TIDMEIH
RNS Number : 2391C
EIH PLC
28 September 2018
EIH PLC
("EIH" or the "Company")
Interim Results
The Company announces its interim results for the six months
from 1 January 2018 to 30 June 2018. A copy of this announcement
will shortly be available for inspection at www.eihplc.co.uk.
Chairman's Statement
The Company made a loss of US$3.3m for the six month period to
30 June 2018 (six month period to 30 June 2017: profit US$0.6m),
and therefore the loss per share for the six month period to 30
June 2018 was 5.08 cents (six month period to 30 June 2017:
earnings per share 0.92 cents). The reason for the loss generated
in the current period is mainly due to the US$2.5m decrease in fair
value of the Company's investment in Evolvence India Fund PCC.
The unaudited net assets of the Company as at 30 June 2018 were
valued at US$19.9m and therefore net asset value ("NAV") per share
at that date was 30.8 cents based on 64,500,002 ordinary shares in
issue (31 December 2017 NAV per share: 38.4 cents).
During the period under review, on 27 April 2018, the Company
made a capital distribution of 2.5 cents per share to shareholders
of the Company registered as at 20 April 2018, equivalent to
approximately US$1.61m.
After the period under review, on 26 July 2018, the Company made
a capital distribution of 1.5 cents per share to shareholders of
the Company registered as at 20 July 2018, equivalent to
approximately US$0.97m.
The Directors are pleased to announce that the Company has
entered into an agreement for the sale of its shareholding in RSB,
held through EIF Co Invest VII. Should the agreement be completed,
and through the unwinding of EIF Co Invest VII, the Company will
receive approximately US$4.95m (calculated on the assumption of a
final US$ conversion rate of 73 Indian Rupees (INR) to the Dollar,
being the current exchange rate), which is approximately 10% below
the carrying value at 31 December 2017. However, as the
consideration was negotiated in INR, and the INR has declined by
13.4% since 31 December 2017, the sale consideration represents a
premium to that carrying value of 4.0% on a constant currency
basis.
While the NAV per share decreased by 19.8% in the period under
review, after adjusting for the capital distribution of 2.5 cents
per share made in April 2018, the Company's NAV decreased by 13.3%
in the period. It is noted that the INR weakened by 6.8% in value
against the US Dollar during the period in review.
Total operating costs during the period were US$0.20m, or 12.8%
below the comparable prior year figure. In addition, the Company
paid certain annual management fees and expenses to Evolvence India
Fund PCC ("EIF") in respect of its commitments. These costs are
embedded in the capital account of EIF and do not appear in the
Company's statement of comprehensive income.
The Company's investment portfolio comprises the following
(based on unaudited values as at 30 June 2018):
Table 1. Investments Capital Commitment Capital Invested Capital Fair value Fair Value
Distribution Adjustment
--------------------- ------------------- ----------------- -------------------- -------------------- -----------
US$'000 US$'000 US$'000 US$'000 US$'000
Fund Investments
(equity)
Evolvence India Fund
PCC 45,120 45,120 (30,133) (1,393) 13,594
Direct Investments
(equity)
EIF Co Invest VII
(RSB Group) 6,970 6,970 (29) (1,987) 4,954
52,090 52,090 (30,162) (3,380) 18,548
--------------------- ------------------- ----------------- -------------------- -------------------- -----------
Further details on the Company's investment portfolio are set
out below and in Note 5 to the interim financial statements.
EIF
As at 30 June 2018 the Company had US$15.0m invested in EIF
(capital called less refund capital contributions), equivalent to
23.2 cents per share. At the reporting date the Fair Value
(unaudited) of the Company's investment in EIF was US$13.6m,
equivalent to 21.1 cents per share, representing a 0.91 x multiple
over cost. EIF is now fully drawn down.
In local currency terms, the S&P BSE SENSEX Indian stock
market index advanced by 4.0% during the period in review. As noted
above the INR weakened by 6.8% in value against the US Dollar
during the period in review.
Against this backdrop EIF's underlying private equity funds
underperformed such that on the basis of beginning and end period
values, and adjusting for drawdowns and distributions made during
the period, the fair value of EIF's underlying funds decreased by
approximately 12.4% in US Dollar terms, while their value decreased
by approximately 6.0% in INR terms. On the same basis of
measurement, the value of EIF's direct investments decreased by
approximately 13.9% in US Dollar terms, while in INR terms a
decrease of approximately 7.6% was experienced.
