TIDMERE
RNS Number : 3761J
Eredene Capital PLC
16 July 2013
Date: 16 July 2013
On behalf of: Eredene Capital PLC ("Eredene" or "Eredene Group")
Embargoed until: 0700hrs
Eredene Capital PLC
Preliminary Results for the year to 31 March 2013
Eredene Capital PLC (AIM: ERE), the AIM quoted investor in
Indian infrastructure, announces its preliminary results for the
year to 31 March 2013.
Highlights
-- Eredene Capital PLC ("Eredene", "Eredene Group", "the
Company") achieves its first full realisation
-- Sale of entire holding in Ocean Sparkle Limited for GBP8.2m,
post the year end, was at a gross premium over investment cost of
39% in Indian Rupee terms
-- Aim to return realisation proceeds to shareholders via
repayments of surplus capital, with next return in the region of
GBP20m to be proposed for approval at the AGM on 12 September
2013
-- Initial return of capital of GBP15.3m made in August 2012
-- Sale of stakes in low-cost housing developer Matheran Realty
and its subsidiary Gopi Resorts under negotiation
-- Adviser appointed to progress divestment of further
significant parts of Eredene's logistics portfolio
-- Orderly sales process in line with stated strategy to extract maximum value from portfolio
-- Total consolidated cash balance of GBP19.5m at 31 March 2013
(2012: GBP41.8m). Additional receipt of GBP8.2m following Ocean
Sparkle sale in June 2013
-- Loss for period of GBP9.1m (2012: loss of GBP6.0m) of which
GBP6.3m due to write-down of stakes in Matheran and Gopi
-- Net Asset Value attributable to equity shareholders of 17.2p
per share as at 31 March 2013 (2012: 19.6p)
Enquiries:
Eredene Capital PLC
Alastair King (Chief Executive) / Brian Tel: +44 20 7448
Mooney 8000
brian.mooney@eredene.com Tel: +44 7808
162 458
Eredene Capital Advisors Private Limited
Ranveer Sharma (Managing Director) Tel: +91 22 6737
Ranveer.Sharma@eredene.com 7373
Numis Securities Limited (Nominated adviser
& broker) Tel: +44 20 7260
Heraclis Economides (Nominated Adviser) 1000
/ David Benda
Redleaf Polhill (Financial PR)
Henry Columbine / David Ison / Hannah Fensome Tel: +44 20 7382
eredene@redleafpolhill.com 4720
Notes to Editors:
-- Eredene Capital PLC is a leading UK-based AIM quoted investor
in infrastructure projects in India. Following the sale of its
stake in OSL, it has a portfolio of eight principal investments in
India, seven in port services, warehousing and logistics and one in
low-cost housing (www.eredene.com).
-- Eredene trades on the Alternative Investment Market ("AIM")
of the London Stock Exchange.
Chairman's Statement
Summary
In line with its stated strategy, Eredene has begun an orderly
process of realising its investments in India and returning capital
to shareholders. A sale post year-end of Eredene's stake in Ocean
Sparkle Ltd, India's leading port operations and marine services
company, was achieved for GBP8.2m at a gross premium over
investment cost of 39% in Indian Rupee terms. An adviser was
appointed to handle the sale of further significant parts of the
Group's logistics investments, and negotiations continue for the
disposal of Eredene's stakes in a low-cost housing development near
Mumbai. Further phased capital repayments to shareholders are
planned following an initial return of GBP15.3m in August 2012. The
next return of capital, estimated to be in the region of GBP20m,
will be proposed for approval by shareholders at the AGM on 12
September 2013.
Financial Results
The results for the Group show a loss for the period of GBP9.1m
(2012: loss GBP6.0m) of which GBP6.3m related to the write-down in
value of the investments in Matheran and Gopi. As at 31 March 2013,
the Group had a Net Asset Value ("NAV") attributable to equity
shareholders of GBP62.4m (2012: GBP87.4m), representing 17.2p per
share (2012: 19.6p). Of the 2.4p decline in NAV per share, 1.7p was
due to the Matheran and Gopi write-down.
