TIDMITA
RNS Number : 6815N
Itacare Capital Investments Ltd
11 September 2013
Date: 11 September 2013
On behalf of: Itacaré Capital Investments Ltd ("Itacaré"
or the "Group")
Embargoed until: 0700hrs
Itacaré Capital Investments Ltd
Half Year Results for the six months ended 30 June 2013
Itacaré Capital Investments Ltd. (AIM: ITA), a real estate
investment company focused on high-end residential resorts in
Brazil, today announces its half year results for the six months
ended 30 June 2013.
Highlights
-- Basic Net Asset Value stands at $1.00 per share.
-- Loss of $5.38 million for the six months, compared to a gain
of $11.01 million for the full year 2012 (EPS loss of $0.05
compared to EPS profit of $0.12 for full year 2012), driven by the
material exchange movement in the Brazilian Real (R$) against the
US Dollar ($).
-- Total assets at 30 June 2013 of $102.8 million (31 December
2012: $106.6 million), including cash of $2.1 million.
-- Continued progress made on the projects being developed at
Duas Barras, Trancoso and Tres Praias with each increasing in R$
but impacted by unfavourable exchange movement of 9% in six months
to 30 June 2013.
-- Anticipated disposal of Warapuru did not materialise thereby
necessitating the placement of Treasury Stock in April 2013.
-- Equity funding committed into our Trancoso joint venture SPV
at NAV (31 December 2012), which provides necessary capital to
launch the project.
-- Debt funding secured for Trancoso, as yet to be drawn down,
to fund the hotel development programme.
Commenting, Michael St Aldwyn, Chairman of Itacaré Capital,
said:
"Despite the frustrations of the current economic and political
situation in Brazil and an unfavourable exchange rate, the last six
months have seen continued progress with the Company's active
projects, as reflected by the value uplifts in local currency. The
long-term economic indicators in Brazil are positive for our
investments and we remain optimistic as we continue to push our
projects closer to the sales phase."
For further information:
Itacaré Capital Investments Tel: +44 (0)7770 362863
Chairman, Michael St. Aldwyn
Itacaré Capital Partners Tel: +55 11 2678 0800
Investment Manager, Pedro de Miranda
Cenkos Securities Tel: +44 (0)20 7397 8962
Stephen Keys, Adrian Hargrave (Nominated
adviser) Russell Kerr, Alex Aylen
(Sales)
Redleaf Polhill Tel: +44 (0)20 7382 4720
Emma Kane, Henry Columbine, Hannah E: itacare@redleafpolhill.com
Fensome
Notes to Editors:
-- Itacaré Capital Investments Ltd is a limited liability
closed-end real estate investment company focused on tourism-real
estate developments in Brazil. The Company acquires large parcels
of land at strategic locations that can be developed and sold to
end users with the intention of achieving a minimum IRR of 25 per
cent.
-- The Company invests in projects at an early development stage
or in strategic land sites that can be acquired at a discount to
open market value at current usage.
-- Itacaré Capital focuses on beachfront parcels with particular
geographic characteristics that maximise sea views and reduce the
need for expensive landscaping thus translating into higher
margin.
-- Itacaré Capital aims to create a development that is better
than the best quality development in the local area in order to
achieve maximum pricing power.
-- Itacaré Capital focuses on high quality residential
developments that typically include a number of holiday or second
home units, luxury hotels and leisure components. Approximately 70%
of our portfolio is targeted to domestic buyers.
-- Further information is available at
www.itacarecapital.com
CHAIRMAN'S STATEMENT
The first six months of 2013 have seen some significant
political activity in Brazil which, coupled with a dramatic
devaluation of the Brazilian Real against the US Dollar, has led
foreign investors to question the momentum of the Brazilian
miracle. As you will see later in the Manager's Report, a
combination of street protests and a sluggish economy has left the
government in a difficult situation with presidential elections
coming up in 2014.
While some areas of the economy have continued to flourish and
the preparations for next year's World Cup have proved further
advanced than many expected, there is an unmistakable
slow-down.
I am pleased to report that this has had limited impact on the
core projects in which your company is involved; in fact during the
period all three appreciated in local currency but showed a decline
in US Dollar as a result of the Real devaluation.
Further progress has been made in securing planning consent in
all three, with sales expected to start in Bahia Beach (Trancoso)
by year-end and in Tres Praias in the first quarter of 2014. We
recognise that this is at the end of our projections but in line
with the bureaucratic delays that we continue to experience.
With regards to our non-core projects we have continued our
efforts to dispose of these assets. Despite granting an extension
to the potential purchaser of our Warapuru assets, they were unable
to complete the proposed transaction with the result that
approaches are now being made to other potential buyers.