EIF's private equity fund exposure is weighted towards funds
with vintages of 2006 and later. The three funds of these vintages,
EIF's three largest funds, comprise 72.3% of EIF's private equity
fund weighting. The remaining six funds, with a 27.7% weighting,
are all 2004 and 2005 vintages. EIF's three largest funds are Jacob
Ballas India Fund III (Growth / PIPE category), JMF India Fund I
(Growth category) and HI-REF International LLC (Real Estate
category). The majority of EIF's nine underlying private equity
funds have fully drawn down their committed capital from EIF, and
EIF's remaining commitments are concentrated in one fund, HI-REF
International LLC Fund. During the period under review, EIF exited
one fund in the secondary market.
The Directors have reviewed certain underlying financial
information provided to us by EIF's Investment Manager and we
remain confident that as EIF's underlying portfolio matures and
further realisations are achieved, further cash distributions will
be received by the Company.
RSB Group ("RSB")
RSB is a large automotive components group based in Pune with a
multi-product portfolio comprising of propeller shafts, gears,
axles, machined engine components, trailers and construction
equipment parts. The Company's direct investment in RSB is held
through EIF Co Invest VII. The shareholders in EIF Co Invest VII
are the Company and EIF, which invested US$7.0m and US$10.0m
respectively, for a total investment of US$17.0m. No fees are
payable on the Company's investment in EIF Co Invest VII, while the
Company's indirect investment in RSB (through its interest in EIF)
attracts standard management and carried interest fee
arrangements.
Through the above arrangements, and on a look-through basis, the
fair value of the Company's total interest in RSB is 9.9 cents per
share; while the fair value of the Company's direct interest in RSB
(held through EIF Co Invest VII) is 7.7 cents per share. The Fair
Value of the Company's interest in RSB is based on a valuation
performed by EIF's investment manager.
Table 2. Investments (Fair Values) As per LP reports RSB Pro-forma
(EIF)
------------------------------------ ------------------ -------- ----------
US$'000 US$'000 US$'000
Fund Investments
EIF (PE funds) 7,754 7,754
EIF (direct investments) 5,606 (1,421) 4,185
EIF (other) 234 234
Direct Investments
RSB Group 4,954 1,421 6,375
18,548 - 18,548
------------------------------------ ------------------ -------- ----------
Table 2 extracts the Company's "look through" interest in RSB
(from EIF) and adds it to the Company's direct interest in RSB
(held by EIF Co Invest VII). On this basis, 34.4% of the Company's
Financial Assets at Fair Value (US$6.4m, equivalent to 9.9 cents
per share), is accounted for by its interest in RSB on an
underlying pro-forma basis.
Table 2 further shows that 41.8% of the Company's Financial
Assets at Fair Value is accounted for by its interests in EIF's
nine PE fund investments, and a further 22.6% by its interests in
EIF's direct investments (excluding RSB).
Other matters
At the date of signing this report, the Company holds US$0.85m
in net cash balances, equivalent to 1.31 cents per share.
As a Board we will continue to manage operating costs carefully.
Our objective remains to realise assets at the appropriate time and
value, and to return the proceeds, less expenses, to our
shareholders.
On behalf of the Board of Directors, I thank all Shareholders
for their support.
Faithfully yours,
Rhys Davies
27 September 2018
For further information, please contact:
EIH PLC
Rhys Davies
Tel: +41 (0) 79 620 0215
Nplus1 Singer Advisory LLP (Nominated Adviser)
James Maxwell / George Tzimas
+44 (0)20 7496 3000
EIH PLC
UNAUDITED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2018
For the period For the period
from 1 January from 1 January
2018 to 2017 to
30 June 2018 30 June 2017
Note US$'000 US$'000
------------------------------------------ ------ ---------------- ----------------
Income
Interest income on cash balances - 1
Loss on disposal of investments
at fair value through profit
or loss - (4)
Fair value movement on investments
at fair value through profit
or loss 5 (3,077) 824
Net investment (expenditure)/income (3,077) 821
------------------------------------------ ------ ---------------- ----------------
Expenses
Administrative expenses (110) (103)
Legal and other professional
fees (70) (100)
Audit fees (20) (22)
Other income/expenses 2 (2)
Total operating expenses (198) (227)
------------------------------------------ ------ ---------------- ----------------
(Loss)/profit before taxation
for the period (3,275) 594
Income tax expense - -
(Loss)/profit after taxation
for the period (3,275) 594
------------------------------------------ ------ ---------------- ----------------
Other comprehensive income - -
------------------------------------------ ------ ---------------- ----------------
Total comprehensive (expenditure)/income
for the period (3,275) 594
------------------------------------------ ------ ---------------- ----------------
Basic and fully diluted (loss)/earnings
per share (US cents) 6 (5.08) 0.92
------------------------------------------ ------ ---------------- ----------------
The accompanying notes form an integral part of these interim
financial statements.
