TIDMIIP TIDMTTM
RNS Number : 8771N
Infrastructure India plc
27 September 2019
27 September 2019
Infrastructure India plc
("IIP" or the "Company" and together with its subsidiaries, the
"Group")
Annual results for the twelve months ended 31 March 2019
Infrastructure India plc, an AIM quoted infrastructure fund
investing directly into assets in India, announces its audited
annual results for the twelve months ended 31 March 2019.
Financial performance
-- Value of the Company's investments was GBP179.4 million as at
31 March 2019 (GBP200.0 million 30 September 2018; GBP223.0 million
31 March 2018).
-- Net Asset Value decreased to GBP106.0 million as at 31 March
2019 (GBP145.3 million 30 September 2018; GBP188.8 million 31 March
2018).
-- NAV per share was GBP0.16 as at 31 March 2019 (GBP0.21 30
September 2018; GBP0.28 31 March 2018).
-- Net asset value decrease is a as a result of delayed
completion schedules for Distribution Logistics Infrastructure
Limited ("DLI"), the associated change to underlying DLI business
assumptions, and the prospective effect of the financing concluded
in April 2019. In particular, the financial statements presented
below reflect the increase in consolidated debt over time at IIP
resulting in a reduction in the carrying value of DLI in the
Group's consolidated balance sheet.
Post year end loan agreement and restructuring of existing
loans
-- IIP announced on 2 April 2019 that it had agreed a debt
facility of up to US$105 million with IIP Bridge Facility LLC (the
"Financing"). The Financing is a secured four-year term loan
provided to IIP's wholly owned Mauritian subsidiary, Infrastructure
India Holdco, and matures on 1 April 2023. The Financing is
expected to provide sufficient capital to enable DLI to complete
and commission its terminal network and to ramp up operations. With
US$75 million of the Facility drawn, this work is now underway.
-- As conditions to the Financing, IIP agreed the extension and
subordination of existing loans with Cedar Valley Financial and
GGIC Ltd. ("GGIC"), with both of these loans now maturing on 30
June 2023 and carrying revised interest rates of 15% per annum
respectively.
Commenting on the results Sonny Lulla, CEO of IIP, said:
"As a supply chain transportation and container infrastructure
company, DLI, our principal investment is well placed to benefit
from the sharp rise in container growth in India. The Indian
government's relaxation of cabotage, increased coastal cargo
movements and growing containerisation of cargo are cumulatively
contributing to this increase all of which further underpins the
rationale for expanding DLI's capabilities and infrastructure.
After a longer than expected period, we now have the necessary
funds to invest in DLI's expansion plans and we believe this will
be the main driver for further NAV growth."
Enquiries:
www.iiplc.com
Infrastructure India plc Via Novella
Sonny Lulla
Cenkos Securities plc
Nominated Adviser & Joint Broker
Azhic Basirov / Ben Jeynes +44 (0) 20 7397 8900
Nplus1 Singer Advisory LLP
Joint Broker
James Maxwell - Corporate Finance
James Waterlow - Investment Fund Sales +44 (0) 20 7496 3000
Novella
Financial Public Relations
Tim Robertson / Fergus Young +44 (0) 20 3151 7008
JOINT STATEMENT FROM THE CHAIRMAN AND THE CHIEF EXECUTIVE
We are pleased to report Infrastructure India plc's ("IIP" or
the "Company" and together with its subsidiaries the "Group")
audited annual results for the year ended 31 March 2019.
Net asset value and net asset value per share decreased to
GBP106.0 million and GBP0.16 respectively as at 31 March 2019 when
compared to GBP145.3 million and GBP0.21 as at 30 September 2018
(GBP188.8 million and GBP0.28 as at 31 March 2018) as a result of
delayed completion schedules for Distribution Logistics
Infrastructure Limited ("DLI"), the associated change to underlying
DLI business assumptions, and the prospective effect of the
financing concluded in April 2019. In particular, the financial
statements presented below reflect for the increase in consolidated
debt over time at IIP resulting in a reduction in the carrying
value of DLI in the Group's consolidated balance sheet.
During the year ended 31 March 2019, funding constraints
continued to hinder progress at DLI. Whilst DLI successfully
focussed on streamlining and improving its existing operations, it
was a frustrating year for the Group and DLI's management as IIP
bridging loans increased throughout the period, largely funding
immediate operational overheads and debt servicing at DLI.
Obtaining long term finance took longer than anticipated due to
a range of issues and the Board was pleased that the US$105 million
financing (the "Financing") was eventually agreed and announced on
2 April 2019, following the year end. The Financing will provide
both time and capital for DLI to execute its business plan and
US$75 million of the Financing has been drawn down to date. DLI is
moving forward with the planned design, engineering and
construction works across all terminals. The Group expects to draw
down the remaining balance of the Financing, conditionally
available to the Group, prior to the end of calendar year 2019.
During the year, DLI's terminal at Nagpur continued to increase
its market share to over 40% of the local export-import market. The
terminal has registered almost all shipping lines and has been able
to secure additional freight movement by rail which was previously
moved by road. Growth during the year was held back in bulk cargo,
auto logistics and warehousing due to the inability of DLI to
complete Phase 2 of construction works at Nagpur, but this work is
now underway, funded from the proceeds of the Financing drawn down
to date.
In the logistics sector, increased containerisation of cargo has
led to a sharp rise in container traffic growth. This growth has
highlighted the importance of inland container terminals in the
export-import value chain. Inland terminals with rail connectivity,
such as those of DLI, play an important role in decongesting
container traffic at ports thereby enhancing supply chain
efficiency. They also cater to significant hinterland cargo
traffic.
Further cargo growth is expected following India's relaxation of
cabotage rules. This move is seen as a way of levelling the playing
field between foreign and domestic shipping lines and should lead
to a reduction in overall freight rates, making Indian trade more
competitive. Growth is also evident in warehousing, which recorded
an overall space take-up of over 24 million square feet in 2018, a
40% increase from 2017. Implementation of the Goods and Services
Tax ("GST") has been a driver of centralised warehousing. These
market trends are positive for DLI.
On the wider macroeconomic front, there has been little impact
on DLI's business so far from the trade war between the US and
China, and DLI management do not currently foresee significant
headwinds for the Indian logistics sector.
The government of India's emphasis on increasing manufacturing
and exports has made logistics a key consideration in achieving
sustained growth. The Ministry of Commerce and Industry has
proposed a separate department for trade facilitation and logistics
to better coordinate government departments responsible for
railway, customs, roads and shipping. Considerable steps have been
taken to create a reliable and predictable national supply chain,
including significant investment in the transport network,
improving customs and facilitation, and the implementation of GST.
Although more is needed to address certain regulatory bottlenecks,
the government focus on developing a well-connected economy is good
news for the sector and those that operate in it.
Financial performance
The gross value of the Group's investments was GBP179.4 million
as at 31 March 2019 (GBP200.0 million as at 30 September 2018;
GBP223.0 million as at 31 March 2018). Currency exchange rates
strengthened at the end of the Company's financial year with GBP:
INR exchange rate of 90.28 as at 31 March 2019 against 94.21 as at
30 September 2018 and 90.81 as at 31 March 2018. The risk-free rate
of return, based on the Indian 10-year bond, decreased to 7.35% as
at 31 March 2019 from 8.02% as at 30 September 2018 and 7.40% as at
31 March 2018.
Total investment during the year ended 31 March 2019 was GBP21.4
million, all of which was advanced by the Group to DLI to fund
limited construction work, working capital and debt servicing
obligations during the period.
Transport
DLI is a supply chain transportation and container
infrastructure company and one of the largest private operators in
its sector in India with a nationwide network of terminals and a
quality road and rail transportation fleet. The unexpected delays
to arranging long term financing resulted in no material
construction progress being achieved during the year. This was a
frustrating period for the Group and DLI's management focused on
improving existing operations.
DLI's Nagpur terminal maintained momentum during the year, with
over 40% of the local export-import market share. The facility
currently has 30 major shipping lines registered and operating from
the terminal. Movement of refrigerated cargo ("reefer cargo")
commenced in October 2018 and has established DLI as a new and
value adding service provider in this category. Reefer cargo is
currently being diverted to Nagpur by rail for customs clearance,
having previously been transported by road to ports for clearance,
and DLI's management expect volumes in this category to increase.
Nagpur is also focussed on increasing import container volumes and
the stuffing of export containers at the terminal.
Through the Group's financing facilities, IIP continued to
provide working capital and debt service support to DLI throughout
the year. The Financing is designed to provide sufficient capital
to complete, commission and ramp up all of DLI's terminals and this
work is already underway. The anticipated timing of completion of
DLI's terminals is coinciding with a sharp increase in
containerisation of cargo and overall sector growth in India.
Energy
India Hydropower Development Company's ("IHDC") overall
production was higher than the same period last year as a result of
higher water release at its Maharashtra projects. In March 2019,
during testing at the Raura project, a manufacturing defect was
found in the turbine runners and the equipment was replaced by the
manufacturer. Following testing and synchronisation, the Raura
plant was commissioned on 9 September 2019. IHDC are currently
selling Raura's power into the wholesale market and are exploring
options for a longer term Power Purchase Agreement. Full generation
and a permanent tariff will not be achieved until the Himachal
Pradesh State Electricity Board completes the transmission line and
substation, which is expected to be in the first half of 2020.
Indian Energy Limited ("IEL") has two operating wind farms,
Theni, in Tamil Nadu, and Gadag, in Karnataka, and overall energy
production was slightly lower than the previous year due to delays
in maintenance works which are carried out by third party service
providers. All turbines are now operational at Gadag and Theni and
this should improve overall IEL energy production.
At Shree Maheshwar Hydel Power Corporation Limited ("SMH"),
there was another year of uncertainty with litigation amongst the
various stakeholders. However, subsequent to the year end, in July
2019, the SMH board approved entry into a memorandum of
understanding (the "MOU") between SMH, the project's lead lender
and the project promoter, which opens up a potential path for the
resolution of the litigation and the completion of the project.
Broadly, the entry into the MOU will see SMH stakeholders stand
down in litigation, the project promoter given management control
of SMH and be required to provide funding to meet the most
immediate needs of SMH. The lenders will then provide the project
promoter with 6 months to propose, and a further 6 months to
implement, an agreeable settlement with the lenders and to secure
appropriate financing to complete the project. Although IIP is
cautiously optimistic that the MOU opens up a potential path
forward, there remain tremendous challenges ahead in completing the
project.
Company liquidity and financing
As at 31 March 2019, the Group had gross cash resources of
GBP1.65 million.
During the year, the Company extended the maturity of the
working capital loan facility provided by GGIC, Ltd. ("GGIC") (the
"Working Capital Loan") and extended and enlarged the unsecured
bridging loan facility provided by Cedar Valley Financial, an
affiliate of GGIC (the "Bridging Loan").
The Working Capital Loan was originally provided to the Company
in April 2013 by GGIC in an amount of US$17 million and increased
to US$21.5 million in September 2017. The Working Capital Loan
carried an interest rate of 7.5% per annum on its fully drawn down
US$21.5 million principal amount and had been due for repayment by
the Company on 1 April 2019. The Company and GGIC agreed to extend
the maturity of the Working Capital Loan to 30 June 2023 and
increase its interest rate to 15% per annum from 1 April 2019.
