RNS Number:5341A
European Convergence Property CoPLC
29 March 2006
29 March 2006
European Convergence Property Company plc
Interim Results for the period from 1 June 2005 - 31 December 2005
Report of the Manager
Property Investment Environment
The year of 2005 witnessed a compression in yields on the back of lower than
anticipated liquidity. The Company's target markets have been characterised by
strong capital flows seeking higher risk-adjusted returns than those available
in Western countries. This weight of investment capital has driven
capitalisation rates for A grade office property in Romania from 10.0% at the
end of 2004 to 8.5% at the end of 2005. Office yields in Bulgaria are currently
in the range of 9.0%. In Turkey, sellers' expectations for single property
acquisitions range from 7.5% - 8.5% but we are not aware of any transactions
that have been concluded recently. Yield compression in all three markets
however seems to have stabilised as investors wait for additional developments
to come on to the market.
The trend towards lower capitalisation rates has been accompanied by tightening
credit spreads as several banks have become increasingly aggressive in the
property market in Romania and Bulgaria. Intensifying competition combined with
a perceived decline of sovereign risk have caused spreads to tighten from around
300 basis points above EURIBOR (as at 28 June 2005) to near-150 basis point
spreads currently. This has meant that leveraged cash flows available to
investors are largely similar to those available 12 months ago.
Most transactions finalised in the second half of 2005 were forward contracts
entered into or negotiated during the first half of the year. In Romania, there
were five office transactions above Euro15 million which either did not fit the
Company's investment criteria, or, represented risks not appropriately
compensated by the yield and terms at which closing would have been achievable.
In Sofia, there was one major mixed-use development transaction which
constituted part of a multi-national portfolio and was completed by the end of
the summer. Turkey demonstrated its appeal as a destination where large
institutional investors are able to complete large institutional deals. Most of
these transactions have been in retail and of at least Euro100 million size. The
office sector has not been as active for investors given that vacancy rates are
relatively high and that there is little institutional grade product available.
As a result of changing investment market conditions, the Company's investment
program is currently 3 to 5 months behind the planned timetable, although the
Company's subsidiary infrastructure is now in place and ready to support those
investments as they come on-stream.
During the second half of 2005, we successfully negotiated the Company's first
acquisition of its investment programme. The property, known as PGV Tower, is
located in central Bucharest and was acquired for Euro24 million. It is expected
that the property will generate a projected running yield of over 10% (after all
expenses and taxes on the net equity contribution). PGV Tower, completed in
2003, consists of two adjoining towers, one of six floors and a second of
fourteen floors. PGV Tower is the head office of Postbank, the EFG-Eurobank
owned Romanian banking group. Postbank and other EFG related companies account
for 86% of the revenue and 93% of the 9,989 sqm of net lettable area. This
acquisition was completed in February 2006.
Several projects fitting the Company's investment criteria will be delivered
over the next 3-9 months as better funded domestic developers engage in larger
projects and international developers take notice of the opportunities available
in the target pre-accession countries.
Looking forward, within Romania and Bulgaria, we currently have several pipeline
investments at varying stages of negotiation that have a combined value in
excess of Euro210 million. In addition, the pipeline includes projects that are
not at sufficient development stages to warrant active negotiation but could
reach such a stage in the near future. While not all pipeline projects will
reach investment completion, we are comfortable with the depth of opportunities
available to the Company. In Turkey, USD-based funding costs have increased
notably following the US Federal Reserve's monetary policy tightening and we are
not currently involved in any investment negotiations. We continue to monitor
prices actively and should an opportunity arise, we will seek to make additions
to the portfolio.
Property Market Conditions
Romania
Office and retail space supply in Bucharest remains restricted as a result of
little land availability. Several office developments have started or are ready
to be delivered in peripheral areas but will be outweighed by demand over the
next 1-3 years, thereby resulting in stable to slightly increasing rents which
are now at around Euro17.5 / m2. Almost all quality developments will be fully
leased before completion indicating the excess demand prevalent in the market.
In the retail category, there continues to be only four malls (of at least
15,000 m2) in the whole of Bucharest, none of which are currently for sale.
Existing shopping centres have a zero vacancy rate and owners are enjoying long
waiting lists for space. Rents are very high and range from Euro 80 - 120 for the
best centre to Euro40 - 60 for the least desirable one. Two shopping centres are
expected to be delivered on the Bucharest market during 2006.