Results
The results for the six months to 30 June 2013 show a loss of
$5.38 million, driven by the material exchange movement in the
Brazilian Real against the US Dollar, which gave rise to unrealised
valuation losses of $4.83 million for the period. This compared to
a profit of $11.01 million for the full year to 31 December 2012,
which reflected increased valuations for our three main projects
due to the significant progress made with planning consents
thereon. During the six months to 30 June 2013, further gains were
made in local currency for each of the three main investments,
reflecting the continued progress made; however, the material
exchange rate movement from R$2.047 to the US Dollar, to R$2.226
during the period has negatively impacted their respective Dollar
valuations. At a combined $100 million, these comprise the bulk of
the Company's NAV. The Company's operating costs have remained on
budget throughout the period. The Company reported a Basic Loss per
share of $0.05 compared to a Basic Earnings per share of $0.12 for
the full year to 31 December 2012.
During the period, the Company placed the balance of its
Treasury Stock for gross proceeds of $2.78 million. Consequently,
the Company is reporting a Basic Net Asset Value (NAV) of $1.00 per
share, compared with $1.11 at 31 December 2012. Itacaré Capital
continues to have no debt at Company or asset level and total net
assets as of 30 June 2013 of $96.4 million, including $2.1 million
of cash. As a further affirmation of the NAV the Company very
successfully secured an equity investment, at project NAV, into the
Bahia Beach Trancoso joint venture special purpose vehicle ("SPV")
in July 2013. These funds will be used to bolster the SPV balance
sheet and provide necessary capital for all pre-marketing and
pre-build spend. Development finance has also been secured on
favourable terms for the SPV, which will be drawn down by the joint
venture when the hotel build program commences.
Dividend policy
The Board would also like to take this opportunity to reiterate
that the Company's intention is still to maximise the IRR of each
project investment and that it therefore intends to return capital
profits as soon as they are realised, subject to retaining
sufficient working capital.
Shareholder matters
Subsequent to the end of the period and in line with the review
conducted late last year, your company elected to adopt many of the
provisions of the UK Takeover Code with a view to assuring
increased protection for shareholders, minority shareholders
particularly.
In July 2013 the Board received notification that an investor
group representing over 51% of the shareholders of the Company had
signed an agreement valid for three years whereby the group
undertook to act in unison and not to sell their shares at a price
below the most recently published NAV. The Board welcomed this
initiative as a demonstration of the group's belief in the
underlying value attributed to their shares in the Company.
Summary
In summary, this has been a frustrating period in which all of
the members of the team have worked hard to ensure continuing
progress. Despite these challenges, your Board continues to be
optimistic about the Company's prospects and welcomes your
continued support.
Michael St Aldwyn
Chairman
11 September 2013
INVESTMENT MANAGER'S REPORT
We are pleased to report continued operational progress for the
six months ending 30 June 2013.
The Brazilian economy and the political scenario in particular
are passing through a sensitive moment, and the government is
reacting quickly to stabilise both. The Company has made solid
progress to initiate sales in two of its three main projects,
notwithstanding some delays that are common for licensing of real
estate developments of this nature in Brazil. Notably, in the
Trancoso Project, $7 million of equity is being raised at NAV from
a local pension fund.
Brazilian Economy
In response to last year`s weak GDP growth (0.9%), in late 2012
and early 2013 the Brazilian government enacted a series of
measures to stimulate production, decrease inflation pressure,
boost competitiveness, and achieve economic recovery. Even though
some numbers and sectors reacted positively to the stimulus,
current estimates point to GDP growth of approximately 2.3% for
2013.
Among these measures are (i) standardisation of the interstate
tax to a common rate of 4% for all interstate transfers, (ii)
reduction in labour taxes for some sectors, (iii) the Brazilian
Development Bank (BNDES) set interest rates to under 4% p.a. for
hotel projects to increase the sector`s capacity nationwide and
(iv) reduction on the corporate income tax on real estate
developments from 6% to 4% on revenues.
In the first half of this year, the Brazilian government faced
serious popular manifestations in the whole country, with millions
of people marching against corruption, poor education, public
transportation and health system, plus a number of other claims.
The manifestations took a dimension unheard of in the history of
Brazil, seriously damaging the popularity of the President. As a
response, the government enacted a series of measures to address
some of the main claims, the results of which shall be seen in the
near future.
In spite of the government's efforts, after the unemployment
rate hit a 10-year low in 2012 of 4.6%, a sluggish upward cycle
began in 2013, reaching 6.0% in June. Also, the Brazilian economy
was impacted, as was the rest of the world, by the strong
appreciation of the Dollar, which led the Real exchange rate to
suffer a 9% hike (from 2.05 to 2.23) through the first semester
with expectations that this trend will be maintained for a while.
The Consumer Price Index for the last 12 months, as a reflection,
reached 6.7%, slightly above the target ceiling set by the
government (6.5%) but the market expects the index to return to
around 5.8% after this seasonal peak. These expectations are based
on the fact that the hike in prices triggered the government to
start a rising cycle in the benchmark borrowing rate (Selic) which
moved from 7.25% to 9.00%.