The Group had administrative expenses of GBP3.9m in the period
(2012: GBP4.0m) which included GBP0.8m (2012: GBP0.7m) of
administrative expenses relating to the Group's subsidiaries, MJ
Logistic Services and Sattva Conware. The Group had total
consolidated cash balance of GBP19.5m at 31 March 2013 (2012:
GBP41.8m) and received a further GBP8.2m from the sale of Ocean
Sparkle in June 2013.
Operating Review
Following the announcement last year that it would make no
investment in new projects, Eredene has started to extract value
from its portfolio by embarking on an orderly sale of its assets in
India with the aim ultimately to return all proceeds to
shareholders. A milestone was achieved with the sale in June 2013
of the Company's holding in Ocean Sparkle Limited ("OSL"), India's
leading port operations and marine services company. Eredene had a
fully diluted stake of 6.8% in OSL which it purchased in 2010
through a subsidiary, West Coast Port Ltd, for GBP7.3m. The sale to
Mauritius-based Infrastructure India Holdings Fund LLC for GBP8.2m
represented a gross premium of 39% over investment cost in Indian
Rupee terms and 12.3% in Sterling terms, significantly less because
of adverse exchange rate movement.
Eredene is actively engaged in negotiations for the sale of its
stakes in a low-cost housing development near Mumbai. The Company
announced in December 2012 that it had signed an indicative term
sheet with a potential purchaser for a cash payment of INR 625m
(GBP7.6m at 31 March 2013 exchange rate) for its stakes in Gopi
Resorts Pvt Ltd and Matheran Realty Pvt Ltd, the joint developers.
The deal has not been completed, and, although the term sheet
remains open, advanced discussions are now taking place with
another bidder who has recently signed a Letter of Intent to buy
the Company's holdings in the development at the same price. That
latter bidder is currently carrying out its due diligence review of
Matheran and Gopi. The Group's stakes in those companies have been
classified as an asset held for sale and have been written down to
the likely realisation value.
During the year the Company appointed the Avendus Group, a
Mumbai-based financial services provider, to handle the sale of
part of its logistics and warehousing investments. There is no
fixed realisation timetable, and Eredene has sufficient funds to
manage and service the companies in its portfolio until their sale
can be realised at prices which represent acceptable returns.
As it sells down its stakes in the companies, Eredene plans
further phased returns of capital to shareholders. An initial
return of GBP15.3m (equivalent to 3.4 pence per share) was made in
August 2012 via a tender offer at 18 pence per share. It is the
Board's intention to propose a further return of capital, likely to
be in the region of GBP20m, at the AGM which is scheduled to be
held on 12 September 2013. Further details will be sent to
shareholders together with the documentation convening the AGM. In
line with strategy, the Board intends to continue the orderly sale
of assets and the return of capital to shareholders. We reiterate
that there is no fixed timetable for the sale of these assets;
however this will ultimately lead to the delisting and winding up
of the Company.
Eredene's new advisory team in Mumbai continues to oversee and
monitor Eredene's investee companies with a brief to set and hold
the investee companies to challenging targets and to maximise their
value. The team, led by Ranveer Sharma, took over management of the
portfolio following the resignation of Eredene Infrastructure
Private Limited in September 2012. In difficult market conditions,
the investee companies generally performed well. A further GBP0.5m
has been invested into the existing investee companies during the
period, to ensure that the Group's stakes in those companies were
not significantly diluted.
Investee Companies
Despite a slow-down in India's growth and challenging economic
conditions, Eredene's investee companies generally performed well
during the past 12 months. Set out below are some of the key
developments and achievements.
-- MJ Logistic Services (MJL), a multi-user third party
logistics business in North India, posted revenue of GBP4.2m for
the financial year ended 31 March 2013, a 23% increase over the
previous year in Indian Rupee terms, and generated positive
Earnings before Tax, Interest, Depreciation and Amortisation.
