TIDMPMEA
RNS Number : 9862V
PME African Infrastructure Opps PLC
22 April 2016
22 April 2016
PME African Infrastructure Opportunities plc
("PME" or the "Company")
(AIM: PMEA.L)
Final Results for the year ended 31 December 2015
PME African Infrastructure Opportunities plc, an investment
company established to invest in sub-Saharan African infrastructure
and infrastructure related industries, announces its audited
results for the year ended 31 December 2015.
Financial Highlights
-- Net Asset Value of US$9.1 million (2014: US$18.3 million)
-- Net Asset Value per share of US$0.22 (2014: US$0.24)
-- Loss attributable to shareholders for the year ended 31
December 2015 was US$2.1 million (2014: loss of US$16.6
million).
-- Basic and diluted loss per share of US$0.0284 (2014: loss per share of US$0.2169)
-- During the period the Company completed the sale of 100% of
the equity of PME's wholly owned subsidiary, PME RSACO (Mauritius)
Limited, the Group entity which held the Group's 50% interest in
Sheltam Holdings (Pty) Ltd, together with certain intercompany
loans, and the disposal of seven C30 locomotives owned by PME
Locomotives (Mauritius) Limited, for an aggregate cash
consideration of US$11.5 million. This disposal was completed on 5
May 2015.
-- US$7.2 million returned to PME shareholders by way of tender offer during the year.
For further information please contact:
Smith & Williamson Corporate Finance Limited
Nominated Adviser
Azhic Basirov / Ben Jeynes +44 20 7131 4000
Stifel Nicolaus Europe Limited
Broker
Neil Winward / Tom Yeadon +44 20 7710 7600
Chairman's Statement
On behalf of the Board of Directors (the "Board"), I am pleased
to present the annual results for PME African Infrastructure
Opportunities plc ("PME" or the "Company" and together with its
subsidiaries the "Group") for the year ended 31 December 2015.
The remit of the Company's directors (the "Directors") under the
Company's investing policy is to seek to realise the remaining
assets of the Company and to return both existing cash reserves and
the proceeds of realisation of the remaining assets to
shareholders. In 2015 the Directors were able to achieve a
significant milestone in the implementation of the Company's
investing policy, with the sale of 100% of the equity of PME's
wholly owned subsidiary, PME RSACO (Mauritius) Limited ("RSACO"),
the Group entity which held the Group's 50% interest in Sheltam
Holdings (Pty) Ltd, together with certain intercompany loans, and
the disposal of seven C30 locomotives then owned by PME Locomotives
(Mauritius) Limited ("PME Locomotives") for an aggregate
consideration of US$11.5 million (the "Disposal"). At the same
time, the Company also entered into a put option agreement in
respect of the remaining three C30 locomotives owned by the Group.
This put option is first exercisable by the Group in the last
quarter of 2016.
A tender offer was successfully completed by the Company in
November 2015. A total of 35,780,661 ordinary shares of US$0.01
each in the capital of the Company ("Ordinary Shares"), comprising
46.6 per cent. of the Ordinary Shares then outstanding, were
validly tendered at a price of US$0.20 per Ordinary Share and were
cancelled by the Company upon completion of the tender offer on 4
December 2015. The total number of remaining issued Ordinary Shares
is 40,973,326.
Investments
The Disposal is reflected in these financial statements.
Following the Disposal, the Company, through its wholly owned
subsidiaries PME Locomotives and PME Properties Limited ("PME
Properties"), continues to own three C30 locomotives and a
commercial property in Dar-es-Salaam, Tanzania (the "Dar-es-Salaam
Property").
PME Locomotives has a put option to require RSACO to purchase
any one or more of the three C30 locomotives that it owns at
exercise of the option for US$1,416,666 per locomotive (the
"Option"). The Option is exercisable at any point during a 90 day
period commencing on 6 November 2016 (the "Option Period").
Prior to and during the Option Period, RSACO has agreed to use
its reasonable endeavours to secure for the Group third party
buyers, for any one or more of the three C30 locomotives still
owned by the Group. In consideration for this, PME Locomotives will
pay to RSACO a sum equal to 50% of the amount by which any cash
purchase price exceeds a hurdle price of US$1,500,000 per C30
locomotive. To date, there has been no enquiry for the purchase of
any of the C30 locomotives.
PME Locomotives can expect a further US$4.25 million from
exercising the Option for the three remaining C30 locomotives. Once
the Option is exercised, completion of the sale of the relevant C30
locomotive or locomotives will take place within five business
days.
The Dar-es-Salaam Property, which is managed by a local managing
agent, is fully let and the investment continues to trade
profitably. In 2010 PME Properties acquired the property from
Dovetel (T) Limited ("Dovetel"), the Company's former
telecommunication investment in Tanzania. Dovetel is also a tenant
of part of the Dar-es-Salaam Property but has been in default on
the payment of rent. As previously reported to shareholders, the
Company served a winding-up petition on Dovetel in January 2013 and
has separately been pursuing proceedings to evict Dovetel from the
Dar-es-Salaam Property.
The Directors visited Tanzania in June 2015, November 2015 and
March 2016 to review the legal strategy being followed in relation
to Dovetel. As a result of this review, the Company will no longer
continue to seek the winding up of Dovetel as this has restricted
the eviction process. PME's lawyers have attended a number of
status hearings on the withdrawal of the Dovetel winding up
petition including two meetings in 2016 with a new judge. A further
meeting is planned for April 2016 and the Directors expect this
action to be successful to withdraw the winding up petition.
