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
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
FR FFMFTMBJTBFR
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June 27, 2017 02:00 ET (06:00 GMT)
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