MJL increased its total warehousing capacity to 800,000 square
feet. Its 200,000 square feet fully automated hub warehouse at
Palwal, on the Delhi-Agra Highway, provides both ambient and cold
storage warehousing. The major ambient customer is Tata Motors
Limited, the owner of Jaguar and Land Rover. Cold chain customers
include some of India's leading fast food companies such as
Domino's Pizza and Subway and other international companies such as
Du Pont Danisco and Unilever. A second cold chamber project is
under construction and will take cold storage capacity to 5,000
pallets. Nine acres of the 22-acre Palwal site are currently in
use.
-- Sattva CFS & Logistics' container freight station (CFS)
at Vichoor, a joint investment with the Sattva Business Group in
Tamil Nadu, paid a dividend for a fifth consecutive year. It
operates on a 26-acre site and handles containers from Chennai Port
and also provides facilities for on-site assembly of imported
machinery. Customers include South Korean machinery manufacturer
Doosan, NYK Line, Maersk, CMA-CGM and MSC. The CFS handled 75,300
TEUs (twenty foot equivalent units, the length of a standard
container) in 2012-13, compared to 68,000 TEUs in the previous
year, an 11% increase. After a poor first quarter in the financial
year, the business recovered strongly and posted annual revenue of
GBP3.7m, a year-on-year increase of 5% in Indian Rupee terms.
-- A second joint investment with the Sattva Business Group in
Tamil Nadu, Sattva Conware CFS, is located on a 60-acre site within
reach of both Ennore and Chennai ports and the newly opened
Kattupalli container terminal. It has a 120,000 square feet
container yard and a 32,000 square feet warehouse, but it was
unable to launch its export-import container business due to a lack
of the necessary Government-allocated customs staff. Despite this
delay, the CFS handled empty container boxes from Wan Hai and NYK
shipping lines and domestic cargo for Ford India.
-- Contrans Logistics' CFS near Pipavav port in Gujarat, one of
two Contrans projects in Northwest India, recorded a small
unaudited post-tax profit for the second consecutive year despite
falling volumes. Contrans CFS saw a year-on-year fall in container
volumes from 25,000 to 18,000 however volumes in the second half of
the financial year were significantly higher than in the first.
Cotton, oil seeds and other agricultural commodities were the
primary revenue earners. Major customers included shippers Maersk
India, Hapag-Lloyd and J.M. Baxi & Co, global chemical and
textile company GHCL and logistics providers Shreenathji Worldwide
and Gudwin Logistics. Maersk, the world's number one container
line, recently took measures to increase traffic at Pipavav port by
adding Pipavav to its India-Middle East-East Coast service, thereby
connecting its customers in Gujarat and the North India hinterland
to the US market.
-- Options are being explored to sell Contrans Logistics' other
project, a 128-acre greenfield site at Baroda in central Gujarat
which has planning permission to develop a rail and road Inland
Container Depot (ICD) on the busy Delhi-Mumbai freight corridor.
The market value of the site is at a significant premium to the
original purchase cost.
-- Eredene has two logistic parks in East India with investment
partner Apeejay Surrendra Group, the Kolkata-based tea and shipping
conglomerate. The two facilities - at Haldia and Kalinganagar - are
operated in a 50/50 joint company, Apeejay Infra-Logistics. They
offer integrated services for multi-modal logistics through
warehousing, container logistics and transportation, and both have
customs bonded facilities.
The Apeejay Infra-Logistics logistics park in Haldia, West
Bengal, is located on a 90-acre site close to the Port of Haldia, a
petrochemical centre at the mouth of the Hooghly River, with a
bonded warehouse of 54,000 square feet, three domestic warehouses
totalling 86,000 square feet and a container yard of 300,000 square
feet. During its first year of operations, the domestic warehouses
were fully occupied. Customers included shipping lines MSC,
CMA-CGM, Tata NYK, Hanjin and Maersk, and leading companies such as
Hindustan Unilever and Tata Steel.