The 2014 FIFA World Cup and the 2016 Olympic Games are expected
to bring significant benefits in terms of development and should
help the government to focus on implementing the required
investments, in particular in infrastructure. In 2012, the
country's three largest airports have been privatised, while the
two main ones in Rio de Janeiro have their bidding process
scheduled for October 2013, and another 45 regional airports'
modernisation bidding processes have now been scheduled for
November 2013. In June, Brazil held the Confederations Cup with
great success, with all stadiums ready and approved for the
competition. Through the rest of 2013 and 2014, the continuation of
initiatives to boost privatisations or partnerships between the
government and the private sector in areas such as ports, roads,
and railways is expected.
Although growing at a slower pace than expected, the Brazilian
economy remains stable supported by low unemployment, continuous
primary government surplus, industrial production regaining
momentum and a growing middle class. In light of the coming
international events (World Cup and Olympics), the Brazilian
government is investing in infrastructure and increasing financing
to hospitality and other related industries. The recent popular
insurgencies are expected to direct the government to increase
infrastructure expenditures and general government investments to
ensure social development and growth.
Portfolio Update
The portfolio of the Company is divided into Active Projects and
Other Investment Properties to give better visibility to investors
on the main drivers of value within our portfolio.
The table below illustrates the value progression in the
Company's five projects both in local currency and US Dollar
equivalent. The portfolio had an appreciation of 5% in Reais terms,
from R$214 million in December 2012 to R$224 million in June 2013,
which reflects the progress made in our Active Projects.
Nonetheless, it suffered a small decrease in US Dollar terms due to
the harsh Real depreciation of 9% during the first semester of
2013.
Despite the political and economic scenarios, we continue to see
growth in consumer confidence and wealth creation in the country,
which is reflected in the demand for residential properties. Our
portfolio is currently mainly positioned for local buyers, who are
looking to purchase both primary and secondary homes in attractive
locations.
Project Valuation Summary ($ m)
Três BB Trancoso Duas Barras Havaizinho Warapuru
Praias
Entry Price 16.7 16.0 8.2 7.1 11.1
Valuation Jun-2012 35.4 25.8 18.1 5.3 2.0
Valuation Dec-2012 41.5 34.4 21.5 5.1 2.0
Valuation Jun-2013 39.8 33.5 19.8 4.8 2.0
Project Valuation Summary (R$ m)
Três BB Trancoso Duas Barras Havaizinho Warapuru
Praias
Entry Price 29.7 27.4 15.5 17.9 19.8
Valuation Jun-2012 71.0 51.8 36.3 10.6 4.0
Valuation Dec-2012 85.0 70.4 43.9 10.5 4.1
Valuation Jun-2013 88.7 74.6 44.1 10.8 4.5
ACTIVE PROJECTS
Três Praias
The Company invested $16.7 million in the Três Praias
residential project, situated in the State of Espírito Santo. The
State is the leading producer of iron ore and steel slabs in the
country, being home to the world's largest steel plant,
ArcelorMittal Brasil. Vitoria, the capital city, is the largest
steel-producing city in the world. The city has an important port
for exporting iron ore and steel. In addition, Espírito Santo is an
important oil and gas driller, a major granite producer, exporting
the product worldwide, and the second largest producer of coffee
and cellulose in the country.
Like many other states in Brazil, tourism is also a prominent
industry of Espírito Santo. The wonderful beaches and the
picturesque mountain retreats attract a large number of tourists to
the State.
Três Praias is expected to benefit from a significant increase
in the level of investment into the State, as more foreigners and
locals move there to work in the oil and steel industries.
According to the investment plans announced for the next five
years, Petrobras (NYSE: PBR), the government-owned oil company, is
investing almost $1 billion over the next years in Espírito Santo,
to expand exploration and production, and Vale (NYSE: VALE) is
expected to invest another $1 billion in a new pelletising plant.
The State expects the new confirmed oil reserves to boost total
production from 360,000 barrels of oil per day in 2012 to 500,000
in 2015. The State is now the second largest oil and gas producer
in Brazil. The expansion of the oil and steel business in the
region is expected to contribute to further infrastructure
developments, as well as the growth of the middle and upper classes
and a resultant increase in demand for residential properties,
including our own.
As announced in July 2009, the Company and its project partner,
Brookfield Incorporações SA (BOVESPA: BISA3), one of Brazil's
largest real estate developers ("Brookfield"), agreed new terms to
the original investment agreement signed in December 2007.
Brookfield acquired approximately nine hectares, or 10% of the
entire site, for a cash consideration of R$6.5 million ($3.2
million), all received by the Company by July 2011. Under the
amended agreement with Brookfield, in addition to the sale of 10%
of the site, Brookfield is also responsible for the master planning
and preliminary licensing of the entire site and all related costs,
including legal fees, environmental compensation and architecture
projects.