The Bridging Loan was originally provided to the Company in June
2017 by Cedar Valley Financial in an amount of US$8.0 million and
was subsequently increased in multiple tranches to US$64.1 million
in March 2019. The Bridging Loan carried an interest rate of 12.0%
per annum on its fully drawn US$64.1 million principal and had been
due for repayment by the Company on 1 April 2019. The Company and
Cedar Valley Financial agreed to extend the maturity of the
Bridging Loan which will now mature on 30 June 2023 and increase
its interest rate to 15% per annum from 1 April 2019.
IIP announced on 2 April 2019, that it had agreed a debt
facility of up to US$105 million with IIP Bridge Facility LLC (the
"Financing"), an affiliate of GGIC. The Financing is a secured
four-year term loan provided to IIP's wholly owned Mauritian
subsidiary, Infrastructure India Holdco, and matures on 1 April
2023. The Financing, to be drawn in tranches, is expected to
provide sufficient capital to enable DLI to commission, ramp up and
complete all of its existing terminal facilities as well as meeting
other DLI lender requirements and provide additional working
capital to the Group. IIP has drawn down US$75 million of the
Financing to-date. IIP utilised US$7.5 million of the drawn funds
to repay the Bridging Loan (together with accrued interest) in
accordance with its terms such that the remaining principal under
the Bridging Loan (following this partial repayment) amounts to
US$56.6 million.
IIP intends to draw the remaining US$30 million, conditionally
available to it under the Financing, in one further tranche in
December 2019, the proceeds of these drawn down amounts will be
used to progress construction and to meet operating overheads at
DLI as well as to provide working capital to the Group.
We look forward to updating the shareholders on progress at DLI
as well as developments across IIP's portfolio of assets in the
period ahead.
Tom Tribone & Sonny Lulla
26 September 2019
REVIEW OF INVESTMENTS
Distribution Logistics Infrastructure Private Limited
("DLI")
Description Supply chain transportation and container
infrastructure company with a large operational
road and rail fleet; developing four large
container terminals across India.
Promoter A subsidiary of IIP
Date of investment 3 Mar 2011 15 Oct 2011 Jan 12- Mar
2019
Investment amount GBP34.8m (implied) GBP58.4m (implied) GBP124.0 million
Aggregate percentage
interest 37.4% 99.9% 99.9%
Investment during the GBP21.4 million
period
Valuation as at 31 March GBP147.9 million
2019
Project debt outstanding GBP74.8 million
as at 31 March 2019
Key developments * In April 2019, IIP agreed a loan facility for up to
US$105 million with IIP Bridge Facility LLC. The loan
amount is expected to be sufficient to complete
construction, meet debt obligations and provide
working capital.
* Delays in funding impacted the completion schedules
of all DLI terminals. However, following the agreed
financing and deployment of the first tranches,
construction is underway and business assumptions
have been revised.
* Nagpur maintained its momentum and DLI secured new
freight movement for the rail division that was
previously being transported by road.
Investment details
DLI is a supply chain transportation and container
infrastructure company headquartered in Bangalore and Gurgaon with
a material presence in central, northern and southern India. DLI
provides a broad range of logistics services including rail
freight, trucking, handling, customs clearing and bonded
warehousing with terminals located in the strategic locations of
Nagpur, Bangalore, Palwal (in the National Capital Region) and
Chennai.
Developments
In April 2019, IIP agreed a loan facility of up to US$105
million from affiliates of GGIC Ltd. The loan amount, drawn in
tranches, is expected to be sufficient to complete construction,
commissioning and ramp up of all terminals, meet debt obligations
and provide working capital for DLI and the IIP Group.
The Indian Government's relaxation of cabotage, increased
coastal cargo movements and growing containerisation of cargo are
cumulatively contributing to a sharp rise in container growth in
India, despite capacity constraints at Indian ports. Container
traffic at major and non-major ports increased 10% year-on-year in
FY 2019. Warehousing recorded an overall space take-up of over 24
million square feet in 2018, with a growth rate of more than 40% on
2017. This is a result of the Goods and Services Tax, coupled with
quality warehouse supply from reputed developers.
During the reporting period, there was little construction
progress due to lack of funding. IIP infused GBP21.4 million during
the year, which was primarily used to meet debt obligations, clear
past liabilities and cover operating expenses at DLI. Following the
financing announced in April 2019, work is underway across all
sites.
The facility at Nagpur maintained good momentum during the
period, with 30 major shipping lines registered and operating from
the terminal. Nagpur commenced the movement of refrigerated cargo
("reefer") during October 2018, changing the mode of transport from
road to rail (with earlier reefer cargo moving by road for customs
clearance at ports). Diverting reefer cargo to Nagpur for customs
clearance has established DLI as a non-routine and value adding
service provider. DLI management expect volumes to increase in this
category.
Valuation
Revised business and construction-related assumptions were
applied, based on a detailed review and update of the budget
prepared by DLI's management team. For valuation purposes, the
funding date was 1 April 2019.
As at 31 March 2019, the net present value ("NPV") of future IIP
cash flows for DLI is GBP147.9 million. The decrease is due to
delayed completion schedules for DLI and the associated change to
underlying DLI business assumptions.
India Hydropower Development Company LLC ("IHDC")
Description IHDC develops, owns and operates small hydropower
projects with seven fully operational plants
(74 MW of installed capacity), and a further
18 MW of capacity under development or construction.
Promoter Dodson-Lindblom International Inc. ("DLZ")
Date of investment Mar 2011 Jan 2012 May 2012
Investment amount GBP25.7 million GBP0.3 million GBP1.1 million
Aggregate % interest 50% 50% 50%
Investment during the Nil
period
Valuation as at 31 March GBP21.0 million
2019
Project debt outstanding GBP7.3 million
as at 31 March 2019
Key developments
* Overall generation from IHDC's projects was higher
than the previous period, with the increase in
production primarily a result of higher water
releases in Maharashtra.
* Manufacturing defects were discovered in turbine
runners at Raura and the manufacturer replaced the
equipment.
* The Raura plant was commissioned on 9 September 2019
and IHDC are currently selling Raura's power into the
wholesale market.
Investment details
The IHDC portfolio has installed capacity of approximately 74 MW
across seven projects - Bhandardara Power House I ("BH-I"),
Bhandardara Power House II ("BH-II"), Darna in Maharashtra;
Birsinghpur in Madhya Pradesh; and Sechi, Panwi and Raura in
Himachal Pradesh. IHDC has an additional 18 MW of capacity under
development and construction with planned capacity at two sites
having been revised upwards.
Project update
Overall generation from IHDC's projects was 163.4 GWh in the
fiscal year ending March 2019 against 144 GWh in the previous
period. The increase is mostly a result of higher water release in
Maharashtra.
At Raura, manufacturing defects were discovered in turbine
runners in March 2019. The equipment was replaced by the
manufacturer and following installation, IHDC resumed testing and
synchronisation activities. The plant was commissioned on 9
September 2019 and IHDC are currently selling Raura's power into
the wholesale market. IHDC management are exploring options for a
longer term PPA but full generation and a permanent tariff will not
be achieved until the Himachal Pradesh State Electricity Board
completes the transmission line and substation. This is expected in
the first half of 2020.
In June 2018, following new legislation, additional charges were
imposed at Birsinghpur, impacting the net billable tariff. IHDC has
filed an appeal with MPERC (the regulatory commission) and will
also approach the Appellate Tribunal of Electricity. IHDC is
closely monitoring the proceedings and evaluating alternatives, but
the overall impact is not material.
Valuation
The IHDC portfolio was valued in accordance with the Company's
stated valuation methodology by using a composite risk premium of
3.36% over the risk free rate of 7.35%. The composite risk premium
is computed using a MW-based weighted average of risk premia of
individual assets related to their stage of operation. Adjustments
were made to tariff estimates to account for current market data.
The value for the IHDC investment as at 31 March 2019 is GBP21.0
million (GBP21.1 million 30 September 2018; GBP20.9 million 31
March 2018).
Indian Energy Limited ("IEL")
Description An independent power producer with 41.3
MW installed capacity over two operating
wind farms.
Promoter IIP
Date of investment Sep 2011 Oct 2011 - Dec 2012
Investment amount GBP10.6 million GBP0.9 million
Aggregate % interest 100% 100%
Investment during the Nil
period
Valuation as at 31 March GBP5.4 million
2019
Project debt outstanding GBP8.1 million
as at 31 March 2019
Key developments
* Overall generation from IEL's two projects was 68 GWh
during the period against 72.1 GWh the previous
period.
* IEL has renegotiated a higher Group Captive tariff
with the off-takers from a weighted average of
Rs.5.43 kWh to Rs.5.47 kWh for the current fiscal
year.
Investment details
IEL is an independent power producer that owns and operates wind
farms, with 41.3 MW of installed capacity across two wind farms -
Gadag and Theni - in the states of Karnataka and Tamil Nadu
respectively.
Project update
Overall generation from IEL's two projects was 68 GWh the in the
fiscal year ending 31 March 2019 against 72.1 GWh the previous
year. Delays in generator maintenance at both projects caused by
O&M service providers had an impact on production during the
period. Subsequent to the year end, all turbines at Gadag &
Theni are now operational which should result in higher production
going forward.
IEL renegotiated a higher GCPP tariff with the off-takers from a
weighted average of Rs.5.43 kWh to Rs.5.47 kWh for the current
fiscal year.
On 27 April 2018, IIP announced that it had agreed to the sale,
subject to regulatory and other approvals, of its 100% interest in
IEL to ReNew Power Services Limited, for a cash consideration of
INR 364 million (approximately GBP3.97 million at that date).
Following an unduly protracted process, the Group withdrew from the
proposed transaction and the sale of IEL did not proceed. The Board
believes this was the correct decision for the Group.
Valuation
Adjustments in operating expenses and tariffs were made to
account for changes observed in the six months since 30 September
2018. The NPV of future cash flows for IIP, after accounting for
these adjustments, was GBP5.43 million for IEL. The valuation is
attributable to weakening of Sterling (GBP) against the Indian
Rupee (INR) and a reduction in the risk free rate.
Shree Maheshwar Hydel Power Corporation Limited ("SMH")
Description 400MW hydropower project on the Narmada
River near Maheshwar in Madhya Pradesh.
Promoter Entegra Limited
Date of investment Jun 2008 Sep 2011
Investment amount GBP13.2 million GBP16.5 million
Direct and indirect
% interest 20.5% 31.2%
Investment during the Nil
period
Valuation as at 31 March GBP5.1 million
2019
Project Debt Outstanding GBP308.6 million
as at 31 March 2019
Key developments * As with prior periods, litigation between the
promoter and the lenders dominated the reporting
period.
* In July 2019, SMH approved entry into an MOU with the
promoter and lead lender which opens up a potential
path to completion.
Investment details
SMH is constructing a 400MW hydropower project (ten turbines of
40MW each) situated on the Narmada River near Maheshwar, in the
southwestern region of Madhya Pradesh. The project is intended to
produce peaking power and to supply drinking water to the city of
Indore. Civil works are largely complete with 27 gates and three of
the ten turbines installed, although the site and equipment have
suffered from a lack of maintenance for several years.