The Apeejay Infra-Logistics 30-acre logistics park at
Kalinganagar in Orissa State, close to local steel and
metallurgical plants, has a domestic warehouse of 65,000 square
feet, a bonded warehouse of 19,000 square feet and a container yard
of 185,000 square feet. It is operational for storage of domestic
cargo, and has also been licensed as an ICD to handle export-import
cargo. The domestic warehouse and a substantial area of the open
yard are leased to logistics services provider Tata TKM.
-- Eredene is in the process of selling its interests in
Matheran and its subsidiary Gopi which are jointly developing a
mass low-cost housing project at Tanaji Malusare City near Mumbai.
There was limited construction activity during the year.
India's Economy
India's growth in Gross Domestic Product (GDP) declined for a
second consecutive year, with the economy expanding by 5.0% in the
year ended 31 March 2013, compared to 6.2% in 2012, according to
the Central Statistical Organisation (CSO). The Reserve Bank of
India cut interest rates in 2013, however the main policy rate
still stands at a comparatively high 7.25%. The Indian Rupee came
under significant selling pressure after the balance sheet date,
and has weakened against Sterling from 82.54 at 31 March 2013 to
90.54 on 30 June 2013.
The declining growth led to a slow-down in container traffic - a
core driver of Eredene's investments in port services and
logistics. Container traffic at India's 12 major ports totalled
7.7m TEUs in the fiscal year 2012-2013, representing a slight
decline of 0.91% compared to 7.8m TEUs in 2011-2012, according to
the Indian Ports Association (IPA). Container volume at the busiest
port of Jawaharlal Nehru (JNPT) stood at 4.3m TEUs, down 1.4% from
the previous year. The second busiest port, Chennai, handled 1.539m
TEUs, down 1.0% from a year earlier.
Outlook
We are pleased that the Company has now achieved its first full
exit, and we look forward to announcing a further significant
return of capital for approval by shareholders at the AGM on 12
September 2013.
The Company has now embarked on an orderly process of realising
its investments in India and we expect to announce more sales in
the course of the next 12 months with commensurate returns of
capital to shareholders.
Struan Robertson
Non-Executive Chairman
16 July 2013
Investment Portfolio Summary
Investment Amount Fair Sector Location Progress
invested Value
at 31/3/13 at
31/3/13
----------------------- ------------ ------------- -------------------- ---------------- ------------------------
1. Sattva CFS & GBP0.7m GBP4.5m Container Chennai, Revenue generating
Logistics - Vichoor Logistics Tamil & dividend paying
CFS Nadu
----------------------- ------------ ------------- -------------------- ---------------- ------------------------
2. Sattva Conware GBP3.8m N/A as Container Ennore, Operational & revenue
CFS subsidiary Logistics Tamil generating
Nadu
----------------------- ------------ ------------- -------------------- ---------------- ------------------------
Contrans Logistic GBP5.6m GBP8.5m
3. Project One: Container Pipavav, Operational & revenue
Pipavav CFS Logistics Gujarat generating
Container Baroda, Pre-construction
4. Project Two: Logistics Gujarat phase
Baroda ICD
----------------------- ------------ ------------- -------------------- ---------------- ------------------------
Apeejay GBP2.9m GBP4.1m
Infra-Logistics Logistics Haldia, Operational & revenue
5. Project One: Park West Bengal generating
Haldia Logistics
Park Kalinganagar, Operational & revenue
Logistics Orissa generating
6. Project Two: Park
Kalinganagar
Logistics
Park
----------------------- ------------ ------------- -------------------- ---------------- ------------------------
7. MJ Logistic GBP10.9m N/A as Warehousing Northern Operational & revenue
Services subsidiary & Third India generating
Party Logistics
----------------------- ------------ ------------- -------------------- ---------------- ------------------------
8. Matheran Realty GBP15.3m GBP7.5m Urban Development Mumbai Construction &
