REG - Macau Prop Opp Fund - Final Results for the period ended 30 June 2016 <Origin Href="QuoteRef">MPO.L</Origin> - Part 5
21/09/2016 07:06
- Part 5: For the preceding part double click ID:nRSU3817Kd
by 5%, (and all other
assumptions remained the same), the fair value of The Waterside would decrease
by US$10 million or increase by US$11 million.
The Waterside is currently valued at its highest and best use. There is no
extra evidence available to suggest that it has an alternative use that would
provide a greater fair value measurement.
There have been no transfers between levels during the period or a change in
valuation technique since the last period.
7. Inventories
Cost 2016US$'000 2015US$'000
Balance brought forward 67,288 54,351
Additions 438 23,955
Disposals (254) (11,004)
Exchange difference (62) (14)
Balance carried forward 67,410 67,288
During the prior year, the Group purchased a luxury private house located in
Macau's exclusive neighbourhood of Penha Hill for a total acquisition cost of
HK$182,320,000 (US$23,500,000) (inclusive of stamp duty and all other fees and
expenses). The acquisition was complementary to the Group's portfolio given
that the property adjoined the Group's existing property The Green House. The
Green House, together with this newly acquired property, is now named as
Estrada da Penha.
Additions include capital expenditure, development costs and capitalisation of
financing costs.
Interest costs of US$nil (2015: US$225,000) relating to The Fountainside loan
facility were capitalised during the year.
Under IFRS, inventories are valued at the lower of cost and NRV. The carrying
amounts for inventories as at 30 June 2016 amounts to US$67,410,000 (2015:
US$67,288,000). NRV as at 30 June 2016 as determined by independent,
professionally-qualified valuer, Savills, was US$185,211,000 (2015:
US$217,655,000).
3 car parking spaces and 1 motorcycle parking space (2015: 27 units and 5 car
parking spaces) were sold during the year for a total consideration of US$1.0
million (HK$8.1 million) (2015: US$27.9 million (HK$216.4 million)) against a
total cost of US$0.2 million (HK$2.0 million) (2015: US$11.0 million (HK$85.6
million)), which resulted in a net profit of US$0.8 million (HK$6.1 million)
(2015: US$16.9 million (HK$130.8 million)) after all associated fees and
transaction costs.
8. Interest-bearing loans
2016US$'000 2015US$'000
Bank loans - Secured
- Current portion 14,705 19,194
- Non-current portion 149,018 146,769
163,723 165,963
The Group has a term loan facility with Hang Seng Bank for The Waterside and
the individual units in One Central Residences. On 4 November 2015, a new
tranche of the facility was executed for HK$282 million (US$36.4 million)
(Tranche 5) to finance the principal instalments of the previous tranches, for
up to the end of 2017.
As at 30 June 2016, three tranches remained outstanding. Tranche 1 had been
fully repaid during the year (2015: HK$79.4 million (US$10.2 million));
Tranche 3 had an outstanding balance of HK$572 million (US$73.7 million)
(2015: HK$750 million (US$96.7 million)); and Tranche 4 had an outstanding
balance of HK$76 million (US$9.8 million) (2015: HK$100 million (US$12.9
million)); and Tranche 5 had an outstanding balance of HK$281 million (US$36.3
million) (2015: HK$nil (US$nil)). Interest is paid quarterly on this loan
facility. As at 30 June 2016, the loan-to-value ratio for the Hang Seng One
Central facility was 57.98% (2015: 46.28%).
The interest rates applicable to Tranche 3, Tranche 4 and Tranche 5 of the
term loan are 2.25% per annum, 2.35% per annum and 2.35% per annum,
respectively, over the 1-, 2- or 3-month HIBOR rate, the choice of rate is at
the Group's discretion. The term loans mature on 19 September 2020. The
principal is to be repaid in half-yearly instalments commencing 19 March 2018
with 50% of the principal due upon maturity. The loan-to-value covenant is
60%. The facility is secured by means of a first registered legal mortgage
over The Waterside and the individual residential units owned by the Group at
One Central Residences as well as a pledge of all income from the units. The
Company is the guarantor for the credit facility. In addition, the Group is
required to maintain a cash reserve equal to six months' interest with the
lender. Early prepayment covenant for sales proceeds out of the individual One
Central Residence units will be waived, subject to the Group maintaining a
loan-to-value ratio of not more than 50% on the facility.