Bulgaria
Supply of quality office premises has been increasing at a measured pace in
Sofia. Similarly to Bucharest, there is a lack of suitable land for development
in the core of the city and as a result, new office construction has been
concentrated in peripheral areas. Demand for Class A office space continues to
outweigh supply but the excess is much lower than that experienced in Bucharest.
Average Class A office rents hover around a Euro13.5 / m2 and although they have
been experiencing a gradual decline over the last 3 years, they have now
stabilised and are exhibiting a slight tendency to increase. On the retail
side, there is one shopping centre that is expected to begin trading at the end
of the summer and will bring the total shopping centres in the city to three.
Turkey
In Istanbul, high quality office buildings continue to be scarce and supply
consists mostly of older developments. In addition, since debt financing was
historically very expensive or not available, developers financed projects with
partial presales and now a large stock of offices is characterised by
multi-ownership. The retail sector has been much more attractive and exciting,
although the only shopping centres that have become available for sale are
regional and super-regional centres of at least Euro100 million value. Major
shopping centres are enjoying near 100% occupancy and high rents of about $80 /
m2 for medium and small units.
Charlemagne Capital (IOM) Limited
22 March 2006
Consolidated Income Statement
Expressed in Euros Note For the period from 1 June 2005 (date
of incorporation) to 31 December 2005
Euro'000
Net rental and related income -
Net valuation gains on investment property -
Administrative expenses (3,793)
Net other income 653
Profit/(Loss) before tax (3,140)
Taxation 11 -
Profit/(Loss) after tax -
Dividends 1, 3.7 -
Retained Profit/(Loss) for the period (3,140)
Basic and diluted earnings per share (Euro) 4 (0.0501)
Consolidated Balance Sheet
Expressed in Euros Note At 31 December 2005
Euro'000
Investment property -
Property, plant and equipment -
Total non-current assets -
Trade and other receivables 25
Cash and cash equivalents 59,780
Total current assets 59,805
Bank overdraft -
Interest bearing loans and borrowings -
Trade and other payables 3.8, 8 249
Provisions -
Total current liabilities 249
Net current assets 59,556
Net assets 59,556
Issued share capital 7 62,696
Retained earnings (3,140)
Total equity 59,556
Consolidated Cash Flow Statement
Expressed in euros Note for the period from 1June 2005 (date of
incorporation) to 31 December 2005
Euro'000
Operating activities
Group operating loss (3,140)
Net other income (653)
Adjustments for non cash items -
Operating profit before changes in working capital (3,793)
and provisions
Increase in trade and other receivables (25)
Increase in trade and other payables 3.8, 8 249
Cash used in operations (3,569)
Interest received 653
Interest paid -
Income and Corporation tax paid -
Cash flows from operating activities (2,916)
Cash flows from investing activities -
Financing activities
Proceeds from the issue of ordinary share capital 7 62,696
Repayment of long term loans -
Net cash inflow from financing 62,696
Increase in cash in the period 59,780
Cash and cash equivalents at 1 June -
Cash and cash equivalents at 31 December 59,780
Notes to the Consolidated Financial Statements
1 The Company
European Convergence 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 1 June 2005 as a public company with registered number 113616C. Pursuant to
the Articles of Association of the Company, Shareholders will be given the
opportunity to vote on the life of the Company after approximately 7 years.
Pursuant to a prospectus dated 15 June 2005 there was an original placing of up
to 100,000,000 Ordinary Shares the closing date of which was 24 June 2005.
Pursuant to the placing, 62,696,333 Shares were issued.
The Shares of the Company were admitted to trading on the Alternative Investment
Market of the London Stock Exchange ("AIM") on 28 June 2005 when dealings also
commenced.
The Company's agents and the Manager perform all significant functions.
Accordingly, the Company itself has no employees.
Duration
At the annual general meeting of the Company to be held in 2012, the Directors
are obligated to propose an ordinary resolution that the Company ceases to
continue in existence. If the resolution is not passed then it shall be
proposed at every fifth annual general meeting thereafter. If the resolution is
passed then the Directors shall, within 3 months after the date of the
resolution, put forward proposals to shareholders to the effect that the Company
be wound up, liquidated, reorganised or unitised.
Dividend Policy
The Directors anticipate that in respect of any 12 month accounting period they
will recommend the payment as a dividend of substantially all of the Company's
net profits (excluding profits arising from unrealised gains). The Directors
may pay half-yearly interim dividends if they believe that the financial
position of the Company justifies it. If the Company's funds are fully
invested, the Directors may be required to re-invest some of the Company's
profits into the maintenance of the Company's property portfolio. Debt
amortisation payments may cause actual dividends to be less than net profits.