Detailed engineering drawings for infrastructure and residential
units and MEP, BMS, foundations, internal traffic and telecom
studies have been completed for Phase 1. The Company submitted the
Environmental Impact Study along with other required documentation
for Phase 1 permits at the end of 2011 and is awaiting final
approval. A public hearing to discuss the Environmental Impact
Study was scheduled to occur in June 2013, but the Municipality
cancelled the public hearing due to public manifestations and riots
in the city, and rescheduled it to 5 August 2013. The first
environmental licence (Preliminary Licence) is expected to be
granted a couple of months after the public hearing.
Despite Brookfield and the Company's efforts, the launch date
for the Project was delayed from H1 2013 to Q1 2014 due to the
complexity of environmental licensing, which was further delayed
due to the local strikes by the State Environmental Agency and
public manifestations in the first semester of 2013.
In April 2013, IPHAN approved the archaeological report, which
is a condition for the issuance of the first environmental license
(Preliminary License). In parallel to the environmental licensing,
Brookfield is approving the implementation drawings with the
Municipality, and finalising the product and sales strategies.
Brookfield Social Institute has been engaged and will be
responsible for preparing the social and environmental compensation
programs for Phase 1.
Furthermore, Brookfield is also finalising the incorporation
documents and the sales and marketing campaigns after which
pre-sales will start. The project will see the phased development
of 1,778 residential units representing total expected sales in the
amount of R$741 million ($335 million) for our remaining share, and
200 hotel units representing total expected sales in the amount of
R$66 million ($30 million).
The Três Praias Project targets only local buyers, mainly from
the Espirito Santo and Minas Gerais states, and C&W's residual
valuation in local currency has increased from R$85.0 million
($41.5 million) in December 2012 to R$88.7 million ($39.8 million)
in June 2013.
Trancoso - Bahia Beach
The Trancoso project is situated on a 293-hectare site with
approximately 600 metres of beachfront. It is three kilometres away
from the village of Trancoso, Bahia, and 47 km south of Porto
Seguro International Airport, which is served by domestic and
international charter flights. There is also a 1,500-metre paved
landing strip located within a 15-minute drive from the project.
The project will see the phased development of 177 residential
units, a small 40-bungalow luxury hotel, a beach club, a spa and
other amenities on the site. Total sales value is projected at R$1
billion resulting in R$500 million ($225 million) attributable to
the Company based on its 50% shareholding.
In December 2010, Itacaré Capital signed a Hotel Operating
Agreement with Hotel Marco Internacional S.A., the operator of
Fasano Hotels, a premium luxury brand in Brazil, and JHSF
Participações S.A., the controlling shareholder of Fasano Hotels,
for the development of Fasano Trancoso. The project team also
comprises Hart Howerton, a London-based firm of master-planners,
and Isay Weinfeld, the award-winning Brazilian architect.
In November 2011, the project received approval by the
Municipality of Porto Seguro for the issuance of the Installation
Licence and the Construction Licence for Phase 1 of the Project.
Phase 1 comprises a 40-room Fasano hotel, restaurant, spa and 23
Fasano residential villas for sale, all located in the beachfront
part of the site. The Installation and Construction Licences are
key value creating steps in the development process. They authorise
(i) the master plan blueprints to be used in the Project, and (ii)
the technical drawings for construction.
Following the granting of these licences at the end of 2011, the
Federal Environmental Agency (IBAMA) suspended the Installation
Licence to verify the existence of protected vegetation in the
beachfront area. IBAMA issued a favourable technical report lifting
the suspension in December 2012, and this report is now waiting for
ratification by the President of IBAMA.
In addition, the local neighbours' association filed a lawsuit
questioning some environmental issues and a preliminary injunction
was granted before the Company presented its defence on the case.
The preliminary injunction was reversed in December 2012 and the
licenses are again effective. Recently, the Company and the
neighbours' association reached an agreement, mediated by the
Public Prosecutor, pursuant to which the Company will provide the
neighbours with access to some Project facilities and the
neighbours' association will withdraw all existing claims and will
refrain from filing any future claims.
On 31 December 2012, the Company signed with Banco do Nordeste
do Brasil (BNB) a 13-year R$40.1 million construction loan
facility, with an annual interest rate of 2.5%, to cover the hotel
and its infrastructure related cost. The Company is now finalising
the process to obtain a bank guarantee letter, which will be
offered to Banco do Nordeste do Brasil.
In July 2013, a Brazilian pension fund committed to invest R$15
million (approximately $7 million) in the Trancoso project. The
investment will be made through a local REIT, to which the Company
will contribute R$50 million in shares from the Trancoso SPV (out
of the December 2012 valuation of R$140.8 million/$68.8 million)
and the new investor will contribute the R$15 million in cash. As a
result, the new investor will control approximately 10% of the
Trancoso SPV and the holding company that Itacaré Capital currently
owns 50:50 with other investors will own the remaining 90%, thus
resulting in a project ownership of 45% for Itacaré Capital. The
use of the proceeds from the new investor will be used primarily to
fund marketing of Phase 1 (23 Fasano villas), site preparation,
infrastructure and other pre-construction costs.
