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IRET Sec Limited (IREZ)

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Wednesday 11 July, 2012

IRET Sec Limited

Final Results

RNS Number : 3737H
IRET Securities Limited
11 July 2012
 



11 July 2012

 

IRET Securities Limited

Annual Results

(the "Company")

 

IRET Securities Limited, a Guernsey registered company, today announces its results for the 15 month period ended 31 March 2012. The Company's principal investment objective is to provide Zero Dividend Preference Shares with a predetermined final capital entitlement. It is recommended that these accounts are read in conjunction with those of its parent, Picton Property Income Limited, also issued today.

 

 

For further information:

 

Tavistock Communications

Jeremy Carey/James Verstringhe, 020 7920 3150, jverstringhe@tavistock.co.uk

 

 

Picton Capital Limited

Michael Morris, 020 7011 9978, michael.morris@pictoncapital.co.uk

 

 

Company Secretary

David Sauvarin

Northern Trust International Fund Administration Services (Guernsey) Limited

Trafalgar Court

Les Banques

St Peter Port

Guernsey

GY1 3QL

 

Tel:       01481 745529

Fax:      01481 745085

 

 



 

Directors' Report

 

The Directors present their report and the audited financial statements of IRET Securities Limited (the "Company") for the period from 1 January 2011 to 31 March 2012. Comparatives are provided for the period ended 31 December 2010. It is recommended that these financial statements are read in conjunction with the consolidated financial statements of Picton Property Income Limited, formerly ING UK Real Estate Income Trust Limited, (the "Parent") and issued as at today's date.

 

Company's Business & Objective

 

IRET Securities Limited is a Guernsey registered company, established to act as a bid vehicle for the purpose of the takeover of IRET Securities Investments Limited (formerly Rugby Estates Investment Trust Plc). 

 

The Company is a wholly owned subsidiary of Picton Property Income Limited, which is also an investment company registered in Guernsey.

 

The Company's principal investment objective is to provide zero dividend preference shares ("ZDP shares") with a predetermined final capital entitlement. This objective is derived from the Company's prospectus. 

 

The ZDP shareholders are entitled to receive an amount equal to 65 pence per share increased daily at an equivalent annual rate of 6.875% per annum. The final capital entitlement will be 76.6 pence per ZDP share payable on 31 October 2012. It is important to note that the ZDP shareholders are not guaranteed to receive their full capital entitlement although the Parent has entered into an undertaking to meet all liabilities of the Company as they fall due.

 

The Parent, Picton Property Income Limited, announced a substantial group restructuring and refinancing on 28 June 2012, which is scheduled to take effect in July 2012. Having achieved this the Directors are now considering further the options available to facilitate repayment of the ZDP shares. The Company's advisors have consulted with a number of existing holders of its ZDP shares and several have indicated an interest in an extension to the term. The Directors are currently investigating potential options for a mechanism which would allow investors to elect to extend the maturity of their holdings. Any extension would be subject to sufficient liquidity in the extended shares. The Company will continue to engage with its investors on this matter and will make a further announcement to the market in due course.

 

Share Capital

 

The Company has 1,498,481.8 ordinary shares in issue as at 31 March 2012 which are held entirely by the Parent.

 

In total 46,556,800 ZDP shares were issued in connection with the takeover of IRET Securities Investments Limited. The ZDP shares were admitted to the official list of the London Stock Exchange on 29 December 2010 (LSE ticker: IREZ).

 

Going Concern

 

The financial statements have been prepared on a going concern basis as it is the intention of the Directors to extend the term of the ZDP shares issued by the Company, see notes 2 and 14 to the financial statements for further information.

 

Results

 

The results for the period are set out in the Statement of Comprehensive Income on page 7. 

 

Taxation

 

The Company is exempt from Guernsey Income Tax under the Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989 and is charged an annual exemption fee of £600.

 

 

 

 

Directors & Directors' Interests

 

The Directors of the Company during the period were as follows:

 

Nicholas Thompson

Robert Sinclair

Trevor Ash

Tjeerd Borstlap

Roger Lewis

 

All of the Directors were appointed on registration.  None of the Directors hold a beneficial interest in the Company.  Any Director's interest in the shares of the Parent is disclosed in the consolidated accounts of the Parent. 