EIH PLC
UNAUDITED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2018
As at 30 June As at 31 December
2018 2017
Note US$'000 US$'000
------------------------------ ----- -------------- ------------------
Non-current assets
Financial assets at fair
value through profit or
loss 5 18,548 24,065
------------------------------- ----- -------------- ------------------
Total non-current assets 18,548 24,065
------------------------------- ----- -------------- ------------------
Current assets
Trade and other receivables 30 29
Cash and cash equivalents 1,419 748
------------------------------- ----- -------------- ------------------
Total current assets 1,449 777
------------------------------- ----- -------------- ------------------
Total assets 19,997 24,842
=============================== ===== ============== ==================
Equity
Issued share capital 1,265 1,265
Share premium 19,822 21,435
Retained earnings (1,201) 2,074
------------------------------- ----- -------------- ------------------
Total equity 19,886 24,774
------------------------------- ----- -------------- ------------------
Current liabilities
Trade and other payables 111 68
Total current liabilities 111 68
------------------------------- ----- -------------- ------------------
Total liabilities 111 68
------------------------------- ----- -------------- ------------------
Total equity and liabilities 19,997 24,842
=============================== ===== ============== ==================
The accompanying notes form an integral part of these interim
financial statements.
EIH PLC
UNAUDITED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2018
Share capital Share Retained Total
premium earnings
US$'000 US$'000 US$'000 US$'000
------------------------ -------------- --------- ---------- ---------
Balance at 1 January
2017 1,265 24,982 1,667 27,914
Total comprehensive
income
Profit for the period - - 594 594
Transactions with
owners of the company
recorded directly
in equity
Return of capital - (2,580) - (2,580)
Balance at 30 June
2017 1,265 22,402 2,261 25,928
------------------------ -------------- --------- ---------- ---------
Balance at 1 January
2018 1,265 21,435 2,074 24,774
Total comprehensive
income
Loss for the period - - (3,275) (3,275)
Transactions with
owners of the company
recorded directly
in equity
Return of capital - (1,613) - (1,613)
Balance at 30 June
2018 1,265 19,822 (1,201) 19,886
------------------------ -------------- --------- ---------- ---------
The accompanying notes form an integral part of these interim
financial statements.
EIH PLC
UNAUDITED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS TO 30 JUNE 2018
For the period For the period
from from
1 January 1 January
2018 to 2017 to
30 June 2018 30 June 2017
Note US$'000 US$'000
Cash flows from operating activities
(Loss)/profit before taxation (3,275) 594
Adjustments:
Loss on disposal of investments
at fair value through profit
or loss - 4
Fair value movement on investments
at fair value through profit
or loss 5 3,077 (824)
Interest income on cash balances - (1)
Operating loss before working
capital changes (198) (227)
Increase in trade and other receivables (1) (19)
Increase in trade and other payables 43 12
----------------------------------------- ----- ----------------- -----------------
Net cash used in operations (156) (234)
Net cash used in operating activities (156) (234)
----------------------------------------- ----- ----------------- -----------------
Cash flows from investing activities
Interest income on cash balances - 1
Proceeds from disposal of investment - 1,352
Capital distribution received 5 2,440 1,355
Net cash generated by investing
activities 2,440 2,708
----------------------------------------- ----- ----------------- -----------------
Cash flows from financing activities
Return of capital (1,613) (2,580)
----------------------------------------- ----- ----------------- -----------------
Net cash used in financing activities (1,613) (2,580)
----------------------------------------- ----- ----------------- -----------------
Net increase/(decrease) in cash
and cash equivalents 671 (106)
Cash and cash equivalents at
1 January 748 1,314
----------------------------------------- ----- ----------------- -----------------
Cash and cash equivalents at
30 June 1,419 1,208
========================================= ===== ================= =================
The accompanying notes form an integral part of these interim
financial statements.