During the prior year, the Group executed a loan facility with the Industrial
and Commercial Bank of China (Macau) Limited to refinance the credit facility
with OCBC Wing Hang Limited (Macau) (previously known as Banco Weng Hang S.A.)
in relation to The Fountainside redevelopment project. The facility amount is
HK$220 million (US$28.4 million) with a tenor of 3 years to mature in March
2018. Full amount of the facility was drawdown in March 2015 to repay the OCBC
Wing Hang facility. Interest is charged at 3% per annum over the 3-month HIBOR
rate. The principal is to be repaid in half-yearly instalments commencing 12
months after drawdown date with 50% of the principal due upon maturity. The
loan-to-value covenant is 60%. The facility is secured by means of a first
registered legal mortgage over all unsold units and car parking spaces of The
Fountainside as at the loan facility date as well as a pledge of all income
from the units and the car parking spaces. The Company is the guarantor for
the credit facility.
As at 30 June 2016, the facility had an outstanding balance of HK$198.1
million (US$25.5 million) (2015: HK$214.4 million (US$27.7 million)). Sales
proceeds of US$nil (2015: US$0.3 million) was pledged with the lender. As at
30 June 2016, the loan-to-value ratio for The Fountainside facility was 56.76%
(2015: 49.33%).
The Group has two loan facilities for the purchase and redevelopment of
Estrada da Penha:
Banco Tai Fung
The loan facility with Banco Tai Fung has a term of 3 years and the facility
amount is HK$70 million. Interest is charged at 3.2% per annum over the
6-month HIBOR rate and repayment is due in full at maturity in June 2017. As
at 30 June 2016, the facility had an outstanding balance of HK$70 million
(US$9.0 million) (2015: HK$70 million (US$9.0 million)). This facility is
secured by a first legal mortgage over the property as well as a pledge of all
income from the property. The Group is the guarantor for this term loan.
Interest is paid monthly on this loan facility. As at 30 June 2016, the
loan-to-value ratio for this facility was 47.62% (2015: 44.59%).
ICBC Macau
The loan facility with Industrial and Commercial Bank of China (Macau) Limited
was executed on 11 December 2014. The term of the loan is 3 years and the
facility amount is HK$79 million. Interest is charged at 3.2% per annum over
the 3-month HIBOR rate and repayment is due in full at maturity in December
2017. As at 30 June 2016, the facility had an outstanding balance of HK$79
million (US$10.2 million) (30 June 2015: HK$79 million (US$10.2 million)).
This facility is secured by a first legal mortgage over the property as well
as a pledge of all income from the property. The Group is the guarantor for
this term loan. In addition, the Group is required to maintain a cash reserve
equal to six months' interest with the lender. Interest is paid monthly on
this loan facility. As at 30 June 2016, the loan-to-value ratio for this
facility was 45.14% (2015: 42.47%).
Bank loan interest paid during the year was US$4,827,000 (2015: US$4,126,000),
including US$nil (2015: US$225,000) capitalised during the year (see Note 7).
Amortised loan arrangement fees for the year are disclosed in Note 14.
The fair value of fixed rate financial assets and liabilities carried at
amortised cost are estimated by comparing market interest rates when they were
first recognised with current market rates for similar financial instruments.
The estimated fair value of fixed interest bearing loans is based on
discounted cash flows using prevailing market interest rates for debts with
similar credit risk and maturity. As at 30 June 2016, the fair value of the
interest-bearing loans was US$378,000 lower than the carrying value of the
financial liabilities (2015: the fair value of the financial liabilities was
US$57,000 higher than the carrying value of the financial liabilities).
The fair value of the Company's interest-bearing loans have been classified
within Level 2 of the fair value hierarchy (Note 1), as they have observable
inputs from similar loans. There have been no transfers between levels during
the period or a change in valuation technique since the last period.
9. Taxation
The Company is exempt from taxation in Guernsey under the provisions of The
Income Tax (Exempt Bodies) (Guernsey) Ordinances, 1989 to 1992, and is charged
an annual exemption fee of £1,200 (US$1,742) (2015: £1,200 (US$1,914)).