 

The Company has prepared these financial statements in compliance with the Companies (Guernsey) Law, 2008.

 

Statement of Directors' Responsibilities

 

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.  Under that law they have elected to prepare the financial statements in accordance with International Financial Reporting Standards as issued by the IASB and applicable law. 

The financial statements are required by law to give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period. 

In preparing these financial statements, the Directors are required to:

 

n select suitable accounting policies and then apply them consistently;

n make judgements and estimates that are reasonable and prudent;

n state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

n prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

 

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies (Guernsey) Law, 2008.  They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities. 

 

DTR Compliance Statement

 

We confirm to the best of our knowledge the financial statements, prepared in accordance with International Financial Reporting Standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company as required by Disclosure and Transparency Rules ('DTR') 4.1.12 R.

 

The Directors' Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties they face as required by DTR 4.1.12 R.

 

 



 

Disclosure of information to auditors

 

The Directors who held office at the date of approval of this Directors' Report confirm that, so far as they are each aware, there is no relevant audit information of which the Company's auditors are unaware; and each Director has taken all the steps that he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

 

Auditors

 

KPMG Channel Islands Limited (the "Auditor") has expressed its willingness to continue in office as the Company's auditor and a resolution proposing its reappointment will be submitted at the Annual General Meeting.

 

 

By order of the Board

 

 

 

 

Robert Sinclair                                                                       

Director                                                                       

 

9 July 2012                                                                  

 

 

 

Company Information

 

 

Directors         

Nicholas Thompson (Chairman)              

Trevor Ash                                                                    

Tjeerd Borstlap

Roger Lewis

Robert Sinclair

 

Registered Office

Trafalgar Court

Les Banques

St Peter Port

Guernsey

GY1 3QL

 

 

Administrator, Registrar and Secretary

Northern Trust International Fund Administration  

Services (Guernsey) Limited      

PO Box 255, Trafalgar Court      

Les Banques    

St Peter Port    

Guernsey

GY1 3QL

 

 

Auditor

KPMG Channel Islands Limited
20 New Street
St Peter Port
Guernsey
GY1 4AN

 

Investment Manager

(with effect from 1 January 2012)

Picton Capital Limited

28 Austin Friars

London

EC2N 2QQ

 

(until 31 December 2011)

CBRE Global Investors UK Limited

60 London Wall

London

EC2M 5TQ

Crest Service Provider

Computershare Investor Services (Jersey) Limited

Queensway House

Hilgrove Street

St Helier           

Jersey

JE1 1ES

 



Legal Advisors

As to English Law

Norton Rose LLP

3 More London Riverside
London

SE1 2AQ

 

As to Guernsey Law

Carey Olsen

PO Box 98
Carey House
Les Banques
St Peter Port
Guernsey GY1 4BZ

Broker to the Parent

JP Morgan Securities Limited

125 London Wall

London 

EC2Y 5AJ

 

Oriel Securities Limited

150 Cheapside

London

EC2V 6ET

 

 

 

INDEPENDENT AUDITOR'S REPORT

TO THE MEMBERS OF IRET SECURITIES LIMITED

 

We have audited the financial statements of IRET Securities Limited (the "Company") for the period from 1 January 2011 to 31 March 2012 which comprise the Statement of Comprehensive Income, the Balance Sheet, the Statement of Changes in Equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards as issued by the IASB.

 

This report is made solely to the Company's members, as a body, in accordance with section 262 of the Companies (Guernsey) Law, 2008.  Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed. 

 

 

Respective responsibilities of directors and auditor

 

As explained more fully in the Statement of Directors' Responsibilities set out on page 2, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (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 Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Board of Directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

 

 

Opinion on financial statements

 

In our opinion the financial statements:

 

·      give a true and fair view of the state of the Company's affairs as at 31 March 2012 and of its loss for the period from 1 January 2011 to 31 March 2012;

·      are in accordance with International Financial Reporting Standards as issued by the IASB; and

·      comply with the Companies (Guernsey) Law, 2008.

 

 

Emphasis of matter

 

In forming our opinion, which is not qualified, we have considered the adequacy of the disclosures made in note 2 to the financial statements which explains that the financial statements are prepared on a going concern basis.  Note 2 discloses the existence of an uncertainty which may affect the Company's decision to continue as a going concern.  The financial statements do not include the adjustments that would result if the Company were not to continue as a going concern.