In March 2013, the Condominium rules and incorporation documents
were approved by the Real Estate Registry. The Company now expects
to start off-plan sales in the last quarter and construction is
expected to start in the months following.
Cushman & Wakefield ("C&W") conducted a residual
valuation analysis of the project recognising that it is likely to
attract a good mix of wealthy Brazilians and foreign buyers.
C&W also took into account the full impact of hotel
construction, which on a standalone basis is slightly value
dilutive, but positively impacted by a premium sales price
anticipated in their valuation model for the Fasano-branded real
estate and by the hotel loan signed with BNB. During the reporting
period, the US Dollar had a strong appreciation of 9% and
consequently the valuation of the Company's 50% share of the
project suffered a moderate decrease of 3% from $34.4 million
(December 2012) to $33.5 million (June 2013). The Real valuation
rose from R$70.4 million (December 2012) to R$74.6 million (June
2013) in the period.
Duas Barras
Duas Barras Project, in the State of Alagoas, is situated on a
200-hectare beachfront plot, which is divided into two main parts
where villas will be located. The first is a relatively flat
plateau that sits approximately 30 metres above sea level and
offers panoramic ocean views. The second is a beach-level coconut
plantation with access to close to 2.6 kilometres of white sandy
beach.
Oscar Niemeyer, the renowned Brazilian architect, designed a
40-room hotel, and New York-based Field Operations prepared the
master plan for the site. The project plan is split into two main
phases. Phase 1 real estate will be clustered around the hotel
complex in order to facilitate the construction and the use of
shared infrastructure. Phase 1 will include sea view villas and
polo villas on the plateau, while the beachfront villas will be
developed as part of Phase 2. The residential portion will consist
of 54 villas for sale. Total sales value is projected at R$655
million resulting in R$327 million ($148 million) attributable to
the Company based on its 50% shareholding.
In February 2010, the project was approved by the State of
Alagoas for the issuance of the first environmental licence
(Preliminary Licence). At the end of 2010, the Company received
approval of the second environmental licence (Infrastructure
Implementation Licence), which is the next stage of permits for the
construction of infrastructure that supports the project. During
2012 and first semester of 2013, the Manager worked to fulfil the
required environmental recuperation works that were a condition of
the Preliminary Licence. In addition, we completed the registration
process required for the bank loan (on favourable terms similar to
those obtained for Trancoso above) and are now working on obtaining
the financing pre-approval. Also, the Company finalised and filed
with IPHAN the archaeological study that we expect should be
approved before the year end.
C&W valued the investment on a "Residual Valuation" basis.
During the reporting period, our 50% share of the valuation
decreased by 9% from $21.5 million (December 2012) to $19.8 million
(June 2013) as a result of the Dollar appreciation whilst the Real
valuation remained stable, from $43.9 million (December 2012) to
$44.1 million (June 2013).
OTHER INVESTMENT PROPERTIES
Our interests under 'Other Investment Properties' represent just
7.4% of the Company's investment portfolio and it is the Company's
intention to dispose of them in an orderly manner.
Warapuru
The Company owns four parcels of land and a mortgage interest on
25% of the hotel facilities as a result of its investment in the
project made in 2007. In May 2011, when the project was half built,
the Portuguese developer of this project was declared bankrupt. The
Company is working with the other main creditor, a Brazilian bank,
in order to achieve an efficient sale of the assets.
Given the potential decay of the partially built structures and
the associated uncertainties with the timing of the solution of the
bankruptcy and the completion of the project, C&W has valued
the investment on an orderly liquidation basis being the amount for
which the properties could be exchanged between knowledgeable,
willing parties in an arm's length transaction basis with a
resultant valuation of $2.61 million (2012: $2.93 million).
In June 2012, the Company signed a Binding Letter of Intent
(LOI) with Warapuru Restructuring Partners, LLC (WRP), a US private
investment group, for the sale of the Company's interest in
Warapuru for a total consideration of $2 million. In March 2013 a
revision to the LOI was signed extending the terms by 90 days to
allow WRP to complete its due diligence. WRP paid $30,000 to extend
its due diligence, which expired in June 2013, but WRP did not
achieve completion of the LOI and the Company decided not to renew
the LOI.
The Company continues to seek a purchaser for its non-core
assets in line with its stated strategy. The Board has decided to
adopt the lower aborted consideration price of $2 million for
Warapuru in its half year accounts instead of the higher C&W
valuation.
Havaizinho
The site comprises a 33-hectare land parcel and has 860 metres
of sea frontage and a small cove beach. It has lower levels of
dense vegetation and it is zoned for tourism development.