Following withdrawal of the winding up petition, the Directors
intend to progress the eviction of Dovetel and the collection of
outstanding debt due from Dovetel (provided it makes economic and
legal sense to do so). The caveat on the land register obtained by
Dovetel against the Dar-es-Salaam Property, which had been
prohibiting the sale of the property, has expired.
During the visits to Tanzania, the Directors reviewed the
operational performance of the Dar-es-Salaam Property with the
property manager. A number of necessary investments required to
maintain the property in a good state have been carried out and
continue to be carried out. There were also positive meetings with
the three rent paying tenants.
The Directors have valued the Dar-es-Salaam Property at US$3.8
million to reflect the current legal uncertainty regarding
Dovetel's occupation. The latest valuation by a local expert puts a
market value of US$6.5 million on the building without taking into
account this legal uncertainty.
Financial Results
The basis of preparation of the financial statements reflects
the changes introduced in the prior year by IFRS 10. A more
detailed explanation is given in note 2.1 to the financial
statements. The results now reflect the Company's position and no
longer a Group position.
The loss for the year to 31 December 2015 was US$2.1 million
(2014: loss of US$16.6 million), representing US$0.0284 loss per
Ordinary Share (2014: loss per Ordinary Share US$0.2169). The loss
for the year was made up of a loss arising on the adjustment of the
fair value of assets, operating and administrative costs including
the cost of the tender offer and the remaining expenses associated
with the Disposal.
The Directors, having considered the value achieved on the
Disposal and the latest valuation of the Dar-es-Salaam Property,
together with the current legal uncertainty regarding Dovetel's
occupation of it, are of the opinion that the rail assets and the
Dar-es-Salaam Property are reflected in the balance sheet at
realistic fair values.
As at 31 December 2015, PME's Net Asset Value attributable to
ordinary shareholders in accordance with IFRS was US$9.1 million
(US$0.22 per share), compared to the US$18.3 million (US$0.24 per
share) that was reported as at 31 December 2014.
Return of Cash and Outlook
The Directors intend to exercise the Option for the three
remaining C30 locomotives in the last quarter of 2016. In addition
the Directors expect to start the marketing process for the sale of
the Dar-es-Salaam Property in the second half of 2016, provided the
outstanding legal issues have been resolved, necessary repairs
concluded and the space currently occupied by Dovetel has been
relet.
Based on the results of these actions, the Directors anticipate
that another tender offer will be proposed to shareholders in
2017.
Paul Macdonald
Chairman
21 April 2016
Statement of Comprehensive Income
Year ended 31 December 2015 Year ended 31 December 2014
Note US$'000 US$'000
Net losses on financial assets at fair
value through profit or loss 10 (441) (13,553)
Dividend income - 904
Operating and administration expenses 5 (1,110) (1,192)
Project related expenses 6 (594) (2,873)
Foreign exchange gain 65 84
------------------------------------------ ----- ------------------------------------- ----------------------------
Operating loss (2,080) (16,630)
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Finance income 7 15 -
Finance costs 7 (36) (16)
Loss before income tax (2,101) (16,646)
Income tax 8 - -
------------------------------------------ ----- ------------------------------------- ----------------------------
Loss and total comprehensive expense for
the year (2,101) (16,646)
Basic and diluted loss per share (cents)
attributable to the equity holders of
the Company
during the year 9 (2.84) (21.69)
------------------------------------------ ----- ------------------------------------- ----------------------------
Balance Sheet
Note As at 31 December 2015 As at 31 December 2014
US$'000 US$'000
------------------------------------------------------- ----- ----------------------- -----------------------
Assets
Current assets
Financial assets at fair value through profit or loss 10 7,856 19,560
Trade and other receivables 11 32 41
Cash and cash equivalents 12 1,331 144
------------------------------------------------------- ----- ----------------------- -----------------------
Total current assets 9,219 19,745
------------------------------------------------------- ----- ----------------------- -----------------------
Total assets 9,219 19,745
------------------------------------------------------- ----- ----------------------- -----------------------
Equity and liabilities
Equity
Issued share capital 13 410 768
Capital redemption reserve 14 1,395 1,037
Retained earnings 7,271 16,528
------------------------------------------------------- ----- ----------------------- -----------------------
Total equity 9,076 18,333
------------------------------------------------------- ----- ----------------------- -----------------------
Current liabilities
Secured loan 16 - 744
Trade and other payables 17 143 668
-----
Total current liabilities 143 1,412
------------------------------------------------------- ----- ----------------------- -----------------------
Total liabilities 143 1,412
------------------------------------------------------- ----- ----------------------- -----------------------
Total equity and liabilities 9,219 19,745
------------------------------------------------------- ----- ----------------------- -----------------------
Statement of Changes in Equity
Share capital Capital redemption reserve Retained earnings Total
US$'000 US$'000 US$'000 US$'000
--------------------------------------- ----------------------------- ------------------ ---------
Balance at 1 January 2014 768 1,037 33,174 34,979
---------------------------------------- ----------- ---------------- ------------------ ---------
Comprehensive expense
Loss for the year - - (16,646) (16,646)
---------------------------------------- ----------- ---------------- ------------------ ---------
Total comprehensive expense for the
year - - (16,646) (16,646)
---------------------------------------- ----------- ---------------- ------------------ ---------
Balance at 31 December 2014 768 1,037 16,528 18,333
---------------------------------------- ----------- ---------------- ------------------ ---------
Balance at 1 January 2015 768 1,037 16,528 18,333