 

 

Matters on which we are required to report by exception

 

We have nothing to report in respect of the following matters where the Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion:

 

·     the Company has not kept proper accounting records, or

·     the financial statements are not in agreement with the accounting records; or

·     we have not received all the information and explanations, which to the best of our knowledge and belief are necessary for the purpose of our audit.

 

 

Ewan F McGill

for and on behalf of KPMG Channel Islands Limited

 

Chartered Accountants and Recognised Auditors

 

10 July 2012



 

Statement of Comprehensive Income

For the period from 1 January 2011 to 31 March 2012

 







1 January 2011 to   31 March 2012

6 April 2010 to 31 December 2010


Note

£000

£000





Expenses




Management expenses                                    

4

(268)

(129)

Other operating expenses


(27)

(549)

Result from operating activities


(295)

(678)





Financing




Finance costs on ZDP Shares

9

(3,318)

(1,306)

Total finance costs


(3,318)

(1,306)





Tax

5

-

-





Total comprehensive loss for the period


(3,613)

(1,984)









Loss per ordinary share - basic and diluted

6

£(2.41)

£(2.65)

 

 

 

 

Notes 1 to 14 form part of these financial statements.

 

  

Statement of Changes in Equity

For the period from 1 January 2011 to 31 March 2012

 

 


Note

Share Capital

Exchangeable Preference Shares

Capital Contribution

Accumulated Loss

Total



£000

£000

£000

£000

£000








Balance as at

6 April 2010


-

-

-

-

-

Issue of ordinary shares

10

5

-

-

-

5

Issue of exchangeable preference shares

10

-

8,420

-

-

8,420

Share reclassification

10

8,420

(8,420)

-

-

-

Total comprehensive loss for the period


-

-

-

(1,984)

(1,984)

Dividend in specie

7

-

-

-

(38,217)

(38,217)

Contribution by parent company


-

-

31,776

-

31,776

Balance as at

31 December 2010


8,425

-

31,776

(40,201)

-

Total comprehensive loss for the period


-

-

-

(3,613)

(3,613)

Contribution by parent company


-

-

3,613

-

3,613

Balance as at

31 March 2012


8,425

-

35,389

(43,814)

-

 

 

Notes 1 to 14 form part of these financial statements.

 

 

 

 

Balance Sheet

As at 31 March 2012

 



31 March 2012

31 December 2010


Note

£000

£000





Non-current assets




Amount due from parent company, net

8

-

31,031

Total non-current assets


-

31,031





Current assets




Amount due from parent company, net

8

34,037

-

Share capital receivable


5

5

Total current assets


34,042

5





Total assets


34,042

31,036





Equity




Share capital

10

8,425

8,425

Capital contribution


35,389

31,776

Accumulated loss


(43,814)

(40,201)

Total equity


-

-





Non-current liabilities




Zero dividend preference shares

9

-

30,711

Total non-current liabilities


-

30,711





Current liabilities




Zero dividend preference shares

9

34,030

-

Accounts payable and accruals


12

325

Total current liabilities


34,042

325





Total liabilities


34,042

31,036





Total equity and liabilities


34,042

31,036









Net asset value per ordinary share

11

-

-

 

 

 

 

These financial statements were approved by the Board of Directors on 9 July 2012 and signed on its behalf by:

 

Robert Sinclair                                                                                      

Director                                                            

 

 

Notes 1 to 14 form part of these financial statements.

 

 

 

Notes to the Financial Statements

For the period from 1 January 2011 to 31 March 2012

 

1.      General information

IRET Securities Limited (the "Company") was registered on 6 April 2010 in Guernsey. The Company is a closed ended Guernsey investment company and a wholly owned subsidiary of Picton Property Income Limited, formerly ING UK Real Estate Income Trust Limited, (the "Parent"), which is also an investment company registered in Guernsey.

 

The Directors are of the opinion that the Company is engaged in a single economic and geographic segment of business primarily being the raising of funds in order to provide financing to the Parent.

 

The Company has a fixed life to 31 October 2012, but the holders of ZDP shares and ordinary shares will be entitled to vote against the winding-up of the Company at a general meeting which will be convened no later than 31 October 2012.