The Company originally acquired this site in a 50:50 partnership
with the developer of Warapuru. Once the developer ran into
financial problems, the Company assumed the remaining land payments
and as the land is adjacent to the Warapuru Project, in 2010,
excluded the defaulted partner from the partnership. As a result,
the Company owns 100% of this site without being exposed to any
potential claims from the developer's creditors.
As detailed in the Warapuru project above, in the LOI signed
with WRP, the Company also negotiated an option for the sale of the
Havaizinho property, pursuant to which WRP would pay $50,000 for a
12-month option to purchase 100% of the Company's interest in the
Havaizinho project for $7 million.
In June 2013 the due diligence period expired without completion
and WRP did not meet the agreed deadline. The Company continues to
seek a purchaser for its non-core assets in line with its stated
strategy.
C&W has valued Havaizinho at $4.8 million (R$10.8 million)
versus $5.1 million (R$10.5 million) in December 2012.
Looking ahead
We expect to start sales of Phase 1 of the Trancoso Project in
Q4 2013, with a view to starting construction shortly thereafter,
along with Três Praias, which Brookfield expects to start selling
in early 2014. We are focused on bringing our two largest projects
to sales status whilst continuing to work on divesting of the
non-core investment properties to further generate realisations for
the Company.
Pedro P. de Miranda
Managing Director
Itacaré Capital Partners Ltd
11 September 2013
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
6 months 6 months Year ended
to to
30 June 30 June 31 December
2013 2012 2012
$ $ $
Interest received 24,282 114,615 301,079
Other income 30,000 - -
Valuation gains on investment
properties - 3,748,935 19,435,316
Valuation losses on investment
properties (4,828,779) (4,479,000) (2,932,450)
------------ ------------
Total operating (loss)/profit (4,774,497) (615,450) 16,803,945
Management fees (870,000) (870,000) (1,740,000)
Other administration fees and
expenses (889,889) (679,592) (1,689,718)
(1,759,889) (1,549,592) (3,429,718)
(Loss)/profit for the period
before tax (6,534,386) (2,165,042) 13,374,227
Deferred tax 724,317 109,510 (2,475,430)
------------ ------------ ------------
(Loss)/profit for the period (5,810,069) (2,055,532) 10,898,797
Other comprehensive income
Exchange differences on translating
foreign operations 434,693 734,917 109,619
Other comprehensive income, net
of tax 434,693 734,917 109,619
Total comprehensive (loss)/income
for period (5,375,376) (1,320,615) 11,008,416
============ ============ ============
Basic (loss)/earnings per Share $(0.05) $(0.01) $0.12
The accompanying notes are an integral part of the interim
report
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
30 June 30 June 31 December
2013 2012 2012
ASSETS Notes $ $ $
Non-current assets
Investment properties 4 100,097,500 86,725,500 104,507,500
100,097,500 86,725,500 104,507,500
Current Assets
Trade and other
receivables 622,022 2,450,715 460,318
Cash and cash equivalents 2,117,637 2,807,925 1,649,230
------------ ------------ ------------
2,739,659 5,258,640 2,109,548
Total assets 102,837,159 91,984,140 106,617,048
============ ============ ============
EQUITY
Capital and reserves attributable to equity
holders
Ordinary Shares 960,965 891,415 891,415
Share premium account 90,768,492 88,159,322 88,159,322
Retained earnings 1,282,734 (5,861,526) 7,092,803
Foreign exchange
reserve 3,375,559 3,566,164 2,940,866
Total equity 96,387,750 86,755,375 99,084,406
------------ ------------ ------------
LIABILITIES
Non Current Liabilities
Deferred tax liability 3 4,927,288 3,066,665 5,651,605
Trade and other
payables 1,353,871 1,057,596 -
------------ ------------ ------------
6,281,159 4,124,261 5,651,605
------------ ------------ ------------
Current Liabilities
Trade and other
payables 168,250 1,104,504 1,881,037
------------ ------------ ------------
168,250 1,104,504 1,881,037
------------ ------------ ------------
Total liabilities 6,449,409 5,228,765 7,532,642
Total equity and
liabilities 102,837,159 91,984,140 106,617,048
============ ============ ============
The accompanying notes are an integral part of the interim
report
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
Share Foreign
Ordinary premium Retained exchange
Shares account earnings reserve Total
$ $ $ $ $
Balance at 1 January
2012 850,965 86,177,272 (3,805,994) 2,831,247 86,053,490
Treasury shares 40,450 1,982,050 - - 2,022,500
Net (loss) for the
period - - (2,055,532) - (2,055,532)
Foreign exchange
reserve - - - 734,917 734,917
Balance at 30 June
2012 891,415 88,159,322 (5,861,526) 3,566,164 86,755,375
--------- ----------- ------------ ---------- ------------
Balance at 1 July