Current status of the project and financing update
Subsequent to the year end, in July 2019, the SMH board approved
entry into an MOU between SMH and the promoter, which opens up a
potential path to completion. Broadly, all stakeholders are to
stand down in litigation. The promoter will be provisionally handed
back equity acquired by the lenders and given management control of
the company. The promoter must provide funding to meet the most
immediate needs of SMH and will have 12 months to raise finance to
complete the project as well as conclude a settlement with the
lenders. Although IIP is cautiously optimistic that this is a path
forward, the promoter has a tremendous task ahead.
Valuation
Forecast assumptions were again adjusted to account for the
continuing uncertainty on the terms and timing of project
completion and the higher risk premium of 8% was retained. The
value of IIP's investment in SMH as at 31 March 2019 was GBP5.12
million (GBP5.6 million 30 September 2018; GBP6.6 million 31 March
2018). The value of IIP's stake in the project remains largely
dictated by the actions and timelines associated in reaching a
viable plan to complete the project and there remains the risk that
the investment could be reduced to zero.
Directors' Report
The Directors have pleasure in presenting their report and
financial statements of the Group for the year ended 31 March
2019.
Principal activity and incorporation
The Company is a closed-ended investment company, incorporated
on 18 March 2008 in the Isle of Man as a public limited company
under the 2006 Companies Act. It was admitted to the Official List
of the London Stock Exchange on 30 June 2008, and subsequently
moved to a listing on AIM, a market operated by the London Stock
Exchange on 16 November 2010.
The Company's investment objective is to provide shareholders
with both capital growth and income by investing in assets in the
Indian infrastructure sector, with particular focus on assets and
projects related to energy and transport.
Results and dividends
The Group's results for the year ended 31 March 2019 are set out
in the Consolidated Statement of Comprehensive Income.
A review of the Group's activities is set out in the Joint
Statement from the Chairman and the Chief Executive report.
The Directors do not recommend the payment of a dividend (2018:
nil).
Directors
The Directors of the Company during the year and up to the date
of this report were as follows:
Tom Tribone Chairman
Rahul Sonny Lulla Chief Executive
Timothy Walker Non-Executive Director and Audit
Committee Chairman
Robert Venerus Non-Executive Director
Madras Seshamani Ramachandran Non-Executive Director
Directors' interests in the shares of the Company are detailed
in note 17.
Company Secretary
The secretary of the Company during the year and to the date of
this report was Philip Scales.
On behalf of the Board
Sonny Lulla
Director
26 September 2019
Statement of Directors' Responsibilities
In Respect of the Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations and have elected to prepare the financial statements in
accordance with International Financial Reporting Standards
("IFRSs"), as adopted by the European Union ("EU").
The financial statements are required to give a true and fair
view of the state of affairs of the Group and of the profit or loss
of the Group for that year.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and accounting estimates that are reasonable and prudent;
-- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company and Group
will continue in business.
The Directors are responsible for keeping proper accounting records that are sufficient to
show and explain the Group's transactions and disclose with reasonable accuracy at any time
its financial position. They have general responsibility for taking such steps as are reasonably
open to them to safeguard the assets of the Group and to prevent and detect fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website; the work carried out by the auditors does not
involve the consideration of these matters and, accordingly, the
auditors accept no responsibility for any changes that may have
occurred in the accounts since they were initially presented on the
website. Legislation governing the preparation and dissemination of
financial statements may differ from one jurisdiction to
another.
Each of the Directors confirm that, to the best of their knowledge:
* the financial statements, prepared in accordance with
International Financial Reporting Standards as
adopted by the EU, give a true and fair view of the
assets, liabilities, financial position and profit or
loss of the Group;
-- the director's report includes a fair review of the
development and performance of the business and the position of the
Group, together with a description of the principal risks and
uncertainties that they face.
By Order of the Board
Sonny Lulla
Director
26 September 2019
Corporate Governance Statement
Introduction from the Chairman
The Board of Infrastructure India plc (the "Company") fully
endorses the importance of good corporate governance and applies
the QCA Corporate Governance Code, published in April 2018 by the
Quoted Companies Alliance (the "QCA Code"), which the Board
believes to be the most appropriate recognised governance code for
a company of the Company's size with shares admitted to trading on
the AIM market of the London Stock Exchange.
This is a practical, outcome-oriented approach to corporate
governance that is tailored for small and mid-size quoted companies
in the UK and which provides the Company with the framework to help
ensure that a strong level of governance is maintained. As
Chairman, I am responsible for leading an effective board,
fostering a good corporate governance culture, maintaining open
communications with the major shareholders and ensuring appropriate
strategic focus and direction for the Company. Notwithstanding the
Board's commitment to applying the QCA Code, we will not seek to
comply with the QCA Code where strict compliance in the future
would be contrary to the primary objective of delivering long-term
value for IIP's shareholders and stakeholders.
However, we do consider that following the QCA Code, and a
framework of sound corporate governance and an ethical culture, is
conducive to long-term value creation for IIP shareholders. All
members of the Board believe strongly in the importance of good
corporate governance to assist in achieving objectives and in
accountability to IIP's stakeholders.
In the statements that follow the Company explains its approach
to governance in more detail.
Establish a strategy and business model which promote long-term
value for shareholders
IIP is an AIM quoted closed end investment company investing in
core economic infrastructure. It is the only AIM-traded investment
company with exposure to both transport and energy assets in
India.
The Company's Investment Strategy is as follows:
The Company will invest at the asset level or through specific
holding companies (not by investing in other funds or in the equity
of non-specific parent companies) in infrastructure projects in
India. Such investments are to be focused on the broader sectors
of:
-- Energy - including assets involved in electricity generation,
transmission and distribution; infrastructure assets related to oil
and gas, service provision and transmission; renewable fuel
production and renewable energy assets; and
-- Transport - including investment in roads, rail, ports and
airport assets, and associated transport interchanges and
distribution hubs.
Additionally, the Company may make investments in other economic
and social infrastructure sectors within India where opportunities
arise and which the Board considers offer similar risk and return
characteristics to those found within the energy and transport
sectors
Embed effective risk management, considering both opportunities
and threats, throughout the organisation.
The Group's activities expose it to a variety of financial
risks: market risk (including currency risk and price risk), credit
risk, liquidity risk and interest rate risk. Risk is monitored and
assessed by the Audit Committee who aim to meet at least twice
annually and are responsible for ensuring that the financial
performance of the Company is properly monitored and reported. This
process includes reviews of annual and interim accounts, results
announcements, internal control systems, procedures and accounting
policies. Risk management is carried out by the Board of Directors.
The Board identifies and evaluates financial risks in close
co-operation with the Asset Manager.
Maintain the board as a well-functioning, balanced team led by
the chair.
The Board has five members, three of which are non-executive.
Tom Tribone is the Company's Chairman, Sonny Lulla is the Company's
Chief Executive and Rob Venerus, Tim Walker and M.S. Ramachandran
are the Company's three Non-Executive Directors.
Tim Walker and M.S. Ramachandran are considered independent
directors. The Board is supported by an audit committee which is
made up of two non-executive directors, Tim Walker and M.S.
Ramachandran. The Board receives detailed reports from FIM Capital
Limited ("FIM"), the administrator and Company Secretary to the
Company covering updates to relevant legalisation and rules to
ensure they remain fully informed and able to make informed
decisions.
All the Directors biographies are published on the Company's
website and outlined below:
https://www.iiplc.com/team/board-of -directors/
The Directors devote sufficient time to ensure the Company's
affairs are managed as efficiently as possible. The Board aims to
hold at least 4 meetings each year with further ad hoc meetings
held as required. The Audit Committee meets at least 4 meetings
each year.
The Directors devote sufficient time to ensure the Company's
affairs are managed as efficiently as possible. During the year the
Board held a number of Ad hoc Board meetings requiring the
attendance of the Independent Directors only.
The Ad hoc meetings held were to consider and approve the
periodic loan increases, which being related party transactions
were restricted in attendance to the independent directors.
Board Meetings Date R Venerus T Tribone S Lulla MS Ramachandran T Walker
1 06-Apr-18 x x
---------- ---------- ---------- -------- ---------------- ---------
2 23-Apr-18 x x
---------- ---------- ---------- -------- ---------------- ---------
3 24-Apr-18 x x
---------- ---------- ---------- -------- ---------------- ---------
4 22-May-18 x x
---------- ---------- ---------- -------- ---------------- ---------
5 25-May-18 x x
---------- ---------- ---------- -------- ---------------- ---------
6 15-Jun-18 x x
---------- ---------- ---------- -------- ---------------- ---------
7 28-Jun-18 x x
---------- ---------- ---------- -------- ---------------- ---------
8 02-Jul-18 x x x x x
---------- ---------- ---------- -------- ---------------- ---------
9 20-Aug-18 x x
---------- ---------- ---------- -------- ---------------- ---------
10 07-Sep-18 x x
---------- ---------- ---------- -------- ---------------- ---------
11 14-Sep-18 x x x x
---------- ---------- ---------- -------- ---------------- ---------
12 14-Sep-18 x x
---------- ---------- ---------- -------- ---------------- ---------
13 25-Sep-18 x x
---------- ---------- ---------- -------- ---------------- ---------
14 17-Oct-18 x x
---------- ---------- ---------- -------- ---------------- ---------
15 22-Oct-18 x x
---------- ---------- ---------- -------- ---------------- ---------
16 24-Oct-18 x x
---------- ---------- ---------- -------- ---------------- ---------
17 16-Nov-18 x x
---------- ---------- ---------- -------- ---------------- ---------
18 12-Dec-18 x x x x x
---------- ---------- ---------- -------- ---------------- ---------
19 12-Dec-18 x x
---------- ---------- ---------- -------- ---------------- ---------
20 20-Dec-18 x x
---------- ---------- ---------- -------- ---------------- ---------
21 07-Jan-19 x x
---------- ---------- ---------- -------- ---------------- ---------
22 21-Jan-19 x x
---------- ---------- ---------- -------- ---------------- ---------
23 04-Feb-19 x x
---------- ---------- ---------- -------- ---------------- ---------
24 15-Feb-19 x x
---------- ---------- ---------- -------- ---------------- ---------
25 21-Feb-19 x x
---------- ---------- ---------- -------- ---------------- ---------
26 22-Mar-19 x x x
---------- ---------- ---------- -------- ---------------- ---------
Ensure that between them the directors have the necessary
up-to-date experience, skills and capabilities.
The Directors have extensive experience in infrastructure fund
management and a strong track record of value creation. The Board
believes it has the correct balance of skills, reflecting a broad
range of commercial and professional skills across geographies and
industries that is necessary to ensure the Company is equipped to
deliver its investment objective.
Additionally, each Director has experience in public markets.
The Directors and their roles and key personnel are displayed on
the Company's website https://www.iiplc.com/team/board-of
-directors/ and a statement of the Directors responsibilities is
also included on page 10 of the 2019 Accounts.
The Directors receive an ad hoc guidance on certain matters
concerning, for example, the AIM Rules for Companies from the
Company's Nominated Adviser and Broker as well as receiving updates
on the regulatory environment from FIM, who provide specialist fund
administration services to a variety of closed ended funds and
collective investment schemes. The role and responsibilities of the
Audit Committee and the terms of reference of the Audit Committee
are summarised at the foot of this document. All Directors are able
to take independent professional advice in the furtherance of their
duties if necessary at the Company's expense.
Evaluate board performance based on clear and relevant
objectives, seeking continuous improvement.