& Gopi Resorts region taking sales deposits
----------------------- ------------ ------------- -------------------- ---------------- ------------------------
9. Ocean Sparkle GBP7.3m GBP8.7m Marine operations Pan-India Revenue generating
& maintenance & dividend paying
----------------------- ------------ ------------- -------------------- ---------------- ------------------------
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2013
Year Year
ended 31 ended 31
March 2013 March 2012
Note GBP'000 GBP'000
Portfolio return and revenue
Realised profits over fair value on
disposal of investments - 134
Unrealised adjustments on the revaluation
of investments 7 285 (2,882)
Other portfolio income 70 93
------------ ------------
355 (2,655)
Revenue from services 4,376 3,957
Cost of sales for services (3,252) (3,005)
------------ ------------
Gross profit 1,124 952
Gross profit/(loss) and net portfolio
return 1,479 (1,703)
------------ ------------
Administrative expenses (3,924) (4,014)
Finance income 229 404
Finance costs (544) (709)
Loss before taxation (2,760) (6,022)
------------ ------------
Taxation (charged)/credited 4 (21) 29
Loss for the period from continuing
operations (2,781) (5,993)
Loss for the period from discontinued (6,301) -
operations
Loss after taxation (9,082) (5,993)
============ ============
Other comprehensive losses
Foreign currency translation (49) (1,778)
------------ ------------
Total comprehensive loss for the period (9,131) (7,771)
Loss attributable to:
Owners of the parent company (9,062) (5,954)
Non-controlling interests (NCI) (20) (39)
------------ ------------
(9,082) (5,993)
------------ ------------
Total comprehensive loss attributable
to:
Owners of the parent company (9,322) (7,501)
Non-controlling interests 191 (270)
------------ ------------
(9,131) (7,771)
------------ ------------
Loss per share Basic and diluted 6
From continuing operations (1.78)p (1.39)p
From discontinued operations (0.52)p -
(2.30)p (1.39)p
Consolidated Balance Sheet
at 31 March 2013
31 March 31 March
2013 2012
Note GBP'000 GBP'000
NON-CURRENT ASSETS
Property, plant and equipment 16,054 15,913
Investments held at fair value through
profit or loss 7 17,061 36,129
Intangible assets 917 953
Deferred income tax asset - 6
Other receivables 115 109
--------- ---------
34,147 53,110
--------- ---------
CURRENT ASSETS
Trade and other receivables 989 961
Cash and cash equivalents 19,543 41,839
---------
20,532 42,800
--------- ---------
Non-current assets classified as held
for sale 8 8,724 -
Assets of disposal group classified
as held for sale 8 16,673 -
TOTAL ASSETS 80,076 95,910
--------- ---------
CURRENT LIABILITIES
Trade and other payables (883) (442)
Current income tax liabilities (21) (6)
Borrowings (1,213) (798)
Provisions (310) (362)
NON-CURRENT LIABILITIES
Borrowings (4,083) (5,294)
Liabilities of disposal group classified
as held for sale 8 (8,478) -
TOTAL LIABILITIES (14,988) (6,902)
--------- ---------
TOTAL NET ASSETS 65,088 89,008
========= =========
EQUITY
Share capital 36,199 44,691
Share premium 16,268 16,268
Special reserve 17,311 32,826
Capital redemption reserve 8,492 -
Foreign exchange deficit (466) (256)
Retained deficit (15,409) (6,121)
Capital and reserves attributable to
equity shareholders
of the company 62,395 87,408
Non-controlling interests (NCI) 2,693 1,600
TOTAL EQUITY 65,088 89,008
========= =========
Consolidated Statement of Changes in Equity
for the year ended 31 March 2013
Capital Foreign Share
Share Share Special redemption exchange Retained holders Total
capital premium reserve reserve reserve deficit equity NCI equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended
31/3/13
As at 1 April
2012 44,691 16,268 32,826 - (256) (6,121) 87,408 1,600 89,008
--------- --------- --------- ------------ ---------- --------- --------- -------- ---------
Loss for the
period - - - - - (9,062) (9,062) (20) (9,082)
Other
comprehensive
income for the
period - - - - (210) (50) (260) 211 (49)
Total
comprehensive
income for the
period - - - - (210) (9,112) (9,322) 191 (9,131)
Share based
payment - - - - - 4 4 - 4