Property Valuation Policy
The Directors intend to appoint an internationally recognised firm of surveyors
as property valuers within 12 months of Admission. It is the Directors'
intention that approximately half of the Company's property portfolio will
receive a valuation from the Company's appointed property valuer in each annual
financial period.
Financial Year End
The financial year end of the Company is 30 June in each year. For the
financial year ending 30 June 2006 AIM has agreed that the Company will present
financial statements covering in effect, a 13 month period since incorporation.
2 The Subsidiaries
During the period and for efficient portfolio management purposes, the Company
established the following subsidiary companies:-
European Convergence Property Company (Cayman) Limited ("ECPC Cayman")
ECPC Cayman was incorporated in the Cayman Islands on 10 May 2005 under the
provisions of The Companies Law (2004 Revision), Cap 22 as a limited liability
company (registration number MC-148905). ECPC Cayman has an authorised share
capital of US$50,000 divided into 50,000 shares of US$1 each. 1 share was
transferred to Charlemagne Capital (IOM) Limited on 20 June 2005 by the
subscriber such share being subsequently transferred to European Convergence
Property Company plc on 29 June 2005. The Directors of ECPC Cayman are James
Houghton (appointed 14 June 2005) and Malcolm Sargeant (appointed 2 November
2005). Adrian Jones (appointed 14 June 2005) resigned as a director on 2
November 2005.
European Convergence Property Company (Malta) Limited ("ECPC Malta")
ECPC Malta was incorporated in Malta on 13 July 2005 under the provisions of
Section 77 of the Companies Act 1995 as a limited liability company
(registration number C36620). The company has an authorised share capital of
Euro10,000 divided into 10,000 shares of Euro1 each. 1,199 shares were issued to
European Convergence Property Company (Cayman) Limited (the direct parent) and 1
share was issued to Osiris Corporate Services Ltd by the subscriber on 13 July
2005 and 17 July 2005, respectively. The Directors of ECPC Malta are James
Houghton, Stuart Blackburn and Joseph Fenech (each appointed 13 July 2005) and
Malcolm Sargeant (appointed 2 November 2005). Adrian Jones (appointed 13 July
2005) resigned as a director on 2 November 2005.
ECPC (Cyprus) Limited ("ECPC Cyprus")
ECPC Cyprus was incorporated in Cyprus on 2 August 2005 under the provisions of
the Companies Law, Cap. 113 as a limited liability company (registration number
HE-163865). The company was incorporated with an authorised share capital of
Euro1,000 divided into 1,000 shares of Euro1 each. 2 shares were transferred to
European Convergence Property Company (Cayman) Limited (the company's direct
parent) by the subscriber on 2 August 2005. On 8 February 2006 the authorised
share capital was increased to Euro120,000 with the creation of a further 119,998
shares of Euro1 each. 119,998 Shares were issued to European Convergence Property
Company (Cayman) Limited who now holds 120,000 shares. The Directors of ECPC
Cyprus are James Houghton, Koulla Antoniadou, Arlene Nahikian and Costas
Christoforou (all appointed 3 August 2005) and Malcolm Sargeant (appointed 2
November 2005). Adrian Jones (appointed 3 August 2005) resigned as a director
on 2 November 2005.
European Convergence Property Real Estate Trading and Management Limited ("ECPC
Turkey")
ECPC Turkey was incorporated in Turkey on 2 September 2005 under the provisions
of the Turkish Commercial Code as a limited liability company (registration
number 563709/511290). The company has an authorised share capital of YTL 5,000
(New Turkish Lira) divided into 200 shares of YTL 25 each. 133 shares were
issued to European Convergence Property Company (Cayman) Limited (the company's
direct parent) and 67 shares were issued to James Houghton on 2 September 2005.
The Directors of ECPC Turkey are James Houghton (appointed 2 September 2005) and
Malcolm Sargeant (appointed 2 November 2005 subject to registration with the
Turkish authorities). Adrian Jones (appointed 2 September 2005) resigned as a
director on 2 November 2005 subject to de-registration with the Turkish
authorities.