 

The financial statements are prepared for the period from 1 January 2011 to 31 March 2012 with comparatives for the period from 6 April 2010 to 31 December 2010. The Company has changed the end of its reporting period from 31 December to 31 March and presents financial statements for a longer period to coincide with the reporting date of the Parent. The comparative amounts presented in the financial statements are therefore not entirely comparable.

 

2.      Significant accounting policies

Basis of accounting

The financial statements have been prepared under the historical cost convention, they give a true and fair view, have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the IASB and are in compliance with the Companies (Guernsey) Law, 2008.

 

The financial statements are presented in pounds sterling, which is the Company's functional currency. All financial information presented in pounds sterling has been rounded to the nearest thousand, except when otherwise indicated.

 

The accounting policies adopted are consistent with those of the previous financial period. The Directors believe that new standards which are in issue but not yet operative or adopted by the Company will not have a material impact on the financial statements of the Company.

 

Going Concern

The financial statements have been prepared on a going concern basis as the Directors intention is to extend the term of the ZDP shares. The Directors are currently investigating potential options for a mechanism which would allow investors to elect to extend the maturity of their holdings. Any extension would be subject to sufficient liquidity in the extended shares. The Company will continue to engage with its investors on this matter and will make a further announcement to the market in due course.

 

The Parent has agreed to support the Company's obligations and has agreed to certain protections to ensure the Parent does not make distributions or returns of capital without retaining sufficient capital to meet its obligations to the Company.

 

Cash flow statement

No Cash Flow Statement is presented as all funding activities are provided by the Parent. The Company does not operate any bank accounts.

 

Investments

Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.

 

 



 

Notes to the Financial Statements

For the period from 1 January 2011 to 31 March 2012 (continued)

 

2.       Significant accounting policies (continued)

Capital contribution

Capital contributions from the Parent are recognised in the financial statements to meet current and future obligations of the Company in accordance with the Contribution Agreement entered into between the Parent and the Company on 15 April 2010.

 

Zero dividend preference shares

The ZDP shares are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with the borrowing.  After initial recognition, the ZDP shares are subsequently measured at amortised cost using the effective interest rate method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.  Gains and losses are recognised in the Statement of Comprehensive Income when the liabilities are derecognised, as well as through the amortisation process.

 

Significant estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets, liabilities, income and expenses.  The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates.

 

3.       Operating segments

The Board sets the Company's strategy in accordance with the  objectives. They have delegated the day to day implementation of this strategy to the Investment Manager but retain responsibility to ensure that adequate resources of the Company are directed in accordance with their decisions. The operating activities of the Investment Manager are reviewed on a regular basis to ensure compliance with the policies and legal responsibilities of the Board.

 

The Investment Manager has been given full authority to act on behalf of the Company in certain situations. Under the terms of the Investment Management Agreement, subject to the overall supervision of the Board, the Investment Manager advises on the investment strategy of the Company. Whilst the Investment Manager may make operational decisions on a day to day basis, any changes to the investment strategy have to be approved by the Board, even though they may be proposed by the Investment Manager.

 

The Board therefore retains full responsibility for investment policy and strategy.  The Investment Manager will always act under the terms of the Prospectus and the Investment Management Agreement which cannot be changed without the approval of the Board. The Board has considered the requirements of IFRS 8 'Operating Segments". The Board is of the opinion that the Company operates in one reportable industry segment, namely real estate investment, and across one primary geographical area, namely the United Kingdom and therefore no segmental reporting is required. 

 

4.      Management expenses

 


1 January 2011 to 31 March 2012

6 April 2010 to 31 December 2010


£000

£000

Management fees

268

129


268

129

 



 

Notes to the Financial Statements

For the period from 1 January 2011 to 31 March 2012 (continued)

 

4.       Management expenses (continued)

Until 31 December 2011 the Group's external investment manager was CBRE Global Investors UK Limited, formerly ING Real Estate Investment Management (UK) Limited. Fees were payable quarterly in arrears and were equal to one quarter of 72.5 basis points of the ZDP shares issued, calculated on the basis of the issue price of the ZDP shares, being 65 pence per ZDP share.