The Group would only be exposed to Hong Kong profits tax if it is:
i) not exempted under the Revenue (Profits Tax Exemption for Offshore Funds)
Ordinance 2006 (the "Ordinance"); and it is
ii) treated as carrying on a trade or business in Hong Kong either on its own
account or through any person as an agent.
No accrual has been made for Hong Kong profits tax, as the Board believes that
no such tax exposure exists at the end of the reporting year (2015: US$nil).
The Group is not subject to any income, withholding or capital gains taxes in
the BVI. No capital or stamp duties are levied in the BVI on the issue,
transfer or redemption of shares. As a result, no provision for BVI taxes has
been made in the consolidated financial statements.
The Macanese SPVs are liable to Macau property tax in respect of their
ownership of Macau properties. Taxation will be charged at the higher of 10%
(2015: 10%) of any rent received or 6% (2015: 6%) of the official ratable
rentable value. Newly built residential buildings or commercial buildings are
exempt from property tax for four years and six years, respectively (such time
running from the month after the occupancy permit is issued) for properties
located in Macau peninsula and outlying islands. Macau Complementary Taxes are
generally levied on income and profits arising in or derived from commercial
and/or industrial activities carried on in Macau. There is no distinction made
between a "revenue profit" and "capital profit" under the Macau complementary
tax regulations. Accordingly, all income booked by a Macau corporate taxpayer,
including gains on sale of investment/immovable property, will be subject to
complementary tax. In general, gains on the disposal of shares in a Macau
company (such as an SPV of the Company) should not attract Macau complementary
tax.
The Board closely monitors and assesses the level of provisions for Macanese
tax taking into consideration factors such as the Group's structure.
The Group also has exposure to PRC taxation for its business operation in the
PRC. The Board considers that the Group's exposure to PRC tax has been
properly reflected in the Group's consolidated financial statements.
As at the year end, the following amounts are the outstanding tax provisions.
2016US$'000 2015US$'000
Current liabilities
PRC tax authorities provision 2,514 -
Non-current liabilities
PRC tax authorities provision - 2,324
Deferred taxation 12,782 17,385
Provisions for Macanese taxations 2,409 2,600
15,191 22,309
PRC tax authorities provision
As at 30 June 2016, due to disposal during the year ended 30 June 2014 of the
APAC Logistics Centre and Cove Residence in Zhuhai, China, the Group is in the
process of finalising the tax assessment with the PRC tax authorities. The
provision has arisen due to the profit on the disposal. The Group has received
taxation advice as to the potential charge that may be imposed by the PRC tax
authorities. The provision amount as at 30 June 2016 reflects the expected
outcome of the tax charge and is expected to be settled within one year. The
Group is unlikely to be reimbursed for this provision. During the year, an
interim payment of HK$6,278,000 (US$810,000) was made against this provision
to the PRC tax authorities.
On 25 August 2016, the Group had submitted the final tax return to the PRC tax
authorities regarding the disposal of the APAC Logistics Centre and Cove
Residence. The final assessed tax liability totalled HK$19 million (US$2.45
million) was paid on 26 August 2016. The Management considered that the PRC
tax provisions made as at 30 June 2016 is adequate to reflect the Group's tax
position.
Deferred taxation
The Group has recognised a deferred tax liability for the taxable temporary
difference relating to the investment property carried at fair value.
Provisions for Macanese taxations
The Group has made provisions for property tax and complementary tax arisen
from its Macau business operations.
Tax Reconciliation
No tax reconciliation has been presented because the Company is exempt from
taxation in Guernsey (except as described above). The tax credit for the year
of US$3,541,000 (2015: tax credit of US$5,515,000) comprised a deferred tax
credit of US$4,587,000 (2015: US$7,453,000), arising from the reduction in the
value of investment property offset by a provision for Macanese taxes of
US$46,000 (2015: US$1,938,000) at a rate of 12% and an increase in the tax
authorities provision for the PRC of US$1,000,000 (2015: US$nil).
10. Trade and other receivables
Current assets 2016US$'000 2015US$'000
Trade receivables 1,013 3,189
Prepayments 83 90
1,096 3,279
11. Trade and other payables
Current liabilities 2016US$'000 2015US$'000
Accruals 454 385
Other payables 1,437 1,388
1,891 1,773
Other payables principally comprise outstanding amounts for operating
expenses.