Orange Convergence Finance BV ("ECPC Netherlands")
ECPC Netherlands was incorporated in The Netherlands on 23 September 2005 under
the provisions of the Dutch Law as a limited liability company (registration
number 34233659). The company has an authorised share capital of Euro90,000
divided into 90,000 shares of Euro1 each. 18,000 shares were issued to ECPC
(Cyprus) Limited (the company's direct parent) on 23 September 2005. The
Directors of ECPC Netherlands are James Houghton, Malcolm Sargeant, Equity Trust
Co. NV and Clear Management Company NV (appointed 23 September 2005).
European Convergence Property Company Bulgaria EOOD ("ECPC Bulgaria")
ECPC Bulgaria was incorporated in Bulgaria on 27 September 2005 under the
provisions of the Bulgarian Law as a limited liability company (registration
number 10512/2005). The company has an authorised share capital of BGN 5,000
divided into 5,000 shares of BGN 1 each. 5,000 shares were issued to European
Convergence Property Company (Malta) Limited (the company's direct parent) on 27
September 2005. The Directors of ECPC Bulgaria are James Houghton (appointed 27
September 2005) and Malcolm Sargeant (appointed 12 December 2005 subject to
registration with the Bulgarian authorities). Adrian Jones (appointed 27
September 2005) resigned as a director of the company on 2 November 2005 subject
to de-registration by the Bulgarian authorities.
European Convergence Property Com. SRL ("ECPC Romania")
ECPC Romania was incorporated in Romania on 4 October 2005 under the provisions
of the Companies Law No. 31/1990 as a limited liability company (registration
number J/40/16665/4, Sole Code of Registration number 18009959). The company
has an authorised share capital of RON 200 divided into 20 shares of RON 10
each. 20 shares were issued; 1 share to James Houghton and 19 shares to ECPC
(Cyprus) Limited (the company's direct parent) on 4 October 2005. The Directors
of ECPC Romania are James Houghton (appointed 4 October 2005) and Malcolm
Sargeant (appointed 24 February 2006). Adrian Jones (appointed 4 October 2005)
resigned as a director of the company on 2 November 2005.
3 Significant Accounting Policies
European Convergence 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 1 June 2005 as a public company with registered number 113616C. The interim
report of the Company for the half year ended 31 December 2005 comprise the
Company and its subsidiaries (together referred to as the "Group").
The interim report was compiled by the Administrator and Registrar and
authorised for issue by the Directors on 22 March 2006.
3.1 Basis of Presentation
The interim report has been prepared in accordance with the same accounting
policies which will be used for the annual financial statements. The annual
financial statements will be prepared in accordance with International Financial
Reporting Standards promulgated by the International Accounting Standards Board
("IFRS"). Management has concluded that the interim report fairly represents
the entity's financial position, financial performance and cash flows.
The Company is denominated in Euros (Euro) and therefore the amounts shown in these
financial statements are presented in Euro.
3.2 Foreign currency translation
Monetary assets and liabilities denominated in foreign currencies as at the date
of these financial statements are translated to Euro at exchange rates prevailing
on that date. Realised and unrealised gains and losses on foreign currency
transactions are charged or credited to the income statement as foreign currency
gains and losses. Expenses are translated into Euro based on exchange rates on the
date of the transaction.
3.3 Deposit interest
Deposit interest is accounted for on an accruals basis
3.4 Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise
cash deposited with banks, cash balances at brokers and bank overdraft.
3.5 Revenue and expense recognition
Interest income is recognised in the financial statements on an accrual basis.
Dividend income is recorded when declared.
Expenses are accounted for on an accrual basis. Expenses are charged to the
income statement except for expenses incurred on the acquisition of an
investment property which are included within the cost of that investment.
Expenses arising on the disposal of an investment property are deducted from the
disposal proceeds.
3.6 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 gains arising from
intra-group transactions, are eliminated in preparing the consolidated financial
statements.
3.7 Dividends
Dividends are recognised as a liability in the year in which they are declared
and approved. There was no interim dividend declared as at 31 December 2005.
3.8 Trade and Other Payables
Trade and other payables are stated at their cost.
4 Net Asset Value per Share
The net asset value per share as at 31 December 2005 is Euro0.9535 based on
62,696,333 ordinary shares in issue as at that date.
5 Related Party Transactions
5.1 Directors of the Company
Anderson Whamond is a director of the Manager. Mr Whamond is a Shareholder of
Charlemagne Capital Limited ("CCL") the parent of the Manager and the Placing
Agent.
Save as disclosed above, none of the Directors had any interest during the
period in any material contract for the provision of services which was
significant to the business of the Company.