All Board appointments have been made after consultation and
detailed due diligence is carried out on all new potential board
candidates. The Board will consider using external advisers to
review and evaluate the effectiveness of the Board and Directors in
future to supplement its own internal evaluation processes. The
Board assesses the performance of the Company's Asset Manager
(Franklin Park Management) on an ongoing basis.
The Company's Articles require that all Directors are proposed
for election at the AGM following their first appointment to the
Board and one third of the Directors are subject to retirement by
rotation on an annual basis to refresh the Board, irrespective of
performance.
Promote a corporate culture that is based on ethical values and
behaviours.
The Corporate Governance Statement is detailed on page 11 of the
2019 Accounts. The Board is mindful that the tone and culture set
by the Board will impact many aspects of the Company and the way
that stakeholders behave and form views.
The Board welcomes the views of all stakeholders who can contact
the Directors and / or the Company Secretary by email / telephone
and ensures that the Company has the means to determine that
ethical values and behaviours are met through the adoption of
appropriate companywide policies.
As stated earlier the Company has extensively considered its
wider social responsibilities and the steps taken to actively
address these.
In order to comply with legislation or regulations aimed at the
prevention of money laundering the Fund has adopted anti-money
laundering and anti-bribery procedures.
Communicate how the Company is governed and is performing by
maintaining a dialogue with shareholders and other relevant
stakeholders.
The Company communicates with shareholders through the Annual
Report and Accounts, full-year and half-year announcements, the
Annual General Meeting and investors can email the Directors and
Company Secretary with any queries they may have.
The website includes information in relation to the outcome of
shareholder voting under the regulatory news section pursuant to
the AIM rules. If a significant proportion of independent votes
were to be cast against a resolution at any general meeting, the
Board's policy would be to engage with the shareholders concerned
in order to understand the reasons behind the voting results.
Following this process, the Board would make an appropriate public
statement via this website regarding any different action it has
taken, or will take as a result of the vote.
Committees
Audit Committee
The Audit Committee is a sub-committee of the Board and it meets
formally at least twice each year. It makes recommendations to the
Board which retains the right of final decision. The Audit
Committee has primary responsibility for reviewing the financial
statements and the accounting policies, principles and practices
underlying them, liaising with the external auditors and reviewing
the effectiveness of internal controls. The terms of reference of
the Audit Committee covers the following:
The composition of the Committee, quorum and who else attends
meetings.
-- Appointment and duties of the Chairman.
-- Duties in relation to external reporting, including reviews
of financial statements, shareholder communications and other
announcements.
-- Duties in relation to the external auditors, including
appointment/dismissal, approval of fee and discussion of the
audit.
In addition, FIM has a number of internal control functions
including a dedicated Compliance Officer who monitors compliance
with all statutory and regulatory requirements and presents a
report to the Board at each meeting.
There is no Remuneration Committee or Nomination Company in
existence. The Company has not established a remuneration committee
as it is satisfied that any issues can be considered by the Board
or the Audit Committee. Details of the directors' remuneration can
be found in note 17.
Audit Committee Report
The Audit Committee met twice in respect of the year ended 31
March 2019. It has approved and recommended to the Board for
approval the interim accounts for the half year end 30 September
2018 and accounts for the year ended 31 March 2019.
The Audit Committee has also liaised with external auditors,
reviewed the effectiveness of internal controls and reviewed and
monitored relevant risk registers during the year.
Independent Auditor's Report to the Members of Infrastructure
India Plc
Qualified opinion
We have audited the financial statements of Infrastructure India
Plc (the 'parent company') and its subsidiaries (the 'group') for
the year ended 31 March 2019 which comprise the consolidated and
parent company Statement of Comprehensive Income, the consolidated
and parent company Statement of Financial Position, the
consolidated and parent company Statement of Changes in Equity, the
consolidated and parent company Statement of Cash Flows and the
notes to the financial statements, including a summary of
significant accounting policies. The financial reporting framework
that has been applied in their preparation is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
In our opinion, except for the possible effects of the matters
described in the basis of qualified opinion section of our
report:
-- the financial statements give a true and fair view of the
state of the group's and parent company's affairs as at 31 March
2019, and of the group's and parent company's results for the year
then ended;
-- the financial statements have been properly prepared in
accordance with IFRSs as adopted by the European Union;
Basis for qualified opinion
We were not appointed as auditor of the group or parent company
for the comparative period, being the year ended 31 March 2018, and
draw attention to the fact that the predecessor auditor issued a
disclaimer of opinion on the financial statements, primarily due to
the material uncertainties surrounding the proposed financing and
the dependence thereon in relation to the underlying activities
within Distribution Logistics Infrastructure Private Ltd ("DLI"),
together with the other portfolio companies. We have been unable to
satisfy ourselves by alternative means that the comparatives shown
in these financial statements are fairly stated, resulting in a
limitation of scope, and so our opinion given above specifically
excludes all comparative figures shown for the year ended 31 March
2018, for both the group and parent company. We draw attention to
the fact that should there be a adjustment to the opening balances
there would be a corresponding adjustment to the results reported
in the Statement of Comprehensive Income for the current year.
In addition to the above, as explained in more detail in the key
audit matters paragraph below, we appointed an independent
auditor's expert in India to appraise the valuations provided by
management. Owing to a limitation in scope they have been unable to
opine to us that the valuations of two of the four portfolio
companies, being India Hydropower Development Co. LLC ("IHDC") and
Shree Maheshwar Hydel Power Corporation Limited ("SMHPCL"), are
fairly stated in all material respects.
As shown in note 13, IHDC is carried in these financial
statements at GBP20.96m representing 19.8% of the group's net
assets. At the date of signing the financial statements not all
queries raised by the independent auditor's expert had been fully
addressed. Based on the work that has been completed the
independent expert has determined that there may be significant
misstatements in the valuation of IHDC but that those misstatements
are not likely to be pervasive to the financial statements as a
whole. We are not able to quantify the effects of any potential
misstatements in this respect.
As shown in note 13, SMHPCL is carried in these financial
statements at GBP5.12m representing 4.8% of the group's net assets.
As SMHPCL is at such an early stage of development it has not been
possible to verify the majority of data entry points to the
valuation model. We are not therefore able to opine on whether the
valuation is fairly stated, nor can we quantify any potential
misstatement in the financial statements.
Based on information available to us in respect of the
valuations of IHDC and SMHPCL, we believe that any misstatement
could be material to the financial statements as a whole but not
pervasive, resulting in this qualified opinion.
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the group
and parent company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK,
including the FRC's Ethical Standard, and we have fulfilled our
other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our qualified
opinion.
Key audit matters
Management have elected to value investments in subsidiaries at
fair value through profit and loss based on a valuation model as
discussed in notes 5 and 13. The fair value models estimate the
present fair value of the investments using a discounted cashflow
analysis, based on assumptions about the future performance of the
investments.
At 31 March 2019, investments in subsidiaries represented
GBP179.38m or 169.12% of the group's total net asset value. As
shown in note 13 the breakdown of investments in subsidiaries
is:
Portfolio group Valuation (GBPm) % of NAV
Distribution Logistics Infrastructure
Ltd ("DLI") 147.87 139.5
India Hydropower Development Co.
LLC ("IHDC") 20.96 19.8
Indian Energy Ltd ("IEL") 5.43 5.1
Shree Maheshwar Hydel Power Corporation
Ltd ("SMHPCL") 5.12 4.8
We have determined this to be a key audit matter which required
significant auditor attention as the fair value models involve
significant management judgements which include accounting
estimates that have high estimation uncertainty.
Our approach to this area has been to appoint an independent
auditor's expert, located in India where the group's operational
activities will be undertaken, to undertake an independent review
of the valuation of the portfolio companies of the group.
Audit procedures undertaken included:
- obtaining an understanding of the various valuation methods
used by management and analysing the reasonableness of the
principal assumptions made for estimating the fair values and
various other data used while arriving at the fair value
measurement;
- assessing the valuation methodology and evaluating and
challenging the reasonableness of the assumptions used, in
particular those relating to forecast revenue growth and royalty
rates;
- performing sensitivity analysis on the assumptions noted above
and considering the adequacy of disclosures in respect of the
investments;
- reviewing the appropriateness of management's basis to identify relevant business;
- evaluating the appropriateness of the discount rates applied, which included comparing the weighted-average cost of capital with sector averages for the relevant markets in which the investment companies operate;
- evaluating the appropriateness of the assumptions applied to
key inputs such as sales, operating costs, inflation and long-term
growth rates;
- performing our own sensitivity analysis, which included
assessing the effect of reasonably possible reductions in growth
rates and forecast cashflows to evaluate the impact on the
currently estimated headroom; and
- evaluating the adequacy of the consolidated financial
statement disclosures, including disclosures of key assumptions,
judgments and sensitivities.
In conjunction with the auditor's expert we have determined that
the valuation models for DLI and IEL (value at GBP147.87m and
GBP5.43m respectively) are, in all material respects, fairly
presented and suitable for inclusion in these financial statements.
They are, however, subject to high estimation uncertainty and we
draw your attention to the disclosures made in notes 5 and 13 and
in particular to the sensitivity analyses presented in note 13. The
realisation of the values assigned to the investments is dependent
on future conditions and as such the actual value may differ
materially from the amounts presented in the financial statements.
Our opinion is not qualified in this respect.
In respect of the valuation models for IHDC and SMHPCL (valued
at GBP20.96m and GBP5.12m respectively) we have been unable to
conclude on the valuations presented and this is referred to in our
basis for qualified opinion above.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in
relation to which the ISAs (UK) require us to report to you
where:
-- the directors' use of the going concern basis of accounting
in the preparation of the financial statements is not appropriate;
or
-- the directors have not disclosed in the financial statements
any identified material uncertainties that may cast significant
doubt about the group's or the parent company's ability to continue
to adopt the going concern basis of accounting for a period of at
least twelve months from the date when the financial statements are
authorised for issue.
Other information
The directors are responsible for the other information. The
other information comprises the information included in the annual
report, other than the financial statements and our auditor's
report thereon. Our opinion on the financial statements does not
cover the other information and, except to the extent otherwise
explicitly stated in our report, we do not express any form of
assurance conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the group and
the parent company and their environment obtained in the course of
the audit, we have not identified material misstatements in the
directors' report.
Responsibilities of directors
As explained more fully in the directors' responsibilities
statement, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors
determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group's and the parent company's
ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the
group or the parent company or to cease operations, or have no
realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with ISAs (UK), we exercise
professional judgment and maintain professional scepticism
throughout the audit. We also:
-- Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal
control.
-- Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the group's or the parent company's
internal control.
-- Evaluate the appropriateness of accounting policies used and
the reasonableness of accounting estimates and related disclosures
made by the directors.
-- Conclude on the appropriateness of the directors' use of the
going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the group's or the
parent company's ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to
draw attention in our auditor's report to the related disclosures
in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor's report. However,
future events or conditions may cause the group or the parent
company to cease to continue as a going concern.