Purchase and
cancellation
of treasury
shares (8,492) - (15,515) 8,492 - - (15,515) - (15,515)
NCI on dilution
of
shareholding - - - - - (180) (180) 180 -
NCI on
acquisition
of
discontinued
operations - - - - - - - 722 722
--------- --------- --------- ------------ ---------- --------- --------- -------- ---------
As at 31 March
2013 36,199 16,268 17,311 8,492 (466) (15,409) 62,395 2,693 65,088
--------- --------- --------- ------------ ---------- --------- --------- -------- ---------
Year ended
31/3/12
As at 1 April
2011 28,024 3,441 32,826 - 1,291 (185) 65,397 1,870 67,267
--------- --------- --------- ------------ ---------- --------- --------- -------- ---------
Loss for the
period - - - - - (5,954) (5,954) (39) (5,993)
Other
comprehensive
income for the
period - - - - (1,547) - (1,547) (231) (1,778)
--------- --------- --------- ------------ ---------- --------- --------- -------- ---------
Total
comprehensive
income for the
period - - - - (1,547) (5,954) (7,501) (270) (7,771)
Share based
payment - - - - - 18 18 - 18
Shares issued
net of costs 16,667 12,827 - - - - 29,494 - 29,494
--------- --------- --------- ------------ ---------- --------- --------- -------- ---------
As at 31 March
2012 44,691 16,268 32,826 - (256) (6,121) 87,408 1,600 89,008
--------- --------- --------- ------------ ---------- --------- --------- -------- ---------
Consolidated Cash Flow Statement
for the year ended 31 March 2013
Year ended Year ended
31 March 31 March
2013 2012
GBP'000 GBP'000
Cash flow from operating activities
Loss before taxation (2,760) (6,022)
Adjustments for:
Finance income (229) (405)
Dividend income (70) (93)
Realised profits over fair value on disposal
of investments - (134)
Unrealised adjustments on the revaluation
of investments (285) 2,883
Share based payment charge 4 18
Foreign exchange differences (323) (5)
Depreciation 339 284
Amortisation 25 25
Increase in trade and other receivables (50) (82)
Increase/(decrease) in trade and other
payables 441 (187)
(Decrease)/increase in provisions (52) 350
Taxation paid - (1)
Net cash used in operating activities (2,960) (3,369)
----------- -----------
Cash flows from investing activities
Purchase of property, plant and equipment (707) (1,658)
Disposal of property, plant and equipment 2 18
Purchase of investments (504) (246)
Disposal of investments - 1,080
Purchase of disposal group held for resale (2,642) -
Interest received 244 389
Dividends received 70 93
Net cash used in investing activities (3,537) (324)
----------- -----------
Cash flows from financing activities
Proceeds from issue of ordinary shares - 29,493
Purchase of treasury shares (15,515) -
(Repayment of)/proceeds from borrowings (716) 778
Proceeds from issue of shares in subsidiary 27 -
to NCI
----------- -----------
Net cash (used in)/generated from financing
activities (16,204) 30,271
----------- -----------
Net (decrease)/increase in cash and cash
equivalents (22,701) 26,578
Cash and cash equivalents at the
beginning of the period 41,839 15,558
Exchange gains/(losses) 405 (297)
Cash and cash equivalents at the end
of the period 19,543 41,839
=========== ===========
1. Status of financial information
The financial information does not constitute the Group's
statutory accounts for either the year ended 31 March 2013 or the
year ended 31 March 2012, but is derived from those accounts. The
Group's statutory accounts for 2012 have been delivered to the
Registrar of Companies and those for 2013 will be delivered in due
course. The auditors' reports on both the 2012 and 2013 accounts
were not qualified or modified; did not draw attention to any
matters by way of an emphasis of matter; and did not contain any
statement under Section 498 of the Companies Act 2006.
2. Accounting policies
Eredene Capital PLC (the "Company") is a company incorporated
and domiciled in the United Kingdom and quoted on the London Stock
Exchange's AIM market. The consolidated financial statements of the
Group for the year ended 31 March 2013 comprise the Company and its
subsidiaries (together referred to as the "Group").