5.2 Directors of the Subsidiaries
James Houghton is a director of the Manager. Adrian Jones is an employee of the
Placing Agent. Malcolm Sargeant is an employee of the Manager. In compliance
with local regulations, certain subsidiaries have appointed directors who are
employees of or are associated with, the relevant registered office service
provider.
5.3 Manager fees
Annual fees
The Manager is entitled to an annual management fee of 1.25% of the net asset
value of the Company from time to time plus borrowings of the group, payable
quarterly in arrears.
The Manager shall also be entitled to recharge to the Company all and any costs
and disbursements reasonably incurred by it in the performance of its duties
including costs of travel save to the extent that such costs are staff costs or
other internal costs of the Manager. Accordingly, the Company shall be
responsible for paying all the fees and expenses of all valuers, surveyors,
legal advisers and other external advisers to the Company in connection with any
investments made on its behalf. All amounts payable to the Manager by the
Company shall be paid together with any value added tax, if applicable.
Annual management fees paid during the period ended 31 December 2005 amounted to
Euro409,791.
Performance fees
The Manager is entitled to a performance fee equal to 15 per cent. of the total
profits generated by the Company. In order for the performance fee to be
payable, the Company must firstly have returned to its Shareholders an amount
equal to the amount subscribed pursuant to the Placing (ignoring any initial
charge paid by Shareholders). Thereafter the Manager shall be entitled to 15
per cent. of any further distributions of profit or capital. In determining
amounts paid to Shareholders and the amount payable to the Manager pursuant to
the performance fee full account will be taken of any dividends paid, other
distributions made and distributions made on a winding up of the Company. In
the event that Shareholders vote for the Company to continue at the annual
general meeting in 2012, the Manager shall be entitled to be paid a performance
fee in accordance with the following provisions. Within one month of the
relevant annual general meeting, the Company and the Manager shall agree the net
asset value of the Company as at close of business on the date of the annual
general meeting and in the absence of agreement the matter shall be determined
by the Company's auditors.
The Manager shall be entitled to an amount equal to 15 per cent. of Z where Z
equals Y minus X and Y equals the net asset value of the Company at the close of
business on the date of annual general meeting plus an amount equal to the total
payments made to Shareholders since Admission and X equals the amount subscribed
by Shareholders pursuant to the Placing. Z shall then form the benchmark net
asset value for the Company going forward and the Manager shall thereafter be
entitled to an annual performance fee equal to 15 per cent. of any excess of W
over Z where W is the net asset value of the Company as at the last business day
of each subsequent financial year of the Company plus an amount equal to the
total amount of distributions paid and made to Shareholders during the relevant
financial period. If any further performance fee is paid by reference to W in
this formula, then this shall set a high watermark benchmark going forward for
the next financial year of the Company.
Payment of the Manager's annual fee and any performance fees shall be paid by a
subsidiary of the Company.
Performance fees paid during the period ended 31 December 2005 amounted to Euro
Nil.
5.4 Placing Agent
In accordance with the terms of the Placing, the Placing Agent was entitled to
charge investors an initial charge of up to 3% of the value of their investment.
The Placing Agent was also entitled to receive from the Company an amount
equal to 4% of the amount raised by the Placing Agent on behalf of the Company.
Placing fees paid by the Company during the period ending 31 December 2005
amounted to Euro2,507,853.
6 Charges and Fees
6.1 Nominated Adviser and Broker fees
Pursuant to the Placing and in its capacity as AIM Sponsor, the Nominated
Adviser and Broker was entitled to receive a fee of #75,000. The payment of
this fee was conditional upon admission of the Company's Shares to AIM taking
place on or before 28 June 2005 or such later date as may have been agreed.
As nominated adviser and broker to the Company for the purposes of the AIM
Rules, the Nominated Advisor and Broker is entitled to receive an annual fee of
#30,000.
Advisory fees paid to the Nominated Advisor and Broker for the period ending 31
December 2005 amounted to Euro131,058.
6.2 Custodian fees
The Custodian is entitled to receive fees calculated as 1 basis point per annum
of the value of the debt securities held on behalf of the Company, subject to a
minimum monthly fee of Euro500, payable quarterly in arrears.
The Custodian expects to review and, subject to written agreement between the
Company and the Custodian, may amend the foregoing fees six months after
Admission and annually thereafter.
Custodian fees paid for the period ending 31 December 2005 amounted to Euro3,500.