------------------------------------------ ------ ------ -------- --------
Comprehensive expense
Loss for the year - - (2,101) (2,101)
------------------------------------------ ------ ------ -------- --------
Total comprehensive expense for the year - - (2,101) (2,101)
------------------------------------------ ------ ------ -------- --------
Transactions with owners
Tender offer (notes 13 and 14) (358) 358 (7,156) (7,156)
------------------------------------------ ------ ------ -------- --------
Total transactions with owners (358) 358 (7,156) (7,156)
------------------------------------------ ------ ------ -------- --------
Balance at 31 December 2015 410 1,395 7,271 9,076
------------------------------------------ ------ ------ -------- --------
Cash Flow Statement
Note Year ended 31 December 2015 Year ended 31 December 2014
US$'000 US$'000
--------------------------------------------------- ----- ---------------------------- ----------------------------
Cash flows from operating activities
Purchase of financial assets - loans to investee
companies 10 (237) -
Proceeds from sale of financial assets - return of
capital 10 11,500 -
Proceeds from sale of financial assets - repayment
of loans to investee companies 10 - 452
Interest received 15 -
Interest paid 16 (36) -
Dividends received - 904
Operating expenses paid (2,219) (3,601)
---------------------------- ----------------------------
Net cash generated from/(used in) operating
activities 9,023 (2,245)
--------------------------------------------------- ----- ---------------------------- ----------------------------
Financing activities
Tender offer 13 (7,156) -
Loan from third party 16 486 809
Repayment of loan from third party 16 (1,137) -
Net cash (used in)/generated from financing
activities (7,807) 809
--------------------------------------------------- ----- ---------------------------- ----------------------------
Net increase/(decrease) in cash and cash
equivalents 1,216 (1,436)
Cash and cash equivalents at beginning of year 144 1,587
Foreign exchange losses on cash and cash
equivalents (29) (7)
--------------------------------------------------- ----- ---------------------------- ----------------------------
Cash and cash equivalents at end of year 12 1,331 144
--------------------------------------------------- ----- ---------------------------- ----------------------------
Notes to the Financial Statements
1 General Information
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PME African Infrastructure Opportunities plc (the "Company") was
incorporated and is registered and domiciled in the Isle of Man
under the Isle of Man Companies Acts 1931 to 2004 on 19 June 2007
as a public limited company with registered number 120060C. The
investment objective of PME African Infrastructure Opportunities
plc and its subsidiaries (the "Group") was to achieve significant
total return to investors through investing in various
infrastructure projects and related opportunities across a range of
countries in sub-Saharan Africa. On 19 October 2012 the
shareholders approved the revision of the Company's investing
policy which is now to realise the remaining assets of the Company
and to return both existing cash reserves and the proceeds of
realisation of the remaining assets to shareholders.
The Company's investment activities were managed by PME
Infrastructure Managers Limited (the "Investment Manager") to 6
July 2012. No alternate has been appointed and the Board of
Directors has assumed responsibility for the management of the
Company's remaining assets. The Company's administration is
delegated to Galileo Fund Services Limited (the "Administrator").
The registered office of the Company is Millennium House, 46 Athol
Street, Douglas, Isle of Man, IM1 1JB.
Pursuant to its AIM admission document dated 6 July 2007, there
was an original placing of up to 180,450,000 Ordinary Shares with
Warrants attached on the basis of 1 Warrant for every 5 Ordinary
Shares. Following the close of the placing on 12 July 2007,
180,450,000 Shares and 36,090,000 Warrants were issued. The
Warrants lapsed in July 2012. The Shares of the Company were
admitted to trading on AIM, a market of the London Stock Exchange,
on 12 July 2007 when dealings also commenced.
Financial year end
The financial year end for the Company is 31 December in each
year.
Dividends
In the year to 31 December 2015 the Company declared and paid
dividends of US$nil (2014: US$nil). A tender offer took place in
November 2015 with up to 38,376,948 shares being available for
tender at a price of US$0.20 per share. A total of 35,780,661
shares were validly tendered and were cancelled upon completion on
4 December 2015.
Going concern
In assessing the going concern basis of preparation of the
financial statements for the year ended 31 December 2015, the
Directors have taken into account the status of current
negotiations on the realisation of the remaining assets. The
Directors consider that the Group has sufficient funds for its
ongoing operations and therefore have continued to adopt the going
concern basis in preparing these financial statements.
2 Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all years presented unless otherwise
stated.
2.1 Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union. The financial statements have been prepared
under the historical cost convention, as modified by the
revaluation of financial assets at fair value through profit or
loss, and the requirements of the Isle of Man Companies Acts 1931
to 2004. The preparation of financial statements in conformity with
IFRS requires the use of accounting estimates. It also requires
management to exercise its judgement in the process of applying the
Company's accounting policies. The areas involving a higher degree
of judgement or complexity, or areas where assumptions and
estimates are significant to the financial statements are disclosed
in note 10.
In accordance with IFRS 10, 'Consolidated financial statements',
the Directors have concluded that the Company falls under the
definition of an investment entity because the Company has the
following characteristics:
-- the Company has obtained funds for the purpose of providing
investors with investment management services;
-- the Company's investing policy, which was communicated
directly to investors, is investment solely for returns from
capital appreciation and investment income; and
-- the performance of investments is measured and evaluated on a fair value basis.