12. Share capital
2016US$'000 2015US$'000
Ordinary shares
Authorised:
300 million ordinary shares of US$0.01 each 3,000 3,000
Issued and fully paid:
76.4 million (2015: 77.5 million)
ordinary shares of US$0.01 each 764 775
The Company has one class of ordinary shares which carries no right to fixed
income.
Ordinary shares repurchase
During the year, under the authority first granted in the Extraordinary
General Meeting of 28 June 2010 and renewed at each Annual General Meetings
thereafter, the Company repurchased 1,101,000 (2015: 3,881,036) ordinary
shares or 1.05% (2015: 3.70%) of the originally issued shares, totalling
US$3,016,000 (2015: US$14,875,000) at an average share price of 176.64p (2015:
237.75p). All shares bought back under the buyback programme were at market
value and were cancelled.
The following table summarises all shares repurchased by the Company as at 30
June 2016:
Numberof Shares Repurchase Price Per Share *
Total shares repurchased/average price at beginning of year 27,466,036 163.72
12 August 2015 550,000 184.00
19 August 2015 129,000 171.00
21 August 2015 122,000 171.00
28 August 2015 150,000 170.24
4 September 2015 150,000 165.50
Total shares repurchased/average priceduring the current year 1,101,000 176.64
Total shares repurchased/average priceat end of year 28,567,036 164.22
* Price in pence Sterling
The Board has publicly stated its commitment to undertake share buybacks at
attractive levels of discount of the share price to Adjusted NAV. In order to
continue this strategy, the Board intends to renew this authority at the 2016
Annual General Meeting.
13. General and administration expenses
General and administration expenses 2016US$'000 2015US$'000
Legal and professional 317 372
Holding Company administration 262 344
Guernsey SPV administration 131 172
BVI, Hong Kong & Macanese SPV administration 101 99
Insurance costs 19 19
Listing fees 21 24
Printing & postage 44 54
Other operating expenses 260 406
1,155 1,490
Administration fees for the BVI, Hong Kong and Macanese SPVs are payable to
Adept Capital Partners Services Limited, in which Thomas Ashworth is a
shareholder and Director.
14. Other financing costs
Financing costs 2016US$'000 2015US$'000
Bank charges 11 161
Loan arrangement fees 313 345
324 506
As at 30 June 2016, unamortised loan arrangement fees were US$791,000 (2015:
US$807,000).
15. Property operating expenses
Property operating expenses 2016US$'000 2015US$'000
Property management fee 742 693
Property taxes 275 677
Utilities 18 35
Other property expenses 236 282
1,271 1,687
16. Cash flows from operating activities
Cash flows from operating activities 2016US$'000 2015US$'000
Loss for the year before tax (49,192) (58,042)
Adjustments for:
Net gain on valuation of interest rate swap (291) (265)
Net loss from fair value adjustment on investment property 38,227 62,048
Net finance costs 5,732 5,440
Operating cash flows before movements in working capital (5,524) 9,181
Effects of foreign exchange rate changes (137) (5)
Movement in trade and other receivables 2,183 (3,028)
Movement in trade payables, provision and other payables 77 (31,933)
Movement in inventories (184) (12,712)
Taxation paid (1,319) -
Net change in working capital 757 (47,673)
Net cash used in operating activities (4,904) (38,497)
Cash and cash equivalents (which are presented as a single class of assets on
the face of the Consolidated Statement of Financial Position) comprise cash at
bank and other short-term, highly-liquid investments with a maturity of three
months or less. For both year ends, there are no cash equivalents held by the
Group.
17. Basic and diluted loss per ordinary share and net asset value per share
The basic and diluted loss per equivalent ordinary share is based on the loss
attributable to equity holders for the year of US$45,651,000 (2015: loss of
US$52,527,000) and on the 76,583,767 (2015: 78,862,869) weighted average
number of ordinary shares in issue during the year.
30 June 16 30 June 15
Loss AttributableUS$'000 Weighted Average No. of Shares'000s EPSUS$ Loss AttributableUS$'000 Weighted Average No. of Shares'000s EPSUS$
Basic and diluted (45,651) 76,584 (0.5961) (52,527) 78,863 (0.6661)
Net asset value reconciliation 2016US$'000 2015US$'000
Net assets attributable to ordinary shareholders 106,643 155,447
Uplift of inventories held at cost to market value 119,672 152,565
Adjusted NAV 226,315 308,012
Number of ordinary shares outstanding ('000) 76,433 77,534
NAV per share (IFRS) (US$) 1.40 2.00
Adjusted NAV per share (US$) 2.96 3.97
Adjusted NAV per share (£)* 2.23 2.53
The NAV per share is arrived at by dividing the net assets as at the date of
the Consolidated Statement of Financial Position, by the number of ordinary
shares in issue at that date.
