ASSET RESOLUTION LIMITED
DIRECTORS’ REPORT (CONTINUED) FOR THE YEAR ENDED 30 JUNE 2017
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Operating and financial review
Review of current period operations During the year the Company’s losses amounted to $326,132 (2016 losses: $2,052,587). The decrease in losses is primarily due: lower head office expenses $570,225 compared to $1,121,738 in the prior year; lower impairment costs of $(5,760) compared to $1,543,328 in respect of the Forest Resort asset sale in the prior year;
The head office costs of ARL have been significantly reduced for the second consecutive year. The $551,513 (2016: $1,045,329) decreases is primarily due to: Directors’ fees have decreased by a further $23,720 (2016 decreased by $126,521); accounting and administrative fees have decreased by a further $143,556 (2016 decreased by $469,443); legal fees have decreased by further $112,593 (2016 decreased by $266,219); share registry fees have decreased by a further $70,791 (2016 decreased by $136,900): insurance costs have decreased by $242,783 majority of which related to run off insurance acquired in September 2015 by the previous board (2016 increased by $20,499); audit fees have decreased by a further $14,518 (2016 decreased by $35,652); offset by higher listing fees of $78,132 (2016 increased by $47,268).
ARL currently manages the following portfolio:
a) Mortgage loan issued during the year amounting to $3,250,000.
b) Distressed Debt due fromOctaviar Limited (formerly MFS Limited) and OctaviarAdministration Pty Ltd (formerly MFS Administration Pty Ltd):
Octaviar Limited and Octaviar Administration Pty both have substantial amounts of cash and other assets that are potentially available to creditors, however there are legal disputes about the status of some creditors of each company. The Board understand that both companies have spent substantial amounts on liquidators’ and legal fees, and it is possible that further substantial amounts could be spent before the companies are wound up and any remaining funds distributed.
For these reasons, it is impossible to forecast with confidence how much, if anything, ARL might be in a position to recover from these assets, nor is it possible to forecast when ARL might receive any money from them, if at all. Accordingly, the Directors have resolved to continue showing the Octaviar Debts at a zero value in ARL’s accounts, even though it is possible that ARL may recover some money from these Distressed Debts in the future.
c) Other corporate assets:
1,334,840 (2016: 1,794,840) shares in Raptis Group Ltd, a property and investment company; received in settlement of an earlier claim. The most recent accounts of Raptis Group Ltd show that it has Net Asset Value of about $0.098 per share (as at 31 December 2016) and recent share price of $0.06 per share. This holding is currently shown in ARL's accounts at zero. During the year 460,000 of shares were sold for $29,720 (2016: $nil).
Significant changes in state of affairs
During the year there were no significant changes to the state of affairs of the Company except as mentioned in this financial report.
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