As a result, the Company does not consolidate its subsidiaries,
instead it is required to account for these subsidiaries at fair
value through profit or loss in accordance with IAS 39, 'Financial
instruments: recognition and measurement' and prepares separate
company financial statements only.
a) New and amended standards and interpretations adopted by the
Company
There are no new international standards, amendments or
interpretations that are effective for the first time for the
financial year ended 31 December 2015 that have had a significant
effect on the financial statements.
b) New standards, amendments and interpretations to existing
standards relevant to the Company, that are not yet effective and
have not been early adopted by the Company
IFRS 9, 'Financial instruments', final version issued July 2014.
This standard replaces the guidance in IAS 39, 'Financial
instruments: recognition and measurement'. IFRS 9 retains but
simplifies the mixed measurement model and establishes two primary
categories for financial assets: amortised cost and fair value. The
basis of classification depends on the entity's business model and
the contractual cash flow characteristics of the financial asset.
For financial liabilities, IFRS 9 retains most of the IAS 39
requirements, but in cases where the fair value option is taken,
the part of a fair value change in a financial liability due to an
entity's own credit risk is recorded in other comprehensive income
rather than the income statement (unless this creates an accounting
mismatch). The standard is not applicable until 1 January 2018 but
is available for early adoption. However, the standard has not yet
been endorsed by the EU. The Company is yet to assess IFRS 9's full
impact.
2.2 Critical accounting estimates
The Company makes estimates and assumptions concerning the
future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year are in relation to the financial assets at
fair value through profit or loss, see notes 2.6 and 10.
2.3 Foreign currency translation
a) Functional and presentation currency
Items included in the financial statements are measured using
the currency of the primary economic environment in which the
entity operates ('the functional currency'). These financial
statements are presented in US Dollars, which is the Company's
functional and presentation currency.
b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the statement
of comprehensive income.
2.4 Revenue and expense recognition
Interest income is recognised in the financial statements on a
time-proportionate basis using the effective interest method.
Interest expense for borrowings is recognised in the financial
statements using the effective interest method.
Dividend income is recognised when the right to receive payment
is established.
Expenses are accounted for on an accruals basis.
2.5 Operating segments
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker is the person or group that
allocates resources to and assesses the performance of the
operating segments of an entity. The chief operating
decision-makers have been identified as the Board of Directors.
2.6 Financial assets and financial liabilities
The Company classifies its financial assets in the following
categories: at fair value through profit or loss, and loans and
receivables. The classification depends on the purpose for which
the financial assets were acquired. Management determines the
classification of its financial assets at initial recognition.
The Company designates its investments, including equity,
related loans and similar instruments (note 10), as at fair value
through profit or loss on initial recognition if they are not
classified as held for trading but are managed, and their
performance is evaluated on a fair value basis in accordance with
the Company's investing policy. Such investments are initially
recorded at fair value, and transaction costs for all financial
assets and financial liabilities carried at fair value through
profit or loss are expensed as incurred. Gains and losses arising
from changes in the fair value of financial assets, including
foreign exchange movements, are recognised in the statement of
comprehensive income.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities
greater than 12 months after the balance sheet date which are
classified as non-current assets. The Company's loans and
receivables comprise 'trade and other receivables' and 'cash at
bank' in the balance sheet (notes 11 and 12). Loans and receivables
are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method, less provision
for impairment. A provision for impairment is established when
there is objective evidence that the Company will not be able to
collect all amounts due according to the original terms of the
receivables.
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The Company classifies its financial liabilities in the
following categories: at fair value through profit or loss and
other liabilities. At 31 December 2015 and 2014 the Company did not
have any financial liabilities at fair value through profit or
loss. Other liabilities are loans and trade creditors which are
included in 'secured loan' and 'trade and other payables' in the
balance sheet (notes 16 and 17).
Regular purchases and sales of investments are recognised on the
trade date, being the date on which the Company commits to purchase
or sell the investment. Financial assets are derecognised when the
rights to receive cash flows from the investments have expired or
the Company has transferred substantially all risks and rewards of
ownership.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value of
financial assets and liabilities that are not traded in an active
market is determined using valuation techniques. The Company uses a
variety of methods and makes assumptions that are based on market
conditions existing at each reporting date. Valuation techniques
used include the use of comparable recent or proposed arm's length
transactions, discounted cash flow analysis and other valuation
techniques commonly used by market participants.
2.7 Trade and other receivables
Trade and other receivables are initially stated at fair value
and subsequently measured at amortised cost using the effective
interest method, less impairment.
A provision for impairment is established when there is
objective evidence that the Company will not be able to collect all
amounts to be received. Significant financial difficulties of the
counterparty, probability that the counterparty will enter
bankruptcy or financial reorganisation, and default in payments are
considered indicators that the amount to be received is impaired.
Once a financial asset or a group of similar financial assets has
been written down as a result of an impairment loss, interest
income is recognised using the rate of interest used to discount
the future cash flows for the purpose of measuring the impairment
loss.
2.8 Cash and cash equivalents
Cash and cash equivalents comprise cash deposited with banks
held with original maturities of less than three months.
2.9 Trade and other payables
Trade and other payables are recognised initially at fair value
and subsequently at amortised cost using the effective interest
method.
2.10 Share capital
Ordinary Shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds.
2.11 Dividends and tender offers
Dividends and tender offers are recognised as a liability in the
year in which they are declared and approved.
3 Risk Management
The Company's activities expose it to a variety of financial
risks: market risk (including foreign currency risk and interest
rate risk), credit risk and liquidity risk. The financial risks
relate to the following financial instruments: financial assets at
fair value through profit or loss, loans and receivables, cash and
cash equivalents, secured loan and trade and other payables. The
accounting policies with respect to these financial instruments are
described in note 2.
Risk management is carried out by the Executive Directors.