Under IFRS, inventories are carried at the lower of cost and NRV. The Adjusted
NAV includes the uplift of inventories to their market values.
The Adjusted NAV per share is arrived at by dividing the Adjusted NAV as at
the date of the Consolidated Statement of Financial Position, by the number of
ordinary shares in issue at that date.
There are no potentially dilutive shares in issue.
* US$:GBP rate as at 30 June 2016 is 1.326 (2015: 1.573).
18. Related party transactions
Directors of the Company are all non-executive and by way of remuneration,
receive only an annual fee which is denominated in Sterling.
2016US$'000 2015US$'000
Directors' fees 187 231
The Directors are considered to be the key management personnel (as defined
under IAS 24) of the Company. Director's fees outstanding as at 30 June 2016
was US$39,461 (2015: US$58,578).
Thomas Ashworth has a beneficial interest in and is a Director of Sniper
Capital Limited. Sniper Capital Limited is the Manager to the Group and
received fees during the year, as detailed in the Consolidated Statement of
Comprehensive Income and on the basis described in Note 19.
Thomas Ashworth is a shareholder and Director of Adept Capital Partners
Services Limited. Adept Capital Partners Services Limited provides
administrative services to the Macanese, Hong Kong and BVI SPVs and received
fees during the year as detailed in Note 13.
No performance fee was accrued at the year end (2015: US$nil). A performance
fee of US$nil was paid during the year (2015: US$23,964,000).
The Group has a Development Management Services Agreement with a development
management company named Headland Developments Limited ("Headland"). Thomas
Ashworth has a beneficial interest in and is a Director of Headland and
therefore, constitutes a related party of the Group. Development Management
Services fees capitalised in investment property and inventories during the
year are detailed in Note 19.
The Group has a Project Management Services Agreement with a property
management company named Bela Vista Property Services Limited ("Bela Vista").
Thomas Ashworth has a beneficial interest in and is a director of Bela Vista
and therefore, constitutes a related party of the Group. Project Management
Services fees capitalised in investment property during the year are detailed
in Note 19.
All intercompany loans and related interest are eliminated on consolidation.
19. Material contracts
Management fee
Under the terms of an appointment made by the Board of Directors of the
Company on 23 May 2006, Sniper Capital Limited was appointed as Manager to the
Group. The Manager is paid quarterly in advance, a fee of 2.0% of the NAV, as
adjusted to reflect the Property Investment Valuation Basis. During the prior
year, an amendment was made to the Investment Management Agreement relating to
the definition of NAV on which the fee is calculated. The definition of NAV
changed to include an 'add-back' of deferred taxation to the Adjusted NAV,
subject to a claw-back provision, as the Directors are of the opinion that
such a liability will not be payable by the Group in the future. Management
fees paid for the year totalled US$5,528,000 (2015: US$8,117,000) with US$nil
outstanding as at 30 June 2016 (2015: US$nil).
Performance fee
In addition, the Manager is entitled to a performance fee in certain
circumstances. This fee is payable by reference to the increase in Adjusted
NAV per ordinary share over the course of each calculation period. The first
calculation period ended on 30 June 2007; each subsequent performance period
is a period of one financial year.
Payment of the performance fee is subject to:
i) the achievement of a performance hurdle condition: Adjusted NAV per
ordinary share at the end of the relevant performance period must exceed an
amount equal to the US Dollar equivalent of the Placing Price increased at a
rate of 10% per annum on a compounding basis up to the end of the relevant
performance period (the "performance hurdle"); and
ii) the achievement of a 'high water mark': Adjusted NAV per ordinary share
at the end of the relevant performance period must be higher than the highest
previously reported Adjusted NAV per Ordinary Share at the end of a
performance period in relation to which a performance fee, if any, was last
earned.