2012 891,415 88,159,322 (5,861,526) 3,566,164 86,755,375
Net profit for the
period - - 12,954,329 - 12,954,329
Foreign exchange
reserve - - - (625,298) (625,298)
Balance at 31 December
2012 891,415 88,159,322 7,092,803 2,940,866 99,084,406
--------- ----------- ------------ ---------- ------------
Balance at 1 January
2013 891,415 88,159,322 7,092,803 2,940,866 99,084,406
Treasury shares 69,550 2,712,370 - - 2,781,920
Issuance costs - (103,200) - - (103,200)
Net (loss) for the
period - - (5,810,069) - (5,810,069)
Foreign exchange
reserve - - - 434,693 434,693
Balance at 30 June
2013 960,965 90,768,492 1,282,734 3,375,559 96,387,750
--------- ----------- ------------ ---------- ------------
The accompanying notes are an integral part of the interim
report
UNAUDITED CONDENSED CONSOLIDATED CASH FLOW STATEMENT
6 months 6 months Year ended
to to 31
30 June 30 June December
2013 2012 2012
$ $ $
Operating activities
Net (loss)/profit for the period (5,810,069) (2,055,532) 10,898,797
Revaluation of investment properties 4,828,779 730,065 (16,502,866)
(Increase)/decrease in receivables (161,704) (2,010,500) (20,103)
(Decrease) in payables (358,916) (918,400) (1,199,463)
Foreign exchange 434,693 734,917 109,619
Deferred taxation (724,317) (109,510) 2,475,430
------------ -------------
Net cash (used) in operating activities (1,791,534) (3,628,960) (4,238,587)
Cashflows from investing activities
Increase in investment properties (418,779) (352,065) (901,134)
Net cash outflow from investing
activities (418,779) (352,065) (901,134)
------------ ------------ -------------
Cash flows from financing activities
Issue of treasury shares 2,678,720 2,022,500 2,022,500
Net cash inflow from financing activities 2,678,720 2,022,500 2,022,500
Net (decrease) in cash and cash
equivalents 468,407 (1,958,525) (3,117,221)
Cash and cash equivalents at the
start of the period 1,649,230 4,766,450 4,766,450
Cash and cash equivalents at the
end of the period 2,117,637 2,807,925 1,649,230
============ ============ =============
The accompanying notes are an integral part of the interim
report
NOTES TO THE FINANCIAL STATEMENTS
1. General information
The Company is a limited liability closed-end real estate
investment company, incorporated on 27 April 2006 in the British
Virgin Islands (BVI). The Company is a real estate investment
company focused on master planned residential resorts in Brazil and
managed by Itacaré Capital Partners Ltd. ("ICP" or the "Investment
Manager").
The shares of the Company were admitted to the Alternative
Investment Market ("AIM") of the London Stock Exchange on 30 May
2007. The consolidated financial statements for the half-year to 30
June 2013, comprise the Company and its subsidiaries (together
referred to as the "Group").
This unaudited condensed consolidated interim report does not
constitute statutory accounts. The financial information for the
year ended 31 December 2012 has been extracted from the statutory
accounts for that year, which are available on the Group's website
www.itacarecapital.com. The auditor's report on those financial
statements was unqualified.
2. Accounting policies
2.1 Basis of preparation
The unaudited condensed consolidated interim report for the six
months ended 30 June 2013 has been prepared using accounting
policies consistent with International Financial Reporting
Standards ("IFRSs") as adopted by the European Union. The unaudited
condensed consolidated interim report should be read in conjunction
with the annual financial statements for the year ended 31 December
2012, which were prepared in accordance with IFRSs as adopted by
the European Union.
2.2 Joint Ventures
The following amounts represent the Group's 50% share of the
assets and liabilities, and results of joint ventures. They are
proportionately included in the balance sheet and income
statement.
Duas Barras BB Trancoso
Ltd Ltd
6 months Year ended 6 months Year ended
ended ended
Jun Dec Jun Dec
2013 2012 2013 2012
Assets
Long-term assets 19,829,000 21,460,000 33,554,106 34,394,700
Current assets 249,970 341,529 210,495 262,648
20,078,970 21,801,529 33,764,601 34,657,348
----------- ------------ ----------- ------------
Liabilities
Long-term liabilities - - 1,053,871 1,057,597
Current liabilities 9,950 19,206 9,819 62,105
9,950 19,206 1,063,690 1,119,702
----------- ------------ ----------- ------------
Net assets 20,069,020 21,782,323 32,700,911 33,537,646
----------- ------------ ----------- ------------
Income 1,203 3,450 1,115 6,068
Expenses (50,014) (110,756) (99,197) (75,370)
Loss after income tax (48,811) (107,306) (98,082) (69,302)
----------- ------------ ----------- ------------
There are no contingent liabilities relating to the Group's
interest in the joint ventures (Dec 2012:nil).
There are no contingent liabilities of the ventures themselves
(Dec 2012:nil).