Foreign currency risk
Foreign currency risk is the risk that the value of financial
instruments will fluctuate due to changes in foreign exchange
rates. The Company's operations are conducted in jurisdictions
which generate revenue, expenses, assets and liabilities in
currencies other than US Dollars. As a result, the Company is
subject to the effects of exchange rate fluctuations with respect
to these currencies. The currencies giving rise to this risk are
South African Rand, Euro and Pound Sterling.
The Company's policy is not to enter into any currency hedging
transactions.
The table below summarises the Company's exposure to foreign
currency risk:
31 December 2015 Monetary Assets Monetary Liabilities Total
US$'000 US$'000 US$'000
-------------------- ---------------- --------------------- ---------
South African Rand - - -
Euro - (3) (3)
Pound Sterling 27 (140) (113)
27 (143) (116)
-------------------- ---------------- --------------------- ---------
31 December 2014 Monetary Assets Monetary Liabilities Total
US$'000 US$'000 US$'000
-------------------- ---------------- --------------------- ---------
South African Rand 1 - 1
Euro - (744) (744)
Pound Sterling 83 (605) (522)
84 (1,349) (1,265)
-------------------- ---------------- --------------------- ---------
The Board of Directors monitors and reviews the Company's
currency position on a continuous basis and act accordingly.
At 31 December 2015, had the US Dollar strengthened by 3% (2014:
strengthened by 6%) in relation to South African Rand, Euro and
Pound Sterling, with all other variables held constant, the
shareholders' equity would have increased by the amounts shown
below:
2015 2014
US$'000 US$'000
---------------------- --------- ---------
South African Rand - -
Euro - 42
Pound Sterling 3 30
Effect on net assets 3 72
---------------------- --------- ---------
Interest rate risk
Interest rate risk is the risk that the value of financial
instruments will fluctuate due to changes in market interest rates.
The Company is not exposed to significant interest rate risk from
the cash held in interest bearing accounts at floating rates or
short term deposits of one month or less. The secured loan is at a
fixed rate of interest. The Board of Directors monitor and review
the interest rate fluctuations on a continuous basis and act
accordingly.
During the year ended 31 December 2015 should interest rates
have decreased by 100 basis points, with all other variables held
constant, the shareholders' equity and the result for the year
would have been US$ 7,000 (2014: 10 basis points US$nil) lower as a
result of the impact on bank balances.
Credit risk
Credit risk is the risk that a counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Company.
The carrying amounts of financial assets best represent the
maximum credit risk exposure at the balance sheet date. This
relates also to financial assets carried at amortised cost. Any
change in credit quality of financial assets at fair value through
profit or loss is reflected in the fair value of the asset.
At the reporting date, the Company's financial assets exposed to
credit risk amounted to the following:
31 December 2015 31 December 2014
US$'000 US$'000
------------------------------------------------------- ----------------- -----------------
Financial assets at fair value through profit or loss 7,856 19,560
Trade and other receivables - 11
Cash and cash equivalents 1,331 144
9,187 19,715
------------------------------------------------------- ----------------- -----------------
The Company manages its credit risk by monitoring the
creditworthiness of counterparties regularly. Cash transactions and
balances are limited to high-credit-quality financial institutions
(at least an Aa2 credit rating).
Liquidity risk
Liquidity risk is the risk that the Company will not be able to
meet its obligations as they fall due. The Company currently
manages its liquidity risk by maintaining sufficient cash. The
Company and the Group's liquidity positions are monitored by the
Board of Directors.
The residual undiscounted contractual maturities of financial
liabilities are as follows:
31 December 2015 Less than 1 month 1-3 months 3 months to 1 1-5 years Over 5 years No stated
year maturity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------ ------------------ ----------- ------------------ ---------- ------------- ------------------
Financial
liabilities
Trade and other 143 - - - - -
payables
143 - - - - -
------------------ ------------------ ----------- ------------------ ---------- ------------- ------------------
31 December 2014 Less than 1 month 1-3 months 3 months to 1 1-5 years Over 5 years No stated
year maturity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
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------------------ ------------------ ----------- ------------------ ---------- ------------- ------------------
Financial
liabilities
Secured loan - - 744 - - -
Trade and other 668 - - - - -
payables
668 - 744 - - -
------------------ ------------------ ----------- ------------------ ---------- ------------- ------------------
Capital risk management
The Company's primary objective when managing its capital base
was to safeguard the Company's ability to continue as a going
concern in order to realise the remaining assets of the Company at
a time and under such conditions as the Directors may determine in
order to maximise value on behalf of the shareholders of the
Company and to return both existing cash reserves and the proceeds
of realisation of the remaining assets to shareholders.
Company capital comprises share capital and reserves.
No changes were made in respect of the objectives, policies or
processes in respect of capital management during the years ended
31 December 2014 and 2015.
4 Operating Segments
The chief operating decision-makers have been identified as the
Board of Directors. The Board reviews the Company's internal
reporting in order to assess performance and allocate resources. It
has determined the operating segments based on these reports. The
Board considers the business on a project by project basis by type
of business. The type of business is transport (railway) and
leasehold property.