If the basic performance hurdle is met, and the high water mark exceeded, the
performance fee will be an amount equal to 20% of the excess of the Adjusted
NAV per ordinary share at the end of the relevant performance period over the
higher of (i) the basic performance hurdle; (ii) the Adjusted NAV per ordinary
share at the start of the relevant performance period; and (iii) the high
water mark (in each case on a per share basis), multiplied by the time
weighted average of the number of ordinary shares in issue in the performance
period (or since Admission in the first performance period) (together, if
applicable, with an amount equal to the VAT thereon).
In the year ended 30 June 2016, no performance fee was accrued (2015: US$nil)
by the Group. During the year ended 30 June 2016, a performance fee of US$nil
was paid (2015: US$23,964,000) by the Group. This performance fee is based on
the basic performance hurdle.
The Manager's appointment is terminable by the Manager or the Company on not
less than 12 months' notice. The Company may terminate the Management
Agreement with immediate effect, if either or both of the Principals is
removed from their position of full-time employment with the Manager or ceases
to be available for any reason beyond the Manager's reasonable control and the
Manager fails, within three months (or six months in the case of one only) of
such event, to cause to be made available the services of a competent
replacement(s) of equivalent skill and experience. The Management Agreement
may also be terminated with immediate effect by either the Manager or the
Company if the other party has gone into liquidation, administration or
receivership or has committed a material breach of the Management Agreement.
Development Management Services Agreement
A Development Management Services Agreement dated 1 June 2010 was entered into
between the Group and Headland, under which Headland provides development
management services to the Group in respect of the Group's properties that
require development. Headland is paid a development management fee based on
the hourly rates of its personnel and the actual time spent on each project
for the Group. Such hourly rates will be reviewed annually by the Board.
Budgeted development management fees are submitted to the Board for approval
and are used to monitor against actual fees charged to the Group. Under
certain circumstances, a fixed percentage fee cap based on construction value
of the project may apply, should the Board deem necessary.
The Group also agrees to reimburse Headland for any reimbursable expenses
reasonably incurred in the performance of its duties under the agreement.
Headland agrees to exercise all the reasonable skill, care and diligence to be
expected of a prudent and competent development manager experienced in the
provision of development management services for projects of a similar size,
scope, nature and complexity as the projects on which it will be engaged by
the Group.
During the year, development management services fees of US$nil (HK$nil)
(2015: US$nil (HK$nil)) were capitalised in investment property and US$22,000
(HK$170,000) (2015: US$113,000 (HK$875,000)) were capitalised in inventories.
As at 30 June 2016, US$5,000 (2015: US$nil) was outstanding.
Project Management Services Agreement
The Group and Bela Vista entered into a Project Management Services Agreement,
under which Bela Vista provides project management services to the Group in
respect of the renovation and enhancement works at The Waterside. Bela Vista
is paid a project management fee based on a percentage of the total renovation
and enhancement costs and expenses incurred or contracted by The Waterside.
Such percentage will be reviewed annually by the Board.
During the year, project management services fees of US$ 62,399 (HK$ 484,143)
(2015: US$ Nil (HK$ Nil)) were capitalised in investment property. As at 30
June 2016 US$ 62,399 (2015: US$ Nil) was outstanding.
20. Interest rate swaps
During the year, the Group paid a net interest of US$581,000 (2015:
US$1,035,000) to the bank as shown in financing expenses on the Consolidated
Statement of Comprehensive Income.
The swaps are treated as net financial liabilities at fair value through
profit or loss with a year end value of US$104,000 (2015: US$395,000). For the
year ended 30 June 2016, a fair value gain of US$291,000 (2015: US$265,000)
arising from the net interest rate swaps has been recognised in the
Consolidated Statement of Comprehensive Income.
There are no changes in the counterparty credit risk during the period.
Standard Chartered Bank
The Group entered into five interest rate swaps with Standard Chartered Bank
to mitigate risks associated with the variability of cash flows arising from
interest rate fluctuations. All of the interest rate swaps matured during the
year, with the earliest maturity date being 6 August 2015 and the latest being
20 May 2016.
The total notional amount for the interest rate swaps was HK$500 million,
being a notional amount of HK$100 million for each swap.
Under these swaps, the Group received quarterly interest at variable rates of
3-month HIBOR and paid quarterly interest at fixed rates ranging from 1.395%
to 2.09% per annum.