-- Evaluate the overall presentation, structure and content of
the financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
-- Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities within
the group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for
our audit opinion.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the consolidated financial statements
of the current period and are therefore the key audit matters. We
describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with the terms of our engagement letter. Our audit
work has been undertaken so that we might state to the company's
members those matters we are required to state to them in an
auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Baker Tilly Isle of Man LLC
Chartered Accountants
P O Box 95
2a Lord Street
Douglas
Isle of Man
IM99 1HP
Date:
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2019
Group Company
-------------------- --------------------
Note 2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Movement in fair value on
investments in subsidiaries 11 - - (35,416) (98,052)
Impairment loss on loans
to Group companies 12 - - (44,755) -
Movement in fair value on
investments at fair value
through profit or loss 13 (65,061) (86,521) - -
Foreign exchange (loss)/gains (2,939) 2,416 (2,935) 2,416
Asset management and valuation
services 7 (5,531) (5,536) - -
Other administration fees
and expenses 6 (3,960) (1,709) (1,369) (1,324)
--------- ---------
Operating loss (77,491) (91,350) (84,475) (96,960)
--------- --------- --------- ---------
Finance income 12 - - 6,984 5,610
Finance costs 8 (5,249) (1,861) (5,249) (1,861)
--------- ---------
Loss before taxation (82,740) (93,211) (82,740) (93,211)
--------- --------- --------- ---------
Taxation 9 - - - -
--------- --------- --------- ---------
Loss for the year (82,740) (93,211) (82,740) (93,211)
--------- --------- --------- ---------
Other comprehensive income - - - -
--------- --------- --------- ---------
Total comprehensive loss (82,740) (93,211) (82,740) (93,211)
========= ========= ========= =========
Basic and diluted loss per (12.16) (13.70)
share (pence) 10 p p
========= =========
The Directors consider that all results derive from continuing
activities.
The notes referred to above form an integral part of the nancial
statements.
Consolidated and Company Statement of Financial Position
at 31 March 2019
Group Company
---------------------- ----------------------
Note 2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Investments in subsidiaries 11 - - - 30,869
Loans to Group companies 12 - - 177,984 191,048
Investments at fair value through
profit or loss 13 179,376 223,034 - -
Total non-current assets 179,376 223,034 177,984 221,917
---------- ---------- ---------- ----------
Current assets
Debtors and prepayments 98 15 17 13
Cash and cash equivalents 1,652 3,431 1,551 3,121
---------- ---------- ---------- ----------
Total current assets 1,750 3,446 1,568 3,134
---------- ---------- ---------- ----------
Total assets 181,126 226,480 179,552 225,051
---------- ---------- ---------- ----------
Current liabilities
Trade and other payables 14 (1,751) (1,585) (177) (156)
Current loans and borrowings 15 - (36,127) - (36,127)
---------- ---------- ---------- ----------
Total current liabilities (1,751) (37,712) (177) (36,283)
---------- ---------- ---------- ----------
Long-term liabilities
Long term loans & borrowings 15 (73,347) - (73,347) -
---------- ---------- ---------- ----------
Total current liabilities (73,347) - (73,347) -
---------- ---------- ---------- ----------
Total liabilities (75,098) (37,712) (73,524) (36,283)
---------- ---------- ---------- ----------
Net assets 106,028 188,768 106,028 188,768
========== ========== ========== ==========
Equity
Ordinary share capital 16 6,803 6,803 6,803 6,803
Share premium 16 282,787 282,787 282,787 282,787
Retained earnings (183,562) (100,822) (183,562) (100,822)
========== ========== ========== ==========
Total equity 106,028 188,768 106,028 188,768
========== ========== ========== ==========
The notes referred to above form an integral part of the nancial
statements.
These financial statements were approved by the Board on 26
September 2019 and signed on their behalf by
Sonny Lulla Tim Walker
Chief Executive Director
Consolidated and Company Statement of Changes in Equity
for the year ended 31 March 2019
Group
Share Share Retained
capital premium earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2017 6,803 282,787 (7,611) 281,979
Total comprehensive loss for the
year
Loss for the year - - (93,211) (93,211)
------------------------------------- ----------- --------- ----------- ---------
Total comprehensive loss for the
year - - (93,211) (93,211)
------------------------------------- ----------- --------- ----------- ---------
Balance at 31 March 2018 6,803 282,787 (100,822) 188,768
========================================== ====== ========= ========== ==========
Balance at 1 April 2018 6,803 282,787 (100,822) 188,768
Total comprehensive loss for the year
Loss for the year - - (82,740) (82,740)
------ --------- ---------- ----------
Total comprehensive loss for the year - - (82,740) (82,740)
------------------------------------------ ------ --------- ---------- ----------
Balance at 31 March 2019 6,803 282,787 (183,562) 106,028
========================================== ====== ========= ========== ==========
Company
Share Share Retained
capital premium earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2017 6,803 282,787 (7,611) 281,979
Total comprehensive loss for the
year
Loss for the year - - (93,211) (93,211)
------------------------------------- ----------- --------- ----------- ---------
Total comprehensive loss for the
year - - (93,211) (93,211)
------------------------------------- ----------- --------- ----------- ---------
Balance at 31 March 2018 6,803 282,787 (100,822) 188,768
========================================== ====== ========= ========== ==========
Balance at 1 April 2018 6,803 282,787 (100,822) 188,768
Total comprehensive loss for the year
Loss for the year - - (82,740) (82,740)
------ --------- ---------- ----------
Total comprehensive loss for the year - - (82,740) (82,740)
------------------------------------------ ------ --------- ---------- ----------
Balance at 31 March 2019 6,803 282,787 (183,562) 106,028
========================================== ====== ========= ========== ==========
The notes referred to above form an integral part of the nancial
statements.
Consolidated and Company Statement of Cash Flows
for the year ended 31 March 2019
Group Company
--------------------
Note 2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Loss for the year (82,740) (93,211) (82,740) (93,211)
Adjustments:
Finance costs 5,249 1,861 5,249 1,861
Movement in fair value on investments
at fair value through profit or
loss 11/13 65,061 86,521 35,416 98,052
Impairment loss on loans to Group
companies - - 44,755 -
Finance income - - (6,984) (5,610)
Foreign exchange loss/(gain) 2,939 (2,416) 2,935 (2,416)
--------- ---------
(9,491) (7,245) (1,369) (1,324)
(Decrease)/increase in trade and
other payables 166 54 21 33
Increase/(decrease) in debtors
and prepayments (83) 13 (5) (3)
--------- --------- --------- ---------
Net cash utilised by operating
activities (9,408) (7,178) (1,353) (1,294)
--------- --------- --------- ---------
Cash flows from investing activities
Loan to subsidiaries - - (24,707) (19,349)
Equity addition in subsidiaries - - (4,547) -
Purchase of investments 13 (21,403) (13,564) - -
--------- ---------
Cash utilised by investing activities (21,403) (13,564) (29,254) (19,349)
--------- --------- --------- ---------
Cash flows from financing activities
Loans received 28,959 22,651 28,959 22,651
--------- ---------
Net cash raised from financing
activities 28,959 22,651 28,959 22,651
--------- --------- --------- ---------
(Decrease)/increase in cash and
cash equivalents (1,852) 1,909 (1,648) 2,008
Cash and cash equivalents at the
beginning of the year 3,431 1,522 3,121 1,113
Effect of exchange rate fluctuations
on cash held 73 - 78 -
--------- ---------
Cash and cash equivalents at the
end of the year 1,652 3,431 1,551 3,121
--------- --------- --------- ---------
The notes referred to above form an integral part of the nancial
statements.
Notes to the Financial Statements
for the year ended 31 March 2019
1. General information
The Company is a closed-end investment company incorporated on
18 March 2008 in the Isle of Man as a public limited company. The
address of its registered office is IOMA House, Hope Street,
Douglas, Isle of Man.
The Company is listed on the AIM market of the London Stock
Exchange.
The Company and its subsidiaries (together the Group) invest in
assets in the Indian infrastructure sector, with particular focus
on assets and projects related to energy and transport.
2. Basis of preparation
(a) Statement of compliance
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the EU.
The financial statements were authorised for issue by the Board
of Directors on 26 September 2019.
(b) Basis of measurement
The consolidated financial statements have been prepared on the
historical cost basis except for financial instruments at fair
value through profit or loss which are measured at fair value in
the Statement of Financial Position.
(c) Functional and presentation currency
These financial statements are presented in Sterling, which is
the Company's functional currency. All financial information
presented in Sterling has been rounded to the nearest thousand,
unless otherwise indicated.
d) Going concern
The Group had GBP1.65 million cash and cash equivalents and
total liabilities of GBP75.1 million at 31 March 2019. As announced
on 2 April 2019, the Group arranged further debt facility of up to
US$105 million (approximately GBP80.2 million). The Loan is
expected to provide sufficient capital to enable Distribution
Logistics Infrastructure Private Limited ("DLI"), the Company's
wholly owned subsidiary, to complete, commission and ramp up all of
its existing terminal facilities through to completion, to meet
other DLI lender requirements and provide additional working
capital for both DLI and the Group. US$75 million has been drawn to
date and a further US$30 million remains available to the Group
under the Facility.
The Directors have a reasonable expectation that the Company and
the Group have adequate resources to continue in operational
existence for the foreseeable future, and for a period of at least
12 months from the date of signing of these financial
statements.
Accordingly, they continue to adopt the going concern basis in
preparing the consolidated financial statements for the year ended
31 March 2019.
(e) Use of estimates and judgements
The preparation of the financial statements in conformity with
IFRSs requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates. Estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognised in the period in which the
estimates are revised and in any future periods affected.
The areas involving a higher degree of judgment or complexity,
or areas where assumptions and estimates are significant to the
consolidated financial statements are disclosed in note 5.
3. Summary of significant accounting policies
3.1 Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries and subsidiary undertakings). Control is achieved
where the Company has power over an investee, exposure or rights to
variable returns and the ability to exert power to affect those
returns.
The results of subsidiaries acquired or disposed of during the
year are included in the consolidated Statement of Comprehensive
Income from the effective date of acquisition or up to the
effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group. All intra-group
transactions, balances, income and expenses are eliminated on
consolidation.
As an investment entity under the terms of the amendments to
IFRS 10 Consolidated Financial Statements, the Company is not
permitted to consolidate its controlled portfolio entities.
The Directors consider the Company to be an investment entity as
defined by IFRS 10 Consolidated Financial Statements as it meets
the following criteria as determined by the accounting
standard:
o Obtains funds from one or more investors for the purpose of
providing those investors with investment management services;
o Commits to its investors that its business purpose is to
invest funds solely for returns from capital appreciation,
investment income or both; and
o Measures and evaluates the performance of substantially all of
its investments on a fair value basis.
3.2 Segment reporting
A business segment is a group of assets and operations engaged
in providing products or services that are subject to risks and
returns that are different from those of other business segments. A
geographical segment is engaged in providing products or services
within a particular economic environment that are subject to risks
and returns that are different from those of segments operating in
other economic environments.
The Directors are of the opinion that the Group is engaged in a
single segment of business being investment in infrastructure
assets in one geographical area, being India.
3.3 Income
Dividend income from investments is recognised when the right to
receive payment has been established, normally the ex-dividend
date.
Interest income is recognised on an accrual basis using the
effective interest method.
3.4 Expenses
All expenses are recognised on an accruals basis and are
presented as revenue items except for expenses that are incidental
to the disposal of an investment which are deducted from the
disposal proceeds.
3.5 Taxation
Income tax expense comprises current and deferred tax. Current
tax and deferred tax is recognised in profit or loss except to the
extent that it relates to a business combination, or items
recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to
tax payable in respect of previous years. Current tax payable also
includes any tax liability arising from the declaration of
dividends.