6.3 Administrator and Registrar fees
The Administrator is entitled to receive a fee of 4 basis points of the net
assets of the Company plus borrowings, subject to a minimum monthly fee of
Euro5,000, payable quarterly in arrears.
The Administrator shall assist in the preparation of the financial statements of
the Company for which it shall receive a fee of Euro2,500 per set.
The Administrator shall provide general secretarial services to the Company for
which it shall receive a minimum annual fee of Euro7,500. Additional fees based on
time and charges, will apply where the number of Board meetings exceeds four per
annum. For attendance at meetings not held in the Isle of Man, an attendance fee
of Euro500 per day or part thereof will be charged.
The Administrator may utilise the services of a CREST accredited registrar for
the purposes of settling share transactions through CREST. The cost of this
service will be borne by the Company. It is anticipated that the cost will be
in the region of #6,000 per annum subject to the number of CREST settled
transactions undertaken.
The Administrator expects to review and, subject to written agreement between
the Company and the Administrator, may amend the foregoing fees six months after
Admission and annually thereafter.
Administration fees paid for the period ending 31 December 2005 amounted to
Euro38,937.
6.4 Other operating expenses
It is anticipated that the costs of managing any properties in the Company's
investment portfolio will be satisfied out of the service charges generated by
tenants. However, to the extent that this is not the case, all such costs, to
include the costs of all other third party service providers, shall be
chargeable to and payable by the Company.
The costs associated with maintaining the Company's subsidiaries, to include the
costs of incorporation and third party service providers shall be chargeable to
each subsidiary and payable by the Company.
6.5 Preliminary (formation) expenses
The estimated total costs and expenses payable by the Company in connection with
the Placing and Admission (including professional fees, the costs of printing
and the other fees payable including commission payable to the Placing Agent)
was approximated to equal 4.5% of the gross amount raised. The actual total
amount of preliminary expenses paid was Euro2,886,625 representing 4.60% of the
gross amount raised.
7 Share Capital
Ordinary Shares of Euro1.00 each Number Euro
In issue at the start of the period - -
Issued during the period 62,696,333 62,696,333
In issue at 31 December 2005 62,696,333 62,696,333
At incorporation the authorised share capital of the Company was Euro300 million
divided into 300 million Ordinary Shares of Euro1.00 each.
8 Trade and Other Payables
31 December 2005
Euro
Legal and professional fees -
Manager annual fees 188,227
Custodian fees 1,150
Administrator and Registrar fees 16,875
Directors fees 22,500
Audit fees 14,583
Other 5,908
Total 249,243
9 Exchange Rates
The following exchange rates were used to translate assets and liabilities into
the reporting currency at 31 December 2005:
USD 1.1844
GBP 0.6884
10 Directors' Remuneration
The Company
The maximum amount of remuneration payable to the Directors permitted under the
Articles of Association is Euro300,000 p.a. Each Director currently is paid a fee
of Euro22,500 p.a. The Directors are each entitled to receive reimbursement of any
expenses incurred in relation to their appointment. Total fees and expenses
paid to the Directors for the period to 31 December 2005 amounted to Euro52,500.
The Subsidiaries
No fees are paid to the directors of the subsidiaries except in circumstances
where a director is appointed in compliance with local regulations and in such
cases the fees payable are nominal.
11 Taxation
Isle of Man
The Company has received confirmation of tax exempt status from the Assessor of
Income Tax in the Isle of Man for the year of assessment ending 5 April 2006.
The effect of tax exempt status is that the Company will have no liability to
Manx income tax on its income or gains and that there will be no requirement to
deduct withholding tax from payments of dividends to shareholders. The current
annual fee for tax exempt status is #475. With effect from 6 April 2006 the
general tax rate for companies in the Isle of Man is zero per cent. As such the
Company does not intend to renew its tax exempt status for the 2006/07 year of
assessment.
There are no corporation, capital gains or inheritance taxes payable in the Isle
of Man.
No Isle of Man stamp duty or stamp duty reserve tax will be payable on the
issue, transfer, conversion or redemption of Ordinary Shares.
Shareholders resident outside the Isle of Man will not suffer any income tax in
the Isle of Man on any income distributions to them.
United Kingdom
The affairs of the Company are conducted so that the central management and
control of the Company is not exercised in the UK and so that the Company does
not carry out any trade in the UK (whether or not through a permanent
establishment situated there). On this basis, the Company should not be liable
for UK taxation on its income and gains, other than certain income deriving from
a UK source.
This information is provided by RNS
The company news service from the London Stock Exchange
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