Year ended 31 December 2015 Transport Leasehold Other* Total
Property
PME RSACO PME Locomotives PME TZ Property
US$'000 US$'000 US$'000 US$'000 US$'000
-------------------------------------------------- ---------- ---------------- ---------------- -------- --------
Net losses on financial assets at fair value
through profit or loss (34) (738) 346 (15) (441)
Finance income - - - 15 15
Finance costs - - - (36) (36)
Loss for the year (34) (738) 346 (1,675) (2,101)
Segment assets - 3,988 3,868 1,363 9,219
Segment liabilities - - - (143) (143)
-------------------------------------------------- ---------- ---------------- ---------------- -------- --------
* Other refers to income and expenses of the Company not
specific to any specific sector such as income on un-invested funds
and corporate expenses. Other assets comprise cash and cash
equivalents US$1,330,692 and other assets US$31,655.
Year ended 31 December 2014 Transport Leasehold Other* Total
Property
PME RSACO PME Locomotives PME TZ Property
US$'000 US$'000 US$'000 US$'000 US$'000
------------------------------------------------- ---------- ---------------- ---------------- -------- ---------
Net losses on financial assets at fair value
through profit or loss (3,881) (9,355) (301) (16) (13,553)
Finance income - 554 350 - 904
Finance costs - - - (16) (16)
Loss for the year (3,882) (8,801) 49 (4,012) (16,646)
Segment assets 1 16,079 3,480 185 19,745
Segment liabilities - - - (1,412) (1,412)
------------------------------------------------- ---------- ---------------- ---------------- -------- ---------
** Other refers to income and expenses of the Company not
specific to any specific sector such as income on un-invested funds
and corporate expenses. Other assets comprise cash and cash
equivalents US$144,400 and other assets US$41,600.
5 Operating and Administration Expenses
Year ended 31 December 2015 Year ended 31 December 2014
US$'000 US$'000
--------------------------------------- ---------------------------- ----------------------------
Administration expenses 183 187
Administrator and Registrar fees 97 103
Audit fees 72 85
Directors' fees 288 334
Professional fees 404 377
Other 66 106
--------------------------------------- ---------------------------- ----------------------------
Operating and administration expenses 1,110 1,192
--------------------------------------- ---------------------------- ----------------------------
Administrator and Registrar fees
The Administrator receives a fee of 10 basis points per annum of
the net assets of the Company between GBP0 and GBP50 million; 8.5
basis points per annum of the net assets of the Company between
GBP50 and GBP100 million and 7 basis points per annum of the net
assets of the Company in excess of GBP100 million, subject to a
minimum monthly fee of GBP4,000 and a maximum monthly fee of
GBP12,500 payable quarterly in arrears.
Administration fees expensed by the Company for the year ended
31 December 2015 amounted to US$87,929 (31 December 2014:
US$93,701).
The Administrator provides general secretarial services to the
Company, for which it receives a minimum annual fee of GBP5,000.
Additional fees, based on time and charges, will apply where the
number of Board meetings exceeds four per annum. For attendance at
meetings not held in the Isle of Man, an attendance fee of GBP750
per day or part thereof will be charged. The fees payable by the
Company for general secretarial services for the year ended 31
December 2015 amounted to US$9,159 (31 December 2014:
US$9,761).
From 26 October 2010 the Administrator has been appointed to
oversee the administration of the Mauritian subsidiaries. The
minimum annual fee for each of these companies is GBP5,000 per
annum. Administration fees of the Mauritian subsidiaries for the
year ended 31 December 2015 amounted to US$42,266 (31 December
2014: US$51,066).
From 31 January 2013, the Administrator has been appointed to
act as administrator of PME Properties Limited and to provide
accounting, valuation and certain other administrative services to
that company. The minimum annual administration fee of this company
is GBP2,500 per annum. Administration fees of PME Properties
Limited for the year ended 31 December 2015 amounted to US$24,010
(31 December 2014: US$46,740).
Directors' remuneration
The maximum amount of basic remuneration payable by the Company
by way of fees to the Non-executive Directors permitted under the
Articles of Association is GBP200,000 per annum. The Directors are
each entitled to receive reimbursement of any expenses incurred in
relation to their appointment. The Non-executive Director was
entitled to receive an annual fee of GBP30,000 prior to
resignation. The Executive Directors are entitled to receive annual
basic salaries of GBP75,000.
Total fees and basic remuneration (including VAT where
applicable) and expenses payable by the Company for the year ended
31 December 2015 amounted to US$288,282 (31 December 2014:
US$333,753) and was split as below. Directors' insurance cover
payable amounted to US$29,972 (31 December 2014: US$30,000).
Year ended 31 December 2015 Year ended 31 December 2014
US$'000 US$'000
----------------------- ---------------------------- ----------------------------
Paul Macdonald 114 122
Lawrence Kearns 128 137
Graca Machel* - 28
Expense reimbursement 46 47
288 334
----------------------- ---------------------------- ----------------------------
* Non-executive, resigned 17 July 2014
6 Project Related Expenses
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On 26 June 2014 the Company announced that it was in
negotiations to acquire the remaining 50 per cent. of the issued
share capital in and shareholder loans to Sheltam Holdings not
currently owned or made by the Company in consideration for the
issue of new ordinary shares in PME. The Company received approval
from the South African Competition Commission on 25 July 2014 with
respect to the acquisition but the resolutions of the Company's
shareholders to approve the acquisition considered at the
extraordinary general meeting of the Company held on 11 August 2014
were not passed and therefore the acquisition did not proceed.
Transaction costs in relation to this proposed acquisition
totalled $2,873,570.
On 17 April 2015 the Company entered into an agreement to sell
the majority of the Group's rail assets for an aggregate cash
consideration of US$11.5 million (the "Sale Transaction") and also
entered into a put option agreement in respect of the Company's
remaining rail assets.