In the prior year, the Group placed HK$5,500,000 (US$709,500) with Standard
Chartered Bank as a pledged deposit to secure the interest rate swap
facilities.
Hang Seng Bank
The Group has also entered into an interest rate swap with Hang Seng Bank to
mitigate risks associated with the variability of cash flows arising from
interest rate fluctuations.
The notional amount for the interest rate swap is HK$250 million, the tenor of
the swap is 5 years with maturity date on 19 March 2018. Under this swap, the
Group receives quarterly interest at variable rates of 3-month HIBOR and pays
quarterly interest at a fixed rate of 1% per annum.
21. Deposits with lenders
Pledged bank balances represent deposits pledged to the banks to secure the
banking facilities and interest rate swaps granted to the Group. Deposits
amounting to US$2.1 million (2015: US$1.9 million) have been pledged to secure
long-term banking facilities and are, therefore, classified as non-current
assets. There are no other significant terms and conditions associated with
these pledged bank balances.
2016US$'000 2015US$'000
Pledged for loan covenants 2,113 1,941
Pledged for interest rate swaps - 709
2,113 2,650
22. Commitments and contingencies
As at 30 June 2016, the Group had agreed construction contracts with third
parties and is consequently committed to future capital expenditure in respect
of inventories of US$nil (2015: US$nil).
23. Auditors' remuneration
All fees payable to the auditors relate to audit services and interim review
fees. During the year, US$19,850 (2015: US$4,850) was paid to Ernst and Young
Tax Services Limited in Hong Kong for tax advice in relation to the disposal
of APAC Logistics Centre and Cove Residence.
Auditors remuneration was broken down as follows:
2016US$'000 2015US$'000
Ernst & Young LLP group audit 103 90
Ernst & Young LLP group interim review (non-audit) 25 27
Non Ernst & Young LLP subsidiary auditors' remuneration 7 5
135 122
24. Operating leases - Group as lessor
The Group has entered into leases on its property portfolio.
Future minimum rentals receivable under non-cancellable operating leases as at
30 June 2016 are as follows:
Residential 2016US$'000 2015US$'000
Within 1 year 902 1,145
After 1 year, but not more than 5 years 46 -
Total future rental income 948 1,145
The majority of leases involve tenancy agreements with a term of 12 months.
25. Subsequent events
There were no significant events occurring after the reporting date of the
annual report for the year ended 30 June 2016.
Directors & Company Information
DirectorsChris Russell (Chairman)Thomas AshworthAlan CliftonWilfred WooDavid Hinde (resigned as of 13 November 2015) Corporate BrokerLiberum Capital LimitedRopemaker Place, Level 1225 Ropemaker StreetLondon EC2Y 9LY
Audit CommitteeAlan Clifton (Chairman)Wilfred WooChris Russell Independent AuditorsErnst & Young LLPPO Box 9Royal ChambersSt Julian's AvenueSt Peter PortGuernsey GY1 4AF
Management Engagement CommitteeAlan Clifton (Chairman)Chris RussellWilfred WooDavid Hinde (resigned as of 13 November 2015) Property ValuersSavills (Macau) LimitedSuite 131013/F Macau Landmark555 Avenida da AmizadeMacau
Nomination and Remuneration CommitteeAlan Clifton (Chairman)Thomas AshworthWilfred WooChris RussellDavid Hinde (resigned as of 13 November 2015) Administrator and Company SecretaryHeritage InternationalFund Managers LimitedHeritage HallPO Box 225Le Marchant StreetSt Peter PortGuernsey GY1 4HY
ManagerSniper Capital LimitedPO Box 957Offshore Incorporations CentreRoad TownBritish Virgin Islands Macau and Hong Kong AdministratorAdept Capital PartnersServices Limited26/F Jubilee Centre42-46 Gloucester RoadHong Kong
Investment AdviserSniper Capital (Macau) Limited918 Avenida da Amizade14/F World Trade CentreMacau Solicitors to the Group as to English LawNorton Rose LLP3 More London RiversideLondon SE1 2AQ
Public RelationsMHP Communications6 Agar StreetLondon WC2N 4HN Advocates to the Group as to Guernsey LawCarey OlsenCarey HouseLes BanquesGuernsey GY1 4BZ
Registered OfficeHeritage HallPO Box 225Le Marchant StreetSt Peter PortGuernsey GY1 4HY
This information is provided by RNS
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