 

From 1 January 2012 the Company's investment manager is Picton Capital Limited, a fellow subsidiary of Picton Property Income Limited. The management fees payable from 1 January 2012 are fixed at £20,000 per annum.

 

5.       Tax

The Directors conduct the affairs of the Company such that the management and control of the Company is not exercised in the United Kingdom and that the Company does not carry on a trade in the United Kingdom. 

 

The Company is exempt from Guernsey income tax under the Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989 and is charged an annual exemption fee of £600.

 

6.       Loss per ordinary share - basic and diluted

Basic earnings per ordinary share is calculated by dividing the net loss for the period attributable to the ordinary shareholders of the Company by the weighted average number of ordinary shares in issue during the period. The following reflects the loss and share data used in the basic and diluted loss per share calculations: 

 


1 January 2011 to 31 March 2012

6 April 2010 to 31 December 2010

Net loss attributable to ordinary shareholders of the Company from continuing operations (£000)

(3,613)

(1,984)




Weighted average number of ordinary shares for basic and diluted loss per share

1,498,481.8

749,241

 

7.       Investment in subsidiary


1 January 2011 to 31 March 2012

 6 April 2010 to 31 December 2010


£000

£000

Carrying value at start of period

-

-

Additions

-

38,217

Disposals

-

(38,217)

Carrying value at end of period

-

-

 

On 14 May 2010 the Company acquired the entire share capital of IRET Securities Investments Limited , formerly Rugby Estates Investment Trust Plc.

 

On 23 August 2010 the Company declared a distribution in specie transferring all the ordinary shares in IRET Securities Investments Limited to the Parent.

 

8.       Amounts due from parent company

On 15 April 2010 the Company entered into a Contribution Agreement with the Parent. The agreement provides an undertaking by the Parent to pay any costs and expenses incurred by the Company in respect of its operation and the continuation of its business and to enable the Company to meet its payment obligations in respect of the ZDP shares. The Parent has agreed to support the Company's obligations and has agreed to certain protections to ensure the Parent does not make distributions or returns of capital without retaining sufficient capital to meet its obligations to the Company.



 

Notes to the Financial Statements

For the period from 1 January 2011 to 31 March 2012 (continued)

 

9.       Zero dividend preference shares


31 March 2012

31 December 2010


£000

£000

At issue

30,262

30,262

Capital additions

4,041

1,306

Capitalised issue costs

(273)

(857)


34,030

30,711

 

The Company issued 46,556,800 zero dividend preference shares ("ZDP shares") at 65 pence per share as consideration for the acquisition of IRET Securities Investments Limited (see note 1). The ZDP shares have an entitlement to receive a fixed cash amount on 31 October 2012, being the maturity date, but do not receive any dividends or income distributions. Additional capital accrues to the ZDP shares on a daily basis at a rate equivalent to 6.875% per annum, resulting in a final capital entitlement of 76.6 pence per share.

 

At the reporting date the Company has accrued for £4,041,000 of additional capital (31 December 2010: £1,306,000). The total amount repayable at maturity is £35,660,000, of which £4,521,000 is due to the Parent.

 

The ZDP shares do not carry the right to vote at general meetings of the Company, although they carry the right to vote as a class on certain proposals which would be likely to materially affect their position. In the event of a winding-up of the Company, the capital entitlement of the ZDP shares (except for any undistributed revenue profits) will rank ahead of exchangeable preference shares and ordinary shares but behind other creditors of the Company.

 

The ZDP shares were listed on the London Stock Exchange on 29 December 2010.  Upon listing, the Parent acquired 5,902,317 ZDP shares for £4,000,000, equating to 67.77 pence per share.

 

Issue costs totalling £1,146,000 have been capitalised and are being amortised over the term of the ZDP issue. For the period ended 31 March 2012, £584,000 of these costs were written off to the Statement of Comprehensive Income (31 December 2010: £289,000).