Notes to the Unaudited Interim Results
For the six months ended 30 June 2018
1 The Company
EIH PLC (formerly Evolvence India Holdings plc) was incorporated
and registered in the Isle of Man under the Isle of Man Companies
Act 1931-2004 on 10 November 2006 as a public company with
registration number 118297C. On 28 March 2011 the Company
re-registered under the Isle of Man Companies Act 2006 with
registration number 006738V.
Pursuant to a prospectus dated 19 March 2007 there was a placing
of up to 65,000,000 Ordinary Shares of GBP0.01 each. The number of
Ordinary Shares in issue immediately following the placing was
65,000,002. The shares of the Company were admitted to trading on
the Alternative Investment Market of the London Stock Exchange
("AIM") following the close of the placing on 23 March 2007. The
Company purchased 500,000 of its own shares for US$0.60 each on 30
September 2011.
The Company's agents perform all significant functions.
Accordingly, the Company itself has no employees.
2 Duration
The Company currently does not have a fixed life but the Board
considers it desirable that Shareholders should have the
opportunity to review the future of the Company at appropriate
intervals. Accordingly, at the annual general meeting of the
Company in 2021 a resolution will be proposed that the Company
ceases to continue as presently constituted. Shareholders holding
at least fifty one per cent of the shares must vote in favour of
this resolution for it to be passed. If the resolution is not
passed, a similar resolution will be proposed at every third annual
general meeting of the Company thereafter. If the resolution is
passed, the Directors will be required, within 3 months of the
resolution, to formulate proposals to be put to Shareholders to
reorganise, unitise or reconstruct the Company or for the Company
to be wound up.
3 Significant accounting policies
The principal accounting policies adopted in the preparation of
the financial statements are set out below.
3.1 Basis of presentation
These interim financial statements have been prepared in
accordance with International Financial Reporting Standard (IFRS)
IAS 34: Interim Financial Reporting. They do not include all of the
information required for full annual financial statements and
should be read in conjunction with the financial statements of the
Company for the year ended 31 December 2017. The interim financial
statements are unaudited.
The accounting policies adopted in the preparation of the
interim consolidated financial statements are consistent with those
followed in the preparation of the Company's annual financial
statements for the year ended 31 December 2017.
IFRS9, Financial Instruments, has been applied as from its
effective date of 1 January 2018. This has not resulted in any
changes to the measurement, classification or presentation of
financial instruments.
3.2 Investments at fair value through profit or loss
Investments are designated as financial assets at fair value
through profit or loss. They are measured at fair value with gains
and losses recognised through profit or loss.
The Company's investments at fair value through profit and loss
comprise funds and co-investment vehicles, where fair value is
estimated by the Directors to be the Company's share of net asset
value per latest financial results reported by the underlying fund
administrator.
3.3 Segment reporting
The Company has one segment focusing on maximising total returns
through investing in an Indian private equity portfolio of
investments. No additional disclosure is included in relation to
segment reporting, as the Company's activities are limited to one
business and geographic segment.
4 Net asset value per share
The unaudited net asset value per share as at 30 June 2018 is
30.8 cents per share based on 64,500,002 ordinary shares in issue
as at that date (31 December 2017: 38.4 cents per share based on
64,500,002 ordinary shares).
5 Financial assets at fair value through profit or loss
The objective of the Company is to make indirect investments in
Indian private equity funds and companies via Mauritian based
investment funds and to also co-invest directly in certain
portfolio companies of the underlying funds. As at 30 June 2018,
the investment portfolio comprised the following assets:
Investments Capital Commitment Capital Invested Capital Fair value Fair Value
(Unlisted) Distribution Adjustment
--------------------- ------------------- ----------------- -------------------- -------------------- -----------
US$'000 US$'000 US$'000 US$'000 US$'000
Fund Investments
(equity)
Evolvence India Fund
PCC 45,120 45,120 (30,133) (1,393) 13,594
Direct Investments
(equity)
EIF Co Invest VII
(RSB Group) 6,970 6,970 (29) (1,987) 4,954
52,090 52,090 (30,162) (3,380) 18,548
--------------------- ------------------- ----------------- -------------------- -------------------- -----------
The fair value of the Company's investments has been estimated
by the Directors with advice from Evolvence India Advisors Inc. The
movement in investments during the period was as follows:
31 December
30 June 2018 2017
US$'000 US$'000
Fair value brought forward 24,065 26,645
Disposal proceeds of investments
at fair value - (1,352)
Loss on disposal of investments at
fair value through profit and loss - (4)
Capital distributions (2,440) (2,078)
Movement in fair value (3,077) 854
Fair value at period/year end 18,548 24,065
-------------------------------------- ------------- ------------
The outstanding capital commitments as at 30 June 2018 were
US$nil (31 December 2017: US$nil).
