TERRA CAPITAL PLC
Consolidated Annual Report Year ended 31 December 2017
Terra Capital plc Annual Report 31 December 2017 | |
CONTENTS | |
Page | |
Directors and advisers | 1 |
Chairman's statement | 2 |
Report of Terra Partners Asset Management Limited | 3-4 |
Investing policy | 5-6 |
Directors' Report | 7-8 |
Statement of Directors' Responsabilities | 9 |
Report of the Independent Auditors | 10-13 |
Audited Consolidated Financial Statements: | |
Consolidated Income Statement | 14 |
Consolidated Statement of Comprehensive Income | 15 |
Company Income Statement | 16 |
Company Statement of Comprehensive Income | 17 |
Consolidated Balance Sheet | 18 |
Company Balance Sheet | 19 |
Consolidated Statement of Changes in Equity | 20 |
Company Statement of Changes in Equity | 21 |
Consolidated Statement of Cash Flows | 22 |
Company Statement of Cash Flows | 23 |
Notes to the Consolidated Financial Statements | 24-44 |
Directors and advisers
Directors
Registered officeInvestment ManagerNominated Adviser & Broker
Dirk Van den Broeck (Non-executive Chairman)
Peter Bartlett (Non-executive Director)
Ian Dungate (Non-executive Director)
Millennium House
46 Athol Street Douglas
Isle of Man, IM1 1JB
Terra Partners Asset Management Limited Portomaso Tower Suite 8/5A
Portomaso Avenue STJ4011 St Julian's Malta
Panmure Gordon & Co 1 New Change London EC4M 9AF
English law adviserAdministrator and RegistrarAuditorsIsle of Man law adviser
Gowling WLG (UK) LLP 4 More London Riverside London
SE1 2AU
Galileo Fund Services Limited 46 Athol Street
Douglas
Isle of Man, IM1 1JB
KPMG Audit LLC Heritage Court 41 Athol Street Douglas
Isle of Man, IM99 1HN
Appleby
33 Athol Street Douglas
Isle of Man, IM1 1LB
1
Chairman's statement
Our year end net asset value per share stood at $1.149 against $1.016 for 2016. This represents an increase for the year of 13.1%.
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 2017, a tender offer was made to purchase up to ten percent. of the shares in issue at 31 December 2017.The tender was effected on 12 March 2018 and was taken up in full. As a result of the tender offer it was determined that no dividend be paid in respect of 2017.
The Investment Manager has continued to maintain a diverse portfolio of undervalued assets throughout 2017 and equity exposure at December 31 2016 stood at 81.4% as cash was held in anticipation of the tender offer.
In addition to the tender offer, as part of the restructuring proposals approved by shareholders in January 2015, Shareholders approved a proposal whereby in June 2018 they would be offered an opportunity to realise all or part of their investment in the Company at a price equal to the then prevailing net asset value (less costs associated with the opportunity). As detailed in the RNS announcement made by the Company on 19 April 2018, following consultation with Shareholders who between them hold in excess of 60 per cent. of the issued share capital of the Company, it has become clear to the Board that such Shareholders would accept the Realisation Opportunity and as such the Company would no longer be a viable proposition.
In the light of the above consultations the Board determined, subject to the formal approval of Shareholders to be given in General Meeting, to dispense with the Realisation Opportunity, and instead cease all new investments and seek to realise, in an orderly fashion, the Company's portfolio of investments and return the net proceeds generated to Shareholders as soon as is practicable. The Board, having consulted with its advisers, believe an orderly realisation of the portfolio of investments is preferable to an immediate liquidation as it is likely to achieve greater returns to Shareholders.
The proposal outlined above constitutes a change to the investment policy of the Company and as such is subject to approval by Shareholders. Accordingly a circular containing details of the proposed change of investment policy was sent to Shareholders on 15 June 2018 containing a notice of General Meeting to be held on 10 July 2018 at which Shareholders will be asked to approve the proposed change of investment policy
Further details can be found on the Company's websitehttp://terracapitalplc.com/ under News and Reporting "Company Reports".
Sincerely yours,
Dirk Van den Broeck
Chairman
26 June 2018
Report of Terra Partners Asset Management Limited, the Investment Manager
The NAV of Terra Capital plc (the "Fund") increased to $1.149 at December 31, 2017 from $1.016 as of December 31, 2016 with a net total return of 13.1% for the year.
The Fund's investment level (equity, fixed income and hedging) decreased from 86.3% at December 31st, 2016 to 81.7% at December 31, 2017. The Fund retained an excess of cash in order to fund the take-up of the tender offer that was anticipated to occur in early 2018.
Specific Areas of Investment
Americas
The allocation to the Americas decreased from 25.2% to 21.0% during the year and was tied with Europe as the Fund's largest regional allocation. During the year the Fund did not add any new positions and liquidated its positions in Scotia Group (Jamaica) and Terra Argentine Fund (Argentina).
Europe
The Fund's exposure to Europe increased from 20.1% to 21.1% and was tied with Americas as the largest regional allocation. During the year the Fund did not add any new positions and liquidated its positions in X5 Retail (Russia), BNL Portfolio Immobiliare (Italy), and Silvano Fashion Group (Estonia).
Asia
The Fund's exposure to Asia decreased from 14.6% to 12.0%. During the year the Fund did not add any new positions and liquidated its positions in Ardent Leisure Group (Australia), Emperador (Philippines), Lotte Chilsung Beverage (Korea), Kumho Petro (Korea), Shinyoung Securities (Korea) and Bank of Georgia (Georgia).
Middle East
The Fund's exposure to the Middle East decreased from 16.0% to 14.7%. During the year the Fund added new positions in Amanat Holdings (UAE), BBK (Bahrian), NBK (Kuwait), and Mezzan Holdings (Kuwait) and liquidated its positions in Doha Bank (Qatar), Air Arabia (UAE), Abu Dhabi Commercial Bank (UAE), Amanat Holdings (UAEf), and Mezzan Holdings (Kuwait).
Africa
The allocation to Africa increased from 9.2% to 12.9%. During the year the Fund added new positions in African Oxygen (South Africa) and KCB Group (Kenya) and liquidated its positions in UAC of Nigeria (Nigeria), Onelogix (South Africa), Cooperative Bank (Kenya), and Holdsport (HSP)
Fund Details
The following pages detail the Fund's holdings including changes from the prior year. The numbers provided are based on the Investment Manager'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
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Disclaimer
Terra Capital plc published this content on 15 October 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 15 October 2018 13:47:12 UTC