3. Deferred Taxation
As a company incorporated under the BVI International Business
Companies Act (Cap. 291), the Company is exempt from taxes on
profit, income or dividends. Each company incorporated in BVI is
required to pay an annual government fee, which is determined by
reference to the amount of the Company's authorised share
capital.
The deferred tax provision for the Brazilian subsidiaries is
based on the capital gains tax rate, which is 15%. At the Company
level such tax liability is likely to be reduced depending on,
among other things, the tax domicile of the vehicle being sold
and/or the acquirer.
In accordance with IAS 12 Income Taxes a full provision has been
made for the 15% liability that would arise if the Company were to
sell its interest in the Brazilian property directly instead.
Deferred
tax
liability
$
Balance at 1 January 2012 3,176,175
Charge in the income statement 2,475,430
Balance as at 31 December 2012 5,651,605
==========
Balance at 1 January 2013 5,651,605
Credit in the income statement (724,317)
Balance as at 30 June 2013 4,927,288
==========
Deferred tax liability is attributable to the
following:
Revaluation of investment property 4,927,288
Total 4,927,288
==========
4. Investment Properties
Tres Bahia Duas
Praias Beach Barras Havaizinho Warapuru Total
$ $ $ $ $ $
At beginning
of period 41,533,000 34,389,500 21,460,000 5,125,000 2,000,000 104,507,500
Additions in
period - 360,529 250 58,000 - 418,779
------------ ------------ ------------ ----------- ----------
41,533,000 34,750,029 21,460,250 5,183,000 2,000,000 104,926,279
Fair value
adjustment (1,662,000) (1,200,529) (1,631,250) (335,000) - (4,828,779)
At end of period 39,871,000 33,549,500 19,829,000 4,848,000 2,000,000 100,097,500
============ ============ ============ =========== ========== ============
The Directors appointed C&W, an internationally recognised
firm of surveyors to conduct a valuation of the Company's acquired
sites to determine their fair asset value as at 30 June 2013. These
valuations were prepared in accordance with generally accepted
appraisal standards, as set out by the American Society of
Appraisers (the "ASA"), and in conformity with the Uniform
Standards of Professional Appraisal Practice of the Appraisal
Foundation and the Principles of Appraisal Practice and Code of
Ethics of the ASA and RICS (the "Royal Institute of Chartered
Surveyors").
The analysis of market value of the properties is based on all
the pertinent factors that relate both to the real estate market
and, more specifically, to the subject properties. The valuation
analysis of the properties used three approaches: the comparison
approach, the residual value approach and a liquidated sale
approach. The comparison approach is based on the premise that
persons in the marketplace buy by comparison. It involves acquiring
market sales/offerings data on properties similar to the subject
property. The prices of the comparables are then adjusted for any
dissimilar characteristics as compared to the subject's
characteristics. Once the sales prices are adjusted, they can be
reconciled to estimate the market value of the subject property.
The residual value approach is an assessment of the value of a
scheme as completed and deduction of the costs of development
(including developer's profit) to arrive at the underlying land
value. The liquidated sale approach is used where the investment
has not performed as expected. Under this approach, special
assumptions are made whereby the liquidated value is determined in
a similar manner to the direct sales or residual approach but with
a discount factor to reflect the fact that the interest that is
being valued is subject to special circumstances and cannot be
offered freely and openly in the market.
Each of the above-mentioned techniques results in a separate
valuation indication for the subject property. Unless the
liquidation approach has been used, a reconciliation process is
performed to weigh the merits and limiting conditions of the first
two approaches. Once this is accomplished, a value conclusion is
reached by placing primary weight on the technique, or techniques,
that are considered to be the most reliable, given all factors.
In relation to Warapuru, the Board has chosen not to adopt
C&W's valuation but has included $2 million for the valuation
as at June 2013.
5. Net asset value per share
The net asset value per share and the net asset values
attributable to ordinary shares at the period end are calculated in
accordance with their entitlements in the Articles of Association
and were:
Net asset value per Net asset value
share attributable attributable
30 June 30 June 31 Dec 30 June 30 June 31 Dec
2013 2012 2012 2013 2012 2012
Unaudited Unaudited Audited Unaudited Unaudited Audited
$ $ $ $'000 $'000 $'000
Basic 1.00 0.98 1.11 96,387 86,755 99,084
Diluted 1.00 0.98 0.95 96,387 86,755 85,057
Diluted
excluding
deferred
tax liability 1.05 1.01 1.17 101,315 89,821 104,736
Basic and diluted net asset value per share is based on net
assets at the June 2013 period end, and on 960,965 (2012: 894,415)
ordinary shares, being the respective number of shares in issue at
the period end.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGUCGBUPWGRU
Itacare Capital (LSE:ITA)
Gráfico Histórico do Ativo
De Mai 2024 até Jun 2024
Itacare Capital (LSE:ITA)
Gráfico Histórico do Ativo
De Jun 2023 até Jun 2024