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for:
-- temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss;
-- temporary differences related to investments in subsidiaries
and jointly controlled entities to the extent that it is probable
that they will not reverse in the foreseeable future; and
-- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax is measured at the tax rates that are expected to
be applied to temporary differences when they reverse, based on the
laws that have been enacted or substantively enacted by the
reporting date.
Deferred tax assets and liabilities are offset if there is a
legally enforceable right to offset current tax liabilities and
assets, and they relate to income taxes levied by the same tax
authority on the same taxable entity, or on different tax entities,
but they intend to settle current tax liabilities and assets on a
net basis or their tax assets and liabilities will be realised
simultaneously.
A deferred tax asset is recognised for unused tax losses, tax
credits and deductible temporary differences, to the extent that it
is probable that future taxable profits will be available against
which they can be utilised. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
3.6 Foreign currency transactions
Transactions and balances
Transactions in foreign currencies are translated to the
respective functional currencies of Group entities at exchange
rates at the dates of the transactions. Monetary assets and
liabilities denominated in foreign currencies at the reporting date
are retranslated to the functional currency at the exchange rate at
that date. The foreign currency gain or loss on monetary items is
the difference between amortised cost in the functional currency at
the beginning of the year, adjusted for effective interest and
payments during the year, and the amortised cost in foreign
currency translated at the exchange rate at the end of the
year.
Non-monetary assets and liabilities denominated in foreign
currencies that are measured at fair value are retranslated to the
functional currency at the exchange rate at the date that the fair
value was determined. Non-monetary items in a foreign currency that
are measured in terms of historical cost are translated using the
exchange rate at the date of the transaction. Foreign currency
differences arising on retranslation are recognised in profit or
loss, except for differences arising on the retranslation of
available-for-sale equity investments, a financial liability
designated as a hedge of the net investment in a foreign operation
that is effective, or qualifying cash flow hedges, which are
recognised in other comprehensive income.
Foreign operations
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on acquisition, are
translated to Sterling at exchange rates at the reporting date. The
income and expenses of foreign operations, excluding foreign
operations in hyperinflationary economies, are translated to
Sterling at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other
comprehensive income, and presented in the foreign currency
translation reserve (translation reserve) in equity. However, if
the operation is a non-wholly-owned subsidiary, then the relevant
proportionate share of the translation difference is allocated to
the non-controlling interests. When a foreign operation is disposed
of such that control, significant influence or joint control is
lost, the cumulative amount in the translation reserve related to
that foreign operation is reclassified to profit or loss as part of
the gain or loss on disposal. When the Group disposes of only part
of its interest in a subsidiary that includes a foreign operation
while retaining control, the relevant proportion of the cumulative
amount is reattributed to non-controlling interests. When the Group
disposes of only part of its investment in an associate or joint
venture that includes a foreign operation while retaining
significant influence or joint control, the relevant proportion of
the cumulative amount is reclassified to profit or loss.
When the settlement of a monetary item receivable from or
payable to a foreign operation is neither planned nor likely in the
foreseeable future, foreign exchange gains and losses arising from
such a monetary item are considered to form part of a net
investment in a foreign operation and are recognised in other
comprehensive income, and presented in the translation reserve in
equity.
3.7 Financial instruments
Financial assets and financial liabilities are recognised when a
Group entity becomes a party to the contractual provisions of a
financial instrument. Financial assets and financial liabilities
are offset if there is a legally enforceable right to set off the
recognised amounts and interests and it is intended to settle on a
net basis.
The Group derecognises a financial asset when the contractual
rights to the cash flows from the financial asset expire or it
transfers the financial asset and the transfer qualifies for
derecognition in accordance with IAS 39. A financial liability is
derecognised when the obligation specified in the contract is
discharged, cancelled or expired.
3.8 Investments
Investments of the Group are categorised as at fair value
through profit or loss and are measured at fair value. Unrealised
gains and losses arising from revaluation are taken to the profit
or loss.
The Group has taken advantage of an exemption in IAS 28,
Investments in Associates, which permits investments in associates
held by venture capital organisations, investment funds and similar
entities to account for such investments at fair value through
profit or loss.
The fair value of unquoted securities is estimated by the
Directors using the most appropriate valuation techniques for each
investment.
3.9 Trade and other receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment.
3.10 Financial liabilities and equity
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangement entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Group after deducting all of
its liabilities.
Financial liabilities are initially recognised at fair value
less any directly attributable transactions costs. Subsequent to
initial recognition, these liabilities are measured at amortised
cost using the effective interest method.
Equity instruments are recorded at proceeds received net issue
costs.
3.11 Provisions
A provision is recognised when the Group has a present legal or
constructive obligation as a result of a past event, and it is
probable that an outflow of economic benefits will be required to
settle the obligation, and the obligation can be reliably measured.
If the effect is material, provisions are determined by discounting
the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and, where
appropriate, the risks specific to the liability.
3.12 Share issue costs
The share issue costs of the Company directly attributable to
the placing that would otherwise have been avoided have been taken
to the share premium account.
3.13 Dividend distribution
Dividend distribution to the Company's shareholders is
recognised as a liability in the financial statements in the period
in which the dividends are approved.
3.14 Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held
at call with banks, other short-term highly liquid investments with
original maturities of three months or less, and bank
overdrafts.
3.15 Interest expense
Interest expenses for borrowings are recognised within finance
costs in the profit or loss using the effective interest rate
method.
3.16 Impairment
Financial assets that are stated at cost or amortised cost are
reviewed at each reporting date to determine whether there is
objective evidence of impairment. If any such indication exists, an
impairment loss is recognised in the profit or loss as the
difference between the asset's carrying amount and the present
value of estimated future cash flows discounted at the financial
asset's original effective interest rate.
3.17 Changes in accounting policies
The following standards, interpretations and amendments were
adopted by the Group during the year:
-- IFRS 9 (2014) - Financial instruments (effective 1 January 2018)
-- Amendments to IFRS 2: Classification and measurement of
Share-based Payment Transactions (effective 1 January 2018)
-- Annual improvements to IFRS Standards 2014-2016 Cycle (effective 1 January 2018)
-- IFRIC Interpretation 22 - Foreign Currency Transactions and
Advance Consideration (effective 1 January 2018)
IFRS 9 Financial Instruments replaced IAS 39 Financial
Instruments: Recognition and Measurement for annual periods
beginning on or after 1 January 2018, bringing together all three
aspects of the accounting for financial instruments: classification
and measurement; impairment; and hedge accounting.
The Group has applied IFRS 9 retrospectively, with the initial
application date of 1 January 2018, and determined that there was
no material impact on the comparative balances other than a change
in classification and terminology. There was no impact on hedging
as the Group does not apply hedge accounting.
Standards, amendments and interpretations to published standards
not yet effective
At the date of authorisation of these financial statements, the
following standards and interpretations, were in issue but not yet
effective, and have not been early adopted by the Group:
-- IFRS 16 - Leases (effective for annual reporting periods
beginning on or after 1 January 2019)
-- Annual Improvements to IFRS Standards 2015 - 2017 Cycle
(effective for annual reporting periods beginning on or after 1
January 2019)
-- Amendments to References to the Conceptual Framework in IFRS
Standards (effective for annual reporting periods beginning on or
after 1 January 2020)
The directors have reviewed the IFRS standards in issue which
are effective for annual accounting years ending on or after the
stated effective date. In their view, none of these standards would
have a material impact on the financial statements of the
Group.
4. Capital and financial risk management
Capital management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in order to
provide returns for shareholders and benefits for other
stakeholders and to maintain an optimal capital structure to reduce
the cost of capital.
In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares, or sell assets to reduce
debt.
Consistent with others in the industry, the Group monitors
capital on the basis of the gearing ratio. This ratio is calculated
as net debt divided by total capital. Net debt is calculated as
total borrowings and other long term loans as shown in the
consolidated statement of financial position, less cash and cash
equivalents.
The following table summarises the capital of the Group:
2019 2018
GBP'000 GBP'000
------------------------------------------ -------- --------
Long and short term loans and borrowings 73,347 36,127
Less: cash and cash equivalents (1,652) (3,431)
------------------------------------------ -------- --------
Net debt 71,695 32,696
Total equity 106,028 188,768
Total capital 177,723 221,465
------------------------------------------ -------- --------
Gearing ratio 40.3% 14.8%
------------------------------------------ -------- --------
Financial risk management
The Group's activities expose it to a variety of financial
risks: market risk (including currency risk and price risk), credit
risk, liquidity risk and cash flow interest rate risk.
Risk management is carried out by the Board of Directors. The
Board identifies and evaluates financial risks in close
co-operation with the Asset Manager.
(a) Market risk
(i) Foreign exchange risk
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the Indian Rupee ("INR"). Foreign exchange risk
arises from future commercial transactions, recognised monetary
assets and liabilities and net investments in foreign
operations.
Net assets denominated in Indian Rupee at the year-end amounted
to GBP179.4 million (2018: GBP223.0 million), representing the
Group's investments in Indian Companies. At 31 March 2019, had the
exchange rate between the Indian Rupee and Sterling increased or
decreased by 10% with all other variables held constant, the
increase or decrease respectively in net assets would amount to
approximately GBP17.9 million (2018: GBP22.3 million). This
exposure is unhedged.
Total liabilities denominated in US$ at the year-end amounted to
GBP75.1 million (2018: GBP32.7 million), principally comprising
loans and borrowings less cash and cash equivalents. At 31 March
2019, had the exchange rate between the US$ and Sterling increased
or decreased by 10% with all other variables held constant, the
increase or decrease respectively in total liabilities would amount
to approximately GBP7.5 million (2018: GBP3.3 million). This
exposure is unhedged.
(ii) Market price risk
The Group is exposed to market risk arising from its investment
in unlisted Indian infrastructure companies due to factors that
affect the overall performance of the financial markets. These
investments present a risk of capital loss. The Board is
responsible for the selection of investments and monitoring
exposure to market price risk. All investments are in Indian
infrastructure projects.
If the value of the Group's investment portfolio had increased
by 10%, the Group's net assets would have increased by GBP17.9
million (2018: GBP22.3 million). A decrease of 10% would have
resulted in an equal and opposite decrease in net assets.
(iii) Cash flow and fair value interest rate risk and sensitivity
The Group's cash and cash equivalents are invested at short term
market interest rates. Loans and borrowings attract fixed interest
rates as detailed in note 15.
The table below summarises the Group's exposure to interest rate
risks. It includes the Groups' financial assets and liabilities at
the earlier of contractual re-pricing or maturity date, measured by
the carrying values of assets and liabilities.
