fair Values
The table below sets out the Group's classification of each
class of financial assets/
liabilities and their fair values:
Loans and Liabilities Total Fair
receivables amortised carrying Value
cost amount
Note EUR'000 EUR'000 EUR'000 EUR'000
2013
Cash and cash equivalents 10 4,153 - 4,153 4,153
Restricted cash 11 1,567 - 1,567 1,567
Trade and other
payables 13 - (201) (201) (201)
------------- ------------ ---------- --------
5,720 (201) 5,519 5,519
------------- ------------ ---------- --------
At 31 December 2013 all items are valued using Level 1 inputs.
Valuation methods for Levels 1, 2 and 3 are described in the "fair
value hierarchy" section of the accounting policies, see Note
2(n).
Loans and Liabilities Total Fair
receivables amortised carrying Value
cost amount
Note EUR'000 EUR'000 EUR'000 EUR'000
2012
Cash and cash equivalents 10 1,152 - 1,152 1,152
Assets included
in disposal group
as held for sale 7 8,022 - 8,022 8,022
Trade and other
payables (excluding
deferred revenue) 13 - (172) (172) (172)
Liabilities included
in disposal group
as held for sale 7 (2,472) (2,472) (2,472)
------------- ------------ ---------- ----------
9,174 (2,644) 6,530 6,530
------------- ------------ ---------- ----------
17. Financial instruments (cont'd.)
At 31 December 2012 all items are valued using Level 1 inputs.
Valuation methods for Levels 1, 2 and 3 are described in the "fair
value hierarchy" section of the accounting policies, see Note
2(o).
18. Subsidiaries and non-controlling interest
Investments in subsidiaries
31 December 31 December
2013 2012
Company Company
EUR'000 EUR'000
Share capital of subsidiaries - -
Loans to subsidiaries 443 33,596
Impairment of loans to subsidiaries - (30,096)
Capital contributions to subsidiaries - 355
Impairment of capital contributions to subsidiaries - (355)
Reversal of previously recognised impairment
provisions - 2,175
Total investments in subsidiaries 443 5,675
The company has made loans and capital contributions to
subsidiaries in prior years whose net asset values have fallen
below the value of the loans and capital contributions granted. The
Board 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 the company if the assets of the subsidiaries were disposed
of at their book value and their existing liabilities repaid. This
was reflected through accumulated impairment charges totalling EUR
Nil (2012: EUR30.4 million). The loans to subsidiaries in the
current year are not deemed to be impaired as the subsidiary has
received significant sums of money post year end.
The reversal of provision for impairment charges recorded for
the year end 31 December 2012 arises as a result of actual proceeds
recovered following the sale of Pedragon Limited post period end
exceeding carrying value (Note 7).
The carrying value of investments in subsidiaries as at 31
December 2012 included an amount of EUR175k with respect to the
directors' estimated fair value of deferred consideration arising
from the sale of the company's subsidiaries as described in Note 7.
In the current year, the directors determined that it was
appropriate to make an impairment provision against this
amount.
The following were the companies in the Group at 31 December
2013:
Securities Principal Country of Beneficial interest
Name in issue activity incorporation 2013 2012
Metro Baltic 2 shares of Intermediate
Guernsey Ltd. EUR1 each holding co. Guernsey 100% 100%
Metro Baltic 18,000 shares Non-trading
Netherlands B.V. of EUR1 each Netherlands 100% 100%
As the parent has 100% share ownership of the two entities
listed above, they are both judged to be fully controlled by the
parent entity and as such are treated as subsidiaries and are fully
consolidated. As noted above, Metro Baltic Netherlands B.V. is non
trading and as such carries little risk and has little effect on
the financials of the Group. Metro Baltic Guernsey Ltd is
co-claimant with the Company in the proceedings being pursued in
the Isle of Man.
19. 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 was invalid and BAP Russia (as purported assignee of BAP
Estonia's claims against Pedragon) did not have any claims against
Pedragon arising out of the credit line agreement.
On 19 April 2013, 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.
20. Employees
At 31 December 2013 the Group had no (2012: 41) employees. The
average number of employees for the year ended 31 December 2013 was
nil (2012: 41).
31 December 31 December
2013 2012
Group Group
EUR'000 EUR'000
Wages and salaries - 260
Social security cost - 58
- 318
21. 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.
As disclosed in Note 3, a gain of EUR714k arose in the prior
year 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 or
performance fee payable for the year ended 31 December 2013 (2012:
Nil).
Directors' fees for the year ended 31 December 2013 amounted to
EUR60k (2012: EUR60k). Directors' fees payable at the year ended 31
December 2013 amounted to EUR82k (2012: EUR38k).
During the financial year ended 31 December 2009, the Group
arranged a loan ("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 2013 was EUR0 which is included in liabilities held for
sale (2012: EUR2.3m). 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 2012 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 19 above.
22. Commitments
The Group has no unprovided commitments as at year end (2012:
Nil).
23. Investment policy
The Company was established in 2006 to invest in and develop a
portfolio of property assets spread across the Baltic States with a
focus on prime office, residential and retail development and
investment opportunities. Following the disposal of its property
assets, the Company's current assets and activities are cash and
litigation against its former advisers Tolmain Advisory Services
Limited (formerly Metro Frontier Limited), Metro Capital Management
AS, Mart Habakuk, James Kenny Paul McGuinness, MG Capital Limited
and McGuinness Investments OU.
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
Under the AIM Rules for Companies, trading in the Company's
shares will be suspended from 7:30am on 15 July 2014. The Company
intends to put proposals to shareholders relating to the potential
delisting of shares and a potential distribution at a general
meeting to be held in advance of that date.
24. Subsequent event
The Company has reached a final settlement with former Company
directors, Robin James, Kristel Meos and Gunnar Okk (together, the
"Former Directors") in March 2014. In entering this settlement the
Former Directors have neither admitted liability nor wrongdoing.
Under the terms of the settlement agreement, the Company has agreed
to dismiss all claims against the Former Directors, and the Company
will receive GBP2,500,000.
The Company and its former auditors, Ernst & Young LLC
("EY") have agreed terms for the settlement of proceedings issued
by EY against the Company on 4 July 2012 in the High Court of
Justice of the Isle of Man, and the Company's counterclaim against
EY in those proceedings. Under the terms of the settlement
agreement, the Company and EY have agreed to settle their
respective claims, and the Company will receive GBP425,000 in full
and final settlement of all claims and counterclaims. In entering
into this settlement agreement, neither EY nor the Company have
admitted liability or wrongdoing. No amounts have been recognised
in the 2013 financial statements regarding these settlements.
25. Approval of financial statements
The financial statements were approved by the Board of Directors
on 19 June 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SESSASFLSESM
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