 

10.     Share capital

 


Ordinary shares

Exchangeable preference shares


1 January 2011 to 31 March 2012

6 April 2010 to 31 December 2010

1 January 2011 to 31 March 2012

6 April 2010 to 31 December 2010


£000

£000

£000

£000

Issued at start of period

8,425

5

-

8,420

Share reclassification

-

8,420

-

(8,420)

Issued at end of period

8,425

8,425

-

-






 

At registration the Company issued 5,000 ordinary shares of £1 per share. The Company also issued 14,934,818 exchangeable preference shares of 10 pence per share for a total consideration of £8,420,000 (of which £6,927,000 constituted a share premium). On 19 August 2010 all the exchangeable preference shares were reclassified as 1,493,481.8 ordinary shares of £1 each.

 

The share capital of the reclassified ordinary shares remained unchanged at £8,420,000.



 

Notes to the Financial Statements

For the period from 1 January 2011 to 31 March 2012 (continued)

 

11.     Net asset value per share

The net asset value per ordinary share is based on the net assets attributable to ordinary shares of £Nil and 1,498,481.8 ordinary shares in issue at the period end.

 

12.     Risk management

The Company's principal investment objective is to provide the ZDP shares with a predetermined final capital entitlement. The Investment Manager reports regularly to the Directors to allow them to monitor and review all the risks noted below.

 

General risk

An investment in ZDP shares is suitable only for investors capable of evaluating the risks and merits of such investment and who have sufficient resources to bear any loss (including total loss) which may result from the investment. The market offer price of the ZDP shares at 31 March 2012 was 73.0p per share (31 December 2010: 69.5p).

 

Credit risk

The obligations of the Parent to repay the ZDP shares and discharge its obligations pursuant to the undertakings, will be subordinated to the claims of the Parent's other creditors on a winding up. If at the repayment date the Parent has insufficient assets, then its obligations to repay the ZDP shares may be satisfied only in part or not at all. Accordingly the Company may have insufficient assets to satisfy the current or final capital entitlement of the ZDP shares.

 

Liquidity risk

The Company's exposure to liquidity risk depends upon the Parent's ability to promptly meet all current and future obligations of the Company. The Parent's liquidity risk is the risks that it will encounter in realising assets or otherwise raising funds to meet it financial commitments. The Parent invests in commercial property in which there is a market where investments are not always readily realisable.

 

Interest rate risk

Returns from ZDP shares are fixed at the time of purchase, as are the final redemption proceeds. Consequently, if a share is held until redemption date, the total return achieved is unaltered from its purchase date.

 

13.     Controlling and related parties

The Company is wholly owned by Picton Property Income Limited (the "Parent"), a Guernsey registered company. The Parent is therefore the immediate and ultimate controlling party.

 

On 15 April 2010 the Parent entered into a Contribution Agreement with the Company to provide an undertaking to pay any costs and expenses incurred in respect of the operation and continuation of the Company's business. During the period the Company received £3.0 million from the Parent (31 December 2010: £31.0 million). As at 31 March 2012 the Company owed £34.0 million under the Contribution Agreement (31 December 2010: £31.0 million).

 

During the period CBRE Global Investors UK Limited, formerly ING Real Estate Investment Management (UK) Limited,  was paid a total of £263,000 under the terms of the Investment Management Agreement (31 December 2010: £129,000). As at 31 March 2012 the Company owed £Nil to the previous Investment Manager (31 December 2010: £55,000).

 

Picton Capital Limited, a fellow subsidiary of the Parent, was paid management fees in the period of £5,000 (31 December 2010: £Nil). As at 31 March 2012 the Company owed £5,000 to the Investment Manager (31 December 2010: £Nil).

 

As stated in note 8 the Parent holds 5,902,317 ZDP shares.

 



 

Notes to the Financial Statements

For the period from 1 January 2011 to 31 March 2012 (continued)

 

13.     Controlling and related parties (continued)

The Directors received no remuneration for their services to the Company during the period (31 December 2010: £Nil).

 

14.     Events after the balance sheet date

The Parent, Picton Property Income Limited, announced a substantial group restructuring and refinancing on 28 June 2012, which is scheduled to take effect in July 2012. Having achieved this the Directors are now considering further the options available to facilitate repayment of the ZDP shares. The Company's advisors have consulted with a number of existing holders and several have indicated an interest in an extension to the term. The Directors are currently investigating potential options for a mechanism which would allow investors to elect to extend the maturity of their holdings. Any extension would be subject to sufficient liquidity in the extended shares. The Company will continue to engage with its investors on this matter and will make a further announcement to the market in due course.

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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