Less than 3 months Non-
1 0 to 1 to 1 1 to 5 Over 5 interest
month month year years years bearing Total
31 March 2019 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Investments at fair value through profit
or loss - - - - - 179,376 179,376
Trade and prepayments - - - - - 98 98
Cash and cash equivalents 1,652 - - - - - 1,652
---------- -------- --------- --------- -------- --------- ---------
Total financial assets 1,652 - - - - 179,474 181,126
---------- -------- --------- --------- -------- --------- ---------
Financial liabilities
Trade and other payables - - - - - (1,751) (1,751)
Loans and borrowings - - - (73,347) - - (73,347)
---------- -------- --------- --------- -------- --------- ---------
Total financial liabilities - - - (73,347) - (1,751) (75,098)
---------- -------- --------- --------- -------- --------- ---------
Total interest rate sensitivity gap 1,652 - - - -
---------- -------- --------- --------- -------- --------- ---------
Less than 3 months Non-
1 0 to 1 to 1 1 to 5 Over 5 interest
month month year years years bearing Total
31 March 2018 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial assets
Investments at fair value through profit
or loss - - - - - 223,034 223,034
Trade and prepayments - - - - - 15 15
Cash and cash equivalents 3,431 - - - - - 3,431
---------- -------- --------- -------- -------- --------- ---------
Total financial assets 3,431 - - - - 223,049 226,480
---------- -------- --------- -------- -------- --------- ---------
Financial liabilities
Trade and other payables - - - - - (1,585) (1,585)
Loans and borrowings - - (36,127) - - - (36,127)
---------- -------- --------- -------- -------- --------- ---------
Total financial liabilities - - (36,127) - - (1,585) (37,712)
---------- -------- --------- -------- -------- --------- ---------
Total interest rate sensitivity gap 3,431 - (36,127) - -
---------- -------- --------- -------- -------- --------- ---------
(b) Credit risk
Credit risk may arise from a borrower failing to make required
payments on investments, cash balances and debtor balances. The
amount of credit risk is equal to the amounts stated in the
statement of financial position for each of these assets. All the
cash balances are held with various Barclays bank accounts. The
Standard & Poor's credit rating of Barclays Bank plc is A-
(Negative).
(c) Liquidity risk
Liquidity risk is the risk that the Company may be unable to
meet short term financial demands. Prudent liquidity risk
management implies maintaining sufficient cash and marketable
securities, the availability of funding through an adequate amount
of committed credit facilities and the ability to close out market
positions. The Company aims to maintain flexibility in funding.
Residual undiscounted contractual maturities of financial
liabilities:
31 March 2019 Less than 0 to 1 3 months 1 to 5 Over 5 No stated
1 month months to 1 year years years maturity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial liabilities
Trade and other - - - - -
payables 1,751
Loans and borrowings - - - 73,347 - -
----------------------- ----------- --------- ----------- -------- -------- ----------
Total - - 1,751 73,347 - -
======================= =========== ========= =========== ======== ======== ==========
31 March 2018 Less than 0 to 1 3 months 1 to 5 Over 5 No stated
1 month months to 1 year years years maturity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Financial liabilities
Trade and other - - 1,585 - - -
payables
Loans and borrowings - - 36,127 - - -
----------------------- ----------- --------- ----------- -------- -------- ----------
Total - - 37,712 - - -
======================= =========== ========= =========== ======== ======== ==========
5. Critical accounting estimates and assumptions
These disclosures supplement the commentary on financial risk
management (see note 4).
Key sources of estimation uncertainty
Determining fair values
The determination of fair values for financial assets for which
there is no observable market prices requires the use of valuation
techniques as described in accounting policy 3.8. For financial
instruments that trade infrequently and have little price
transparency, fair value is less objective, and requires varying
degrees of judgement depending on liquidity, concentration,
uncertainty of market factors, pricing assumptions and other risks
affecting the specific instrument. See also "Valuation of financial
instruments" below.
Critical judgements in applying the Group's accounting
policies
Valuation of financial instruments
The Group's accounting policy on fair value measurements is
discussed in accounting policy 3.8. The Group measures fair value
using the following hierarchy that reflects the significance of
inputs used in making the measurements:
-- Level 1: Quoted market price (unadjusted) in an active market
for an identical instrument.
-- Level 2: Valuation techniques based on observable inputs,
either directly (i.e., as prices) or indirectly (i.e., derived from
prices). This category included instruments valued using: quoted
market prices in active markets for similar instruments: quoted
market prices for identical or similar instruments in markets that
are considered less than active; or other valuation techniques
where all significant inputs are directly or indirectly observable
from market data.
-- Level 3: Valuation techniques using significant unobservable
inputs. This category includes all instruments where the valuation
technique includes inputs not based on observable data and the
unobservable inputs have a significant effect on the instrument's
valuation. This category includes instruments that are valued based
on quoted prices for similar instruments where significant
unobservable adjustments or assumptions are required to reflect
differences between the instruments.
Fair values of financial assets and financial liabilities that
are traded in active markets are based on quoted market prices or
dealer price quotations. For all other financial instruments, the
Group determines fair values using valuation techniques.
The Group holds investments in several unquoted Indian
infrastructure companies. The Directors' valuations of these
investments, as shown in note 13, are based on a discounted cash
flow methodology or recent transaction prices, prepared by the
Company's Asset Manager (Franklin Park Management). The valuations
are inherently uncertain and realisable values may be significantly
different from the carrying values in the financial statements.
The methodology is principally based on company-generated cash
flow forecasts and observable market data on interest rates and
equity returns. The discount rates are determined by market
observable risk free rates plus a risk premium which is based on
the phase of the project concerned.
The table below analyses financial instruments measured at fair
value at the end of the reporting period, by the level in the fair
value hierarchy into which the fair value measurements are
categorised:
Level Level
1 2 Level 3
GBP'000 GBP'000 GBP'000
Financial assets at fair value through
profit or loss (note 13)
Shree Maheshwar Hydel Power Corporation
Ltd - - 5,115
India Hydropower Development Company,
LLC - - 20,959
Distribution Logistics Infrastructure
Private Ltd - - 147,870
Indian Energy Limited - - 5,432
--------- --------- --------
- - 179,376
========= =================================================== ========
The following table shows a reconciliation from the beginning
balances to the ending balances for fair value measurements in
level 3 of the fair value hierarchy:
GBP'000
Fair value brought forward 223,034
Additional capital injected 21,403
Movement in fair value (65,061)
Fair value at year end 179,376
=========
If the determined discount rates were increased by 1% per annum,
the value of unlisted equity securities would fall by GBP30 million
(2018: GBP31 million).
6. Other administration fees and expenses
Group Company
------------------ ------------------
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Audit fees 69 59 34 30
Legal fees 180 332 180 155
Corporate advisory fees 201 188 201 188
Consultancy fees 59 134 59 294
Other professional costs* 2,475 194 7 7
Administration fees 164 147 120 120
Directors' fees (note 17) 180 180 170 170
Insurance costs 9 9 9 9
Loan arrangement related fees 463 235 463 132
Travel and entertaining 109 134 109 134
Other costs 51 97 17 85
3,960 1,709 1,369 1,324
======== ======== ======== ========
* On 31 July 2018, IIP announced that it had entered into
conditional proposed financing agreements for up to U$125 million
with PSA International, a global port group, and Gateway Partners.
The transaction included the issue of convertible preference shares
in Distribution Logistics Infrastructure India ("DLII") for a
consideration of U$75 million and the sale of 24% of DLI for a
consideration of U$50 million. The transaction fell through and the
Company arranged alternative financing as detailed in note 20. The
GBP2,475,000 professional fees include additional expenses in
relation to the exploration of refinancing and intended
disposal.
7. Investment management, advisory and valuation fees
On 14 September 2016, the Company entered into a revised and
restated management and valuation and portfolio services agreement
(the "New Management Agreement") with Franklin Park Management, LLC
("Franklin Park" or the "Asset Manager"), the Company's existing
asset manager, to effect a reduction in annual cash fees payable by
IIP to the Asset Manager. The other terms of the New Management
Agreement were unchanged from those of the prior agreement between
the parties.
Under the New Management Agreement, the Asset Manager is
entitled to a fixed annual management fee of GBP5,520,000 per annum
(the "Annual Management Fee"), payable quarterly in arrears. In
addition to the Annual Management Fee, the Asset Manager will be
issued with 605,716 new ordinary shares in the Company annually
(the "Fee Shares"). The Fee Shares will be issued free of charge,
on 1 July of each calendar year for the duration of the New
Management Agreement.
Fees for the year ended 31 March 2019 were GBP5,531,000 (31
March 2018: GBP5,536,000). The amount of management fees
outstanding as at 31 March 2019 amounted to GBPnil (2018:
GBP1,398,000).
8. Finance costs
2019 2018
GBP'000 GBP'000
Loan interest expense (note 15) 5,249 1,861
-------- --------
5,249 1,861
======== ========
9. Taxation
There is no liability for income tax in the Isle of Man. The
Company is subject to tax at a rate of 0%.
The Group is subject to income tax in Mauritius at the rate of
15% on the chargeable income of Mauritian subsidiaries. They are,
however, entitled to a tax credit equivalent to the higher of the
foreign tax paid and a deemed credit of 80% of the Mauritian tax on
their foreign source income. No provision has been made in the
accounts due to the availability of tax losses.
10. Basic and diluted loss per share
Basic loss per share are calculated by dividing the loss
attributable to shareholders by the weighted average number of
ordinary shares outstanding during the year.
2019 2018
Loss attributable to shareholders (GBP thousands) (82,740) (93,211)
Weighted average number of ordinary shares in issue (thousands) 680,267 680,267
---------- ----------
Basic loss per share (12.16) p (13.70) p
========== ==========
There is no difference between basic and diluted loss per
share.
11. Investments in subsidiaries
Since incorporation, for efficient portfolio management
purposes, the Company has established or acquired the following
subsidiary companies, with certain companies being consolidated and
others held at fair value through profit or loss in line with the
Amendments to IFRS 10 Consolidated Financial Statements (see note
3.1):
Consolidated subsidiaries Country of Ownership
incorporation interest
Infrastructure India HoldCo Mauritius 100%
Power Infrastructure India Mauritius 100%
Roads Infrastructure India Mauritius 100%
Power Infrastructure India (Two) Mauritius 100%
Distribution and Logistics Infrastructure
India Mauritius 100%
Hydropower Holdings India* Mauritius 100%
India Hydro Investments* Mauritius 100%
Non-consolidated subsidiaries held at fair value through profit
or loss
Distribution & Logistics Infrastructure sub group:
Distribution Logistics Infrastructure
Private Limited India 99.9%
Freightstar Private Limited India 99.9%
Deshpal Realtors Private Limited India 99.8%
Bhim Singh Yadav Property Private India 99.9%
Indian Energy Limited sub group (IEL):
Indian Energy Limited Guernsey 100%
Indian Energy Mauritius Limited Mauritius 100%
Belgaum Wind Farms Pvt Limited India 100%
iEnergy Wind Farms (Theni) Pvt Limited India 74%
iEnergy Renewables Pvt Limited India 100%
India Hydropower Development Company sub
group (IHDC):
India Hydropower Development Company LLC Delaware 50%
Franklin Park India LLC Delaware 100%
The following table shows a reconciliation from the beginning
balances to the ending balances for investments in
subsidiaries:
Total
GBP'000
Balance as at 1 April 2018 30,869
Addition during the year 4,547
Movement in fair value on investments
in subsidiaries (35,416)
Balance as at 31 March 2019 -
==========
12. Loans to Group companies
Capital Interest Total
GBP'000 GBP'000 GBP'000
Balance as at 1 April 2018 181,325 9,723 191,048
Loan drawn down during the year 24,707 - 24,707
Interest for the year - 6,984 6,984
Impairment provision (44,755) - (44,755)
Balance as at 31 March 2019 161,277 16,707 177,984
========= ========= =========
13. Investments - designated at fair value through profit or
loss
At 31 March 2019, the Group held four investments in unlisted
equity securities. Three of the investments are held by the
Company's wholly owned subsidiaries in Mauritius and one is held
directly by the Company.