Evolvence India Fund PCC (EIF)
Evolvence India Fund PCC, a Protected Cell Company formed under
the laws of Mauritius having limited liability, is a private equity
fund of funds with a co-investment pool, focusing primarily on
investments in India. The fund size of EIF is US$250m, of which
approximately two-thirds have been invested in different private
equity funds (including growth capital, mezzanine and real estate
funds) with significant focus on India, and the balance has been
invested in co-investment opportunities, primarily in Indian
companies or companies with significant operations in India. The
fund investments of EIF are Baring India Private Equity Fund II,
IDFC Private Equity Fund II, India Value Fund II (Formerly GW
Capital), Leverage India Fund, New York Life Investment Management
India Fund II, Ascent India Fund, JM Financial India Fund I, HI-REF
International LLC Fund and NYLIM Jacob Ballas India Fund III.
Valuation basis
The fair value of the investment in EIF is based on the
Company's share of the net assets of EIF at 30 June 2018 per its
results as reported by the underlying fund administrator. The
financial statements of EIF are prepared under IFRS, with all
investments stated at fair value. The valuation of the investment
portfolio of EIF has been performed by its investment manager at 30
June 2018. The investment portfolio comprises investments in
private equity funds, where fair value is based on reported net
asset values, and co-investments in private companies where fair
values are based on valuation techniques.
EIF Co Invest VII
The Company has invested US$7m in RSB Group through a Special
Purpose Vehicle (SPV), EIF Co Invest VII. RSB Group is a leading
manufacturer of automotive components and construction aggregates.
The fair value of the investment in Co Invest VII is based on the
Company's share of the net assets of Co Invest VII at 30 June 2018
per its financial results as reported by the underlying fund
administrator. The financial statements of EIF Co Invest VII are
prepared under IFRS, with all investments stated at fair value.
The Company has entered into an agreement for the sale of its
shareholding in RSB, held through EIF Co Invest VII. Should the
agreement be completed, and through the unwinding of EIF Co Invest
VII, the Company will receive approximately US$4.95m (calculated on
the assumption of a final US$ conversion rate of 73 Indian Rupees
(INR) to the Dollar, being the current exchange rate), which is
approximately 10% below the carrying value at 31 December 2017.
However, as the consideration was negotiated in INR, and the INR
has declined by 13.4% since 13 December 2017, the sale
consideration represents a premium to that carrying value of 4.0%
on a constant currency basis.
EIF Co Invest X
The Company held its interest in Gland Pharma Limited through an
SPV, EIF Co Invest X. EIF Co Invest X sold its interest in Gland
Pharma Limited during the year ended 31 December 2014, but retained
an amount of the sale proceeds to address any possible
contingencies. The Company received its final distribution of
US$1.4m in respect of this interest on 24 January 2017.
6 (Loss)/earnings per share
Basic and fully diluted (loss)/earnings per share is calculated
by dividing the (loss)/profit attributable to equity holders of the
Company by the weighted average number of ordinary shares in issue
during the period:
30 June 2018 30 June 2017
'000 '000
(Loss)/profit attributable to equity
holders of the Company (US$) (3,275) 594
Weighted average number of ordinary
shares in issue 64,500 64,500
Basic (loss)/earnings per share (cents
per share) (5.08) 0.92
----------------------------------------- ------------- -------------
There are no dilutive potential ordinary shares in issue,
therefore there is no difference between the basic and fully
diluted (loss)/earnings per share for the period.
7 Subsequent events
As disclosed in the Chairman's Statement, on 26 July 2018, the
Company made a capital distribution of 1.5 cents per share to
shareholders of the Company registered as at 20 July 2018,
equivalent to approximately US$0.97m.
In August 2018, the Company received a distribution from EIF of
US$0.5m.
As disclosed in note 5, the Company has entered into an
agreement for the sale of its shareholding in RSB, held through EIF
Co Invest VII.
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END
IR SEIFMWFASEEU
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