Kenmore European Industrial Fund Limited - Hemscott IR

More documents

Recommendations

Info

26 Kenmore European Industrial Fund Limited Report and Accounts 2007 Notes to the Accounts As at 3 December 2007 . Taxation – continued A reconciliation of the current income tax charge applicable to the results at the statutory income tax rate to the charge for the period is as follows: 2007 2006 Company Group Company Group £’000 £’000 £’000 £’000 Net profit/(loss) before taxation (1,015) 11,423 1,139 7,701 Income tax at following – 4,193 – 2,460 applicable tax rates 0% 36.71% 0% 31.94% Effects of: Tax exempt income – (567) – (56) Non-deductible expenses – 1,954 – 12 Losses not utilised – 2,192 – 100 Other timing differences – 470 – 288 Overprovided in prior periods – (251) – – Total tax charge – 7, – 2,804 The group applicable income tax rate represents a blended rate across the tax jurisdictions in which the group operates. The Company is exempt from Guernsey taxation on dividend income derived outside Guernsey under the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989. A fixed annual fee of £600 is payable to the States of Guernsey in respect of this exemption. The Directors intend to conduct the Company’s affairs such that the management and control is not exercised in the United Kingdom and so that the Company does not carry on any trade in the United Kingdom. Accordingly, the Company will not be liable for United Kingdom taxation on its income or gains other than certain income deriving from a United Kingdom source. The Company’s subsidiaries are subject to local income tax on income arising on the property portfolio after deduction of its allowable debt financing costs and other allowable expenses, dependent upon the residence of each subsidiary. As noted in accounting policy note 1(h), deferred income tax is not recognised on temporary differences at the time of initial recognition arising from transactions treated as asset acquisitions. This policy is different from that used in the pro-forma financial information contained in the prospectus dated 8 September 2006 which recognised deferred tax on such differences on the balance sheet in order to calculate net assets per share. 6. Dividends During the year, the Company paid interim dividends amounting to 4.5 pence per share – a total of £6,300,000 (25 April 2007 – 1.5 pence totalling £2,100,000; 26 September 2007 – 3.0 pence totalling £4,200,000). An interim dividend of 3.0 pence per share, totalling £4,200,000 will be paid on 25 April 2008 to shareholders on the register on 11 April 2008. Although this payment relates to the year ended 31 December 2007, under International Financial Reporting Standards it will be accounted for in the year ending 31 December 2008, being the year during which it becomes unconditionally payable. 7. Earnings per share The earnings per Ordinary Share are based on the net profit for the year of £3,432,000 and on 140,000,000 Ordinary Shares, being the weighted average number of shares in issue during the year. The diluted earnings per Ordinary Share are based on the net profit for the year of £3,432,000 and on 142,563,936 Ordinary Shares, being the weighted average number of shares in issue during the year plus the potential dilutive ordinary shares that may be issued in respect of the performance fee (see note 2(a)).
27 Kenmore European Industrial Fund Limited Report and Accounts 2007 8. Investment properties 2007 2006 Company Group Company Group £’000 £’000 £’000 £’000 Freehold and leasehold properties Balance at start – 283,010 – – Acquisitions – 86,953 – 275,950 Development costs – 1,893 – 2,258 Disposals – (1,179) – – Reclassification – – – (270) Change in fair value – 15,111 – 5,072 Foreign exchange movements – 28,958 – – Balance at end – 4 4,746 – 283,0 0 CB Richard Ellis Ltd, who have appropriate professional qualifications and recent experience in the location and category of the property being valued, completed a valuation of Group investment properties at 31 December 2007 on an open market basis in accordance with the requirements of the Appraisal and Valuation Manual published by the Royal Institution of Chartered Surveyors, which is deemed to equate to fair value. Fair value is determined by reference to market based evidence, which is the amounts for which the assets could be exchanged between a knowledgeable, willing buyer and a knowledgeable, willing seller in an arm’s length transaction as at the valuation date. The market value of these investment properties amounted to £428,826,000. On the acquisition of certain properties, the Group negotiated a purchase price adjustment for contingent deferred tax. The aggregate amount of such adjustments obtained to 31 December 2007 was £14,080,000. It is assumed that in the case of a future sale, any prospective buyer would seek a similar adjustment and so the closing valuation has been reduced to reflect this. Included within the above is one leasehold, or the local legal equivalent, property with a closing market valuation of £5,963,000. The Group has adopted IAS 40, allowing leasehold properties to be carried at fair value rather than amortised over the term of the lease. The same valuation criteria are therefore applied to leasehold as freehold properties. The property valuer is independent and external to the Group. The property valuer takes account of deleterious materials included in the construction of the investment properties in arriving at its estimate of open market valuation, when the Investment Managers advise the presence of such materials. The Group has entered into leases on its property portfolio as lessor (see note 19 for further information). No one property accounts for more than 15 per cent of the gross assets of the Group. The only leasehold property which the Group holds as lessee has more than 30 years remaining on the lease term. There are no restrictions on the realisability of the Group’s investment properties or on the remittance of income or proceeds of disposal. However, the Group’s investments comprise European commercial property, which may be difficult to realise as described in Liquidity risk, note 17. The majority of leases are on a full repairing basis and as such the Group is not liable for costs in respect of repairs, maintenance or enhancements to its investment properties.
Page 1 and 2: Kenmore European Industrial Fund Li
Page 3 and 4: 0 Kenmore European Industrial Fund
Page 27: 2 Kenmore European Industrial Fund
Page 39 and 40: FSC logo This document is printed o

Kenmore European Industrial Fund Limited - Hemscott IR

Create successful ePaper yourself

Delete template?

Save as template?