The sale included the Company's interest in the share capital of
PME RSACO (Mauritius) Limited, together with certain intercompany
loans and seven of the ten C30 locomotives which were subject to
the finance lease held by PME Locomotives (Mauritius) Limited. The
Group continues to own the remaining three C30 locomotives but
holds a put option for US$1 to require the buyer to purchase one or
more of the remaining locomotives for US$1,416,666 per locomotive
at any point during a 90 day period commencing 18 months following
the completion of the disposal. All conditions of the disposal were
met by the end of April 2015 and as a result the Sale Transaction
completed on 5 May 2015.
Transaction costs in relation to this sale for the year ended 31
December 2015 totalled $593,583.
7 Net Finance Expense
Year ended 31 December 2015 Year ended 31 December 2014
US$'000 US$'000
Bank interest income 15 -
Finance income 15 -
------------------------------- ---------------------------- ----------------------------
Interest charge (see note 16) (36) (16)
------------------------------- ---------------------------- ----------------------------
Finance expense (36) (16)
------------------------------- ---------------------------- ----------------------------
Net finance expense (21) (16)
------------------------------- ---------------------------- ----------------------------
8 Income Tax Expense
The Company is resident for taxation purposes in the Isle of Man
and is subject to income tax at a rate of zero per cent (2014: zero
per cent).
9 Basic and Diluted Loss per Share
Basic loss per share is calculated by dividing the loss
attributable to equity holders of the Company by the weighted
average number of Ordinary Shares in issue during the year.
Year ended 31 December 2015 Year ended 31 December 2014
---------------------------------------------------------- ---------------------------- ----------------------------
Loss attributable to equity holders of the Company
(US$'000) (2,101) (16,646)
Weighted average number of Ordinary Shares in issue
(thousands) 74,009 76,754
---------------------------------------------------------- ---------------------------- ----------------------------
Basic loss per share (cents) for the year (2.84) (21.69)
---------------------------------------------------------- ---------------------------- ----------------------------
There is no difference between basic and diluted Ordinary Shares
as there are no potential dilutive Ordinary Shares.
10 Financial Assets at Fair Value through Profit or Loss
The following subsidiaries of the Company are held at fair value
in accordance with IFRS 10:
Country of incorporation Percentage of shares held
------------------------------------- -------------------------- --------------------------
PME Locomotives (Mauritius) Limited Mauritius 100%
PME Tanco (Mauritius) Limited Mauritius 100%
PME TZ Property (Mauritius) Limited Mauritius 100%
------------------------------------- -------------------------- --------------------------
The following company is an indirect investment of the Company
and is included within the fair value of the direct
investments:
Country of incorporation Percentage of shares held Parent company
----------------------- ------------------------- -------------------------- ------------------------------------
PME Properties Limited Tanzania 100% PME TZ Property (Mauritius) Limited
----------------------- ------------------------- -------------------------- ------------------------------------
The following table shows a reconciliation of the opening
balances to the closing balances for fair value measurements:
31 December 2015 31 December 2014
US$'000 US$'000
---------------------------------------------------- ----------------- -----------------
Start of the year 19,560 33,565
Increase/(decrease) in loans to investee companies 237 (452)
Return of capital* (11,500) -
Movement in fair value of financial assets (441) (13,553)
End of the year 7,856 19,560
---------------------------------------------------- ----------------- -----------------
* The return of capital relates to a share buyback conducted by
PME Locomotives (Mauritius) Limited in May 2015.
During the year the Group disposed of its holding in PME RSACO
(Mauritius) Limited (which included the Group's indirect holding in
Sheltam Holdings) for total consideration of US$1. This resulted in
a loss on disposal of US$10,576 which is included in the movement
in fair value of financial assets.
Assets carried at amounts based on fair value are defined as
follows:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
-- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (Level
2).
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (Level
3).
The fair values of all financial assets at fair value through
profit or loss are determined using valuation techniques using
significant unobservable inputs. Accordingly, the fair values are
classified as level 3. There were no transfers between levels
during the year. The key inputs and most significant unobservable
inputs are shown below.
Fair value as at Fair value as at Valuation Significant Sensitivity to
31 December 2015 31 December 2014 technique unobservable significant
inputs unobservable inputs
US$'000 US$'000
------------------ ------------------ ------------------ ----------------- ----------------- --------------------
Rail assets (PME 3,988 16,080 Agreed/ proposed Estimated N/A
Locomotives transaction recovery value
(Mauritius) terms less value
Limited and PME of other net
RSACO (Mauritius) liabilities
Limited)
Real estate 3,868 3,480 Adjusted Discount rate If the discount
investments (PME discounted cash rate were 1%
TZ Property flow property higher/lower the
(Mauritius) valuation estimated fair
Limited) plus value of Estimated value would
other net assets adjustment for (decrease)/increase
caveat and non by US$27,000
rent paying
tenant (Dovetel) N/A
------------------ ------------------ ------------------ ----------------- ----------------- --------------------
Total 7,856 19,560
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------------------ ------------------ ------------------ ----------------- ----------------- --------------------
Commitments under operating leases relating to PME Properties
Limited are disclosed in note 18.