The investments are recorded at fair value as follows:
SMHPCL IHDC DLI IEL Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2018 6,643 20,870 191,513 4,008 223,034
Additional capital injection - - 21,403 - 21,403
Fair value adjustment (1,528) 89 (65,046) 1,424 (65,061)
-------- -------- --------- -------- ---------
Balance as at 31 March
2019 5,115 20,959 147,870 5,432 179,376
======== ======== ========= ======== =========
(i) Shree Maheshwar Hydel Power Corporation Ltd ("SMHPCL")
(ii) India Hydropower Development Company LLC ("IHDC")
(iii) Distribution Logistics Infrastructure ("DLI")
(iv) Indian Energy Limited ("IEL")
The investments in SMHPCL, IHDC, IEL and DLI have been fair
valued by the Directors as at 31 March 2019 using discounted cash
flow techniques, as described in note 5. The discount rate adopted
for the investments is the risk free rate (based on the Indian
government 9-10-year bond yields) plus a risk premium of 8% for
SMHPCL, 3.36% for IHDC, 2.00% for IEL and 7% for DLI. (2018: risk
premium was 8% for SMHPCL, 3.2% for IHDC, 2.00% for IEL and 7% for
DLI).
All the investments valued using discounted cash flow techniques
are inherently difficult to value due to the individual nature of
each investment and as a result, valuations may be subject to
substantial uncertainty. SMHPCL and DLI are still in the
construction or 'ramp-up' phase. As disclosed in note 20, the
Company arranged financing which is expected to provide sufficient
capital to enable DLI to complete, commission and ramp up all of
its existing terminal facilities through to completion, to meet
other DLI lender requirements and provide additional working
capital for both DLI and the Group.
The decrease in valuation is as a result of delayed completion
schedules for DLI, the associated change to underlying DLI business
assumptions, and the prospective effect of the debt financing
concluded in April 2019.
There is no assurance that the estimates resulting from the
valuation process will reflect the actual sales price even where
such sales occur shortly after the valuation date.
As at 31 March 2019, the Company had pledged 51% of the shares
in DLI, totalling 66,677,000 shares of INR 10 each, as part of the
terms of a term loan within the underlying investment entity. In
addition, the Company had provided a non-disposal undertaking of
51% of the shares in IEL, totalling 25,508,980 shares of 1 penny
each, as part of the terms of a loan agreement within the
underlying investment entity.
The following table shows the sensitivities of the valuations to
discount rates and exchange rates:
SMHPCL Discount Rate
----------------------------------
14.90% 15.40% 15.90% 16.40%
------- ------- ------- -------
INR/GBP Exchange rate 94.3 8.8 4.9 1.3 -
-----------------------
92.3 9.0 5.0 1.4 -
-----------------------
90.3 9.2 5.1 1.4 -
88.3 9.4 5.2 1.4 -
86.3 9.7 5.4 1.5 -
----------------------- ----- ------- ------- ------- -------
IHDC Discount Rate
----------------------------------
10.21% 10.71% 11.21% 11.71%
------- ------- ------- -------
INR/GBP Exchange Rate 94.3 21.3 20.1 19 18
-----------------------
92.3 21.7 20.5 19.4 18.4
-----------------------
90.3 22.2 21.0 19.8 18.8
88.3 22.7 21.4 20.3 19.2
86.3 23.2 21.9 20.8 19.7
----------------------- ----- ------- ------- ------- -------
DLI Discount Rate
----------------------------------
13.40% 14.40% 15.40% 16.40%
------- ------- ------- -------
INR/GBP Exchange Rate 94.3 168.9 142.4 120.9 103.3
-----------------------
92.3 172.5 145.5 123.5 105.5
-----------------------
90.3 176.3 147.9 126.3 107.8
88.3 180.3 152.0 129.1 110.3
86.3 184.5 155.6 132.1 112.8
----------------------- ----- ------- ------- ------- -------
IEL Discount Rate
------------------------------ ----------------------------------
8.35% 9.35% 10.35% 11.35%
----------------------- ----- ------- ------- ------- -------
INR/GBP Exchange Rate 94.4 5.8 5.2 4.7 4.2
-----------------------
92.4 5.9 5.3 4.8 4.3
-----------------------
90.3 6.0 5.4 4.9 4.4
88.4 6.2 5.6 5.0 4.5
86.4 6.3 5.7 5.1 4.6
----------------------- ----- ------- ------- ------- -------
14. Trade and other payables
Group Company
------------------ ------------------
2019 2018 2019 2018
GBP'000 GBP'000 GBP'000 GBP'000
Trade payables 204 91 131 89
Accruals and other payables 1,547 1,494 46 67
1,751 1,585 177 156
======== ======== ======== ========
15. Loans and borrowings
Capital Interest Total
GBP'000 GBP'000 GBP'000
Balance as at 1 April 2018 33,868 2,259 36,127
Loans drawn-down 28,959 - 28,959
Interest charge for the year - 5,249 5,249
Foreign currency loss 2,841 171 3,012
-------- --------- --------
Balance as at 31 March 2019 65,668 7,679 73,347
======== ========= ========
On 8 April 2013, the Company entered into a working capital loan
facility agreement with GGIC Ltd ("GGIC") for up to US$ 17.0
million. The loans were originally repayable on 10 April 2017.
During the year, a further US$4.5 million was made available to,
and drawn-down on 19 September 2017, with the fully drawn-down
working capital loan now totalling US$21.5 million. The working
capital loan has an interest rate of 7.5% per annum, payable
semi-annually during the facility period. The Company's ultimate
controlling party during the year was GGIC and affiliated
parties.
In addition, and on 30 June 2017, the Company entered into an
US$8.0 million unsecured bridging loan facility with Cedar Valley
Financial ("Cedar Valley"), an affiliate of GGIC and the loan was
subsequently increased in multiple tranches, most recently to
US$64.1 million at 31 March 2019. The bridging loan has an interest
rate of 12% per annum, payable semi-annually during the facility
period. Cedar Valley's ultimate controlling party during the year
was GGIC and affiliated parties.
Subsequent to year-end the loan maturity of both loans has been
extended to 30 June 2023 and will carry an interest rate of 15% per
annum going forward. (note 20).
Accrued interest relating to these loans as at the year-end
amounted to GBP7.7 million (2018: GBP2.3 million).
16. Share capital
No. of shares Share Share premium
capital
Ordinary shares
of GBP0.01 GBP'000 GBP'000
each
---------------- --------- --------------
Balance at 31 March 2019 680,267,041 6,803 282,787
================ ========= ==============
As detailed in note 7, the Asset Manager is entitled 605,716 new
ordinary shares in the Company annually (the "Fee Shares"). The Fee
Shares will be issued free of charge, on 1 July of each calendar
year for the duration of the New Management Agreement. As at 31
March 2019, the accrued shares were 1,664,474 (including prior year
accrued Fee Shares not yet issued) and the accrued share based
payment expense for the 1,664,474 is GBP13,000 at 31 March 2019
share price.
Subsequent to year-end, the Company issued a total of 1,817,148
ordinary shares to the Asset Manager including shares that had
accrued up to 1 July 2019 (note 20).
17. Directors' fees and Directors' interests
The Directors had the following interests in the shares of the
Company at 31 March 2019:
Timothy Walker 981,667 Ordinary Shares
Sonny Lulla 1,500,000 Ordinary Shares
Details of the Directors' remuneration in the year are as
follows:
2019 2018
GBP'000 GBP'000
Timothy Walker 90 90
Madras Seshamani Ramachandran 90 90
180 180
======== ========
18. Related party transactions
Management services and Directors' fees
Franklin Park Management LLC ("FPM") is beneficially owned by
certain Directors of the Company, namely Messrs Tribone, Lulla and
Venerus, and receives fees in its capacity as Asset Manager as
described in note 7.
As detailed in note 7, fees payable to FPM in respect of
management services for the year ending 31 March 2019 amounted to
GBP5,531,000 (31 March 2018: GBP5,536,000). The amount of
management fees outstanding as at 31 March 2019 amounted to
GBP1,380,000 (2018: GBP1,398,000).
Loans and borrowings
See note 15 regarding loans from GGIC and Cedar Valley
Financial, including interest charged in the year and accrued at
the year-end.
Administrator
FIM Capital Limited provides administration services including
financial accounting services to the Company. The fees paid to the
Administrator for the year amounted to GBP120,000 (2018:
GBP120,000). The amount outstanding as at year end is GBP30,000
(2018: GBP30,000).
19. Net Asset Valuation (NAV) per share
The NAV per share is calculated by dividing the net assets
attributable to the equity holders of the Company at the end of the
period by the number of shares in issue.
2019 2018
GBP'000 GBP'000
Net assets (GBP'000) 106,028 188,768
Number of shares in issue (note
16) 680,267,041 680,267,041
------------ ------------
NAV per share GBP0.16 GBP0.28
============ ============
There is no difference between basic and diluted NAV per
share
20. Subsequent events
Financing
As announced on 2 April 2019, the Group arranged further debt
facility of up to US$105 million (approximately GBP80.2 million)
with IIP Bridge Facility LLC (the "Lender"), an affiliate of GGIC,
Ltd. ("GGIC"). The Loan is expected to provide sufficient capital
to enable Distribution Logistics Infrastructure Private Limited
("DLI"), the Company's wholly owned subsidiary, to complete,
commission and ramp up all of its existing terminal facilities
through to completion, to meet other DLI lender requirements and
provide additional working capital for both DLI and the Group.
The loan carries an interest rate of 15% (increasing to 18% per
annum in the event of default) and payable at maturity, and is
secured on all assets of IIP's wholly owned Mauritian subsidiary,
Infrastructure India Holdco, including 100% of the issued share
capital of Distribution Logistics Infrastructure India ("DLII"),
DLI's Mauritian parent company.
The loan matures on 1 April 2023, is voluntarily repayable
without penalty and is otherwise mandatorily proportionally
repayable from the net proceeds of Group asset realisations in
excess of US$500,000.
US$8.7 million of the loan was drawn down by the Group on 5
April 2019 and US$7.5 million of the proceeds was applied towards
the repayment the Bridging Loan. At 31 July 2019, US$75 million has
been drawn to date and a further US$30 million remains available to
the Group under the Facility.
In accordance with the requirements of the loan above maturity
of both the working capital loan and the bridging loans have been
extended to 30 June 2023 and will carry an interest rate of 15% per
annum going forward.
Share issue
As detailed in note 7, the Asset Manager is entitled 605,716 new
ordinary shares in the Company annually (the "Fee Shares"). The Fee
Shares will be issued free of charge, on 1 July of each calendar
year for the duration of the New Management Agreement. As at 31
March 2019, the accrued shares were 1,664,474 (including prior year
accrued Fee Shares not yet issued). Subsequent to year-end, the
Company issued a total of 1,817,148 ordinary shares to the Asset
Manager including shares that had accrued up to 1 July 2019.
There were no other significant subsequent events.
21. Ultimate controlling party
The ultimate controlling party during the year was GGIC and
affiliated parties.
22. Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR SEFESMFUSEFU
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