11 Trade and Other Receivables
31 December 2015 31 December 2014
US$'000 US$'000
----------------------------- ----------------- -----------------
VAT receivable - 11
Prepayments 32 30
Trade and other receivables 32 41
----------------------------- ----------------- -----------------
12 Cash and Cash Equivalents
31 December 2015 31 December 2014
US$'000 US$'000
--------------------------- ----------------- -----------------
Bank balances 1,331 144
--------------------------- ----------------- -----------------
Cash and cash equivalents 1,331 144
--------------------------- ----------------- -----------------
13 Share Capital
Ordinary Shares of US$0.01 each 31 December 2015 and 2014 31 December 2015 and 2014
Number US$'000
--------------------------------- -------------------------- --------------------------
Authorised 500,000,000 5,000
--------------------------------- -------------------------- --------------------------
C Shares of US$1 each 31 December 2015 and 2014 31 December 2015 and 2014
Number US$'000
----------------------- -------------------------- --------------------------
Authorised 5,000,000 5,000
Issued - -
----------------------- -------------------------- --------------------------
Ordinary Shares of US$0.01 each 31 December 2015 31 December 2014
US$'000 US$'000
-------------------------------------------------------------------------------- ----------------- -----------------
40,973,236 (31 December 2014: 76,753,897) Ordinary Shares in issue, with full
voting rights 410 768
410 768
-------------------------------------------------------------------------------- ----------------- -----------------
At incorporation the authorised share capital of the Company was
US$10,000,000 divided into 500,000,000 Ordinary Shares of US$0.01
each and 5,000,000 C Shares of US$1.00 each. The holders of
Ordinary Shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at meetings of
the Company.
The holders of C Shares would be entitled to one vote per share
at the meetings of the Company. The C Shares can be converted into
Ordinary Shares on the approval of the Directors. On conversion
each C share would be sub-divided into 100 C Shares of US$0.01 each
and will be automatically converted into New Ordinary Shares of
US$0.01 each.
On 12 July 2007, the Company raised a gross amount of
US$180,450,000 following the admission of the Company's Ordinary
Shares to AIM. The Company placed 180,450,000 Ordinary Shares of
US$0.01 par value, at an issue price of US$1.00 per share, and
36,090,000 Warrants on a 1 Warrant per 5 Ordinary Shares basis.
The Warrants lapsed in July 2012. No subscriptions rights were
exercised prior to the Warrants lapsing.
A tender offer took place in November 2015. Up to 38,376,948
Ordinary Shares were available for tender at a price of US$0.20 per
share. A total of 35,780,661 Ordinary Shares with an aggregate
nominal value of US$357,807 were validly tendered and were
cancelled upon completion on 4 December 2015. Retained earnings
were reduced by US$7,156,132, being the consideration paid for
these shares.
14 Capital Redemption Reserve
The capital redemption reserve is created on the cancellation of
shares equal to the par value of shares cancelled. This reserve is
not distributable.
15 Net Asset Value per Share
As at 31 December 2015 As at 31 December 2014
---------------------------------------------------- ------------------------------- -------------------------------
Net assets attributable to equity holders of the
Company (US$'000) 9,076 18,333
Shares in issue (thousands) 40,973 76,754
---------------------------------------------------- ------------------------------- -------------------------------
NAV per share (US$) 0.22 0.24
---------------------------------------------------- ------------------------------- -------------------------------
The NAV per share is calculated by dividing the net assets
attributable to equity holders of the Company by the number of
Ordinary Shares in issue.
16 Secured Loan
On 10 October 2014 the Company entered into a secured loan
agreement with Helvetica Deutschland GmbH ("Helvetica") for
EUR600,000 to assist with general working capital. The loan was
secured on the Company's cash receivables, was repayable at par on
10 October 2015 and attracted interest at a rate of 10% per
annum.
On 12 February 2015 the Company entered into a further secured
loan agreement with Helvetica for a loan of EUR400,000 under the
same terms as the initial loan.
Interest payable by the Company for the year ended 31 December
2015 amounted to US$36,105.
Paul Macdonald holds 40% of Helvetica's issued share capital,
therefore Helvetica is deemed to be a related party of the Company
and the loan is a related party transaction.
The loans and all outstanding interest were settled in full on
completion of the disposal of rail assets in May 2015.
17 Trade and Other Payables
31 December 2015 31 December 2014
US$'000 US$'000
------------------------------------ ----------------- -----------------
Administration fees payable 24 24
Audit fee payable 69 90
CREST service provider fee payable 10 7
Directors' fees payable - 177
Legal fees payable 15 183
Other sundry creditors 25 187
143 668
------------------------------------ ----------------- -----------------
The fair value of the above financial liabilities approximates
their carrying amounts.
18 Contingent Liabilities and Commitments
PME Properties Limited has entered into a number of operating
lease agreements in respect of property. The lease terms are
between one and ten years and the majority of the lease agreements
are renewable at the end of the lease period at market rates.
The Groups' future aggregate minimum lease payments, by virtue
of its indirect investment in PME Properties Limited, under
operating leases are as follows:
31 December 2015 31 December 2014
US$'000 US$'000
----------------------------------------- --------------------------- ---------------------------
Amounts payable under operating leases:
Within one year - 68
In the second to fifth years inclusive 200 180
Beyond five years 1,280 1,340
----------------------------------------- --------------------------- ---------------------------
1,480 1,588
----------------------------------------- --------------------------- ---------------------------
19 Related Party Transactions
Parties are considered to be related if one party has the
ability to control the other party or to exercise significant
influence over the other party in making financial or operational
decisions. Key management is made up of the Board of Directors.
The Directors of the Company are considered to be related
parties by virtue of their influence over making operational
decisions. Directors' remuneration is disclosed in note 5 and the
related party loan is disclosed in note 16.
20 Financial Statements
The financial information set out in this announcement does not
constitute statutory accounts but has been extracted from the
Group's Financial Statements. The Group's annual report will be
posted to shareholders shortly and will be available on the
Company's website www.pmeinfrastructure.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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