Basis of preparation
The Group's consolidated financial statements have been prepared
in accordance with International Financial Reporting Standards as
adopted for use in the EU ("IFRS"). The Company has elected to
prepare its parent Company financial statements in accordance with
UK GAAP.
The Directors have considered the appropriateness of preparing
the accounts on a going concern basis in light of the decision to
realise the Group's investments in an orderly basis (further
details are given in the Chairman's Statement). There is no
certainty over the timeframe that the investments will be realised
and the Directors believe that the business will be able to realise
its assets and discharge its liabilities in the normal course of
business.
The directors, therefore, consider that the Group has adequate
resources to continue in operational existence for the foreseeable
future and so it remains appropriate to prepare the financial
statements on a going concern basis.
The following accounting policies have been applied consistently
in dealing with items which are considered material in relation to
the Group's financial statements.
The financial statements are presented in pounds sterling. They
have been prepared on the historical cost basis, except for the
revaluation of certain investments.
Basis of consolidation
The Group's financial statements consolidate the financial
statements of the Company and its subsidiary undertakings.
Subsidiaries are entities controlled by the Company. Control exists
when the Company has the power, directly or indirectly, to govern
the financial and operating policies of an entity so as to obtain
benefits from its activities. In assessing control, potential
voting rights that presently are exercisable or convertible are
taken into account. The results of any subsidiaries sold or
acquired are included in the Group income statement up to, or from,
the date control passes. Intra-Group sales and profits are
eliminated fully on consolidation.
On acquisition of a subsidiary, all of the subsidiary's
separable, identifiable assets and liabilities existing at the date
of acquisition are recorded at their fair values reflecting their
condition at that date. On disposal of a subsidiary, the
consideration received is compared with the carrying cost at the
date of disposal and the gain or loss is recognised in the income
statement. The excess of the cost of acquisition over the fair
value of the Group's share of the identifiable net assets is
recorded as goodwill. Intercompany transactions, balances and
unrealised gains on transactions between group companies are
eliminated. Subsidiaries' results are amended where necessary to
ensure consistency with the policies adopted by the Group.
Goodwill
Goodwill represents the excess of the cost of an acquisition
over the fair value of the net identifiable assets of the acquired
subsidiary at the date of acquisition. Goodwill on acquisitions of
subsidiaries is included in intangible assets and allocated from
the acquisition date to each of the Group's cash generating units
("CGU") that are expected to benefit from the business combination.
Goodwill may be allocated to CGUs in both the acquired business and
in the existing business. Goodwill is tested annually for
impairment and carried at cost less accumulated impairment
losses.
Acquired intangible assets
Intangible assets, other than goodwill, that are acquired by the
Group are stated at cost less accumulated amortisation and
impairment losses. The pipeline of investments acquired is
amortised over the period in which gains or losses on the
investments made from the pipeline are expected to be realised of
ten years. The amortisation charge for the period is included
within administrative expenses.
Impairment of intangible assets (including goodwill)
Goodwill is not subject to amortisation but is tested for
impairment annually and whenever events or circumstances indicate
that the carrying amount may not be recoverable. Assets that are
subject to amortisation are tested for impairment when events or a
change in circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognised for the amount by
which the carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of the asset's fair value less
costs to sell and the value in use. For the purposes of assessing
impairments, assets are grouped at the lowest levels for which
there are identifiable cash flows (i.e. cash generating units).
Property, plant and equipment
Property, plant and equipment is stated at cost less
depreciation and impairment. Depreciation on property plant and
equipment is provided at rates calculated to write off the cost
less estimated residual value of each asset over its expected
useful life. It is calculated at the following rates:
Fixtures and fittings - 6-20% per annum straight line basis
Office equipment - 5-33% per annum straight line basis
Buildings - 3-22% per annum straight line basis
Vehicles and machinery - 5-10% per annum straight line basis
Financial assets
- Investments held at fair value through profit or loss
Investments in which the Group has a long-term interest and over
whose operating and financial policies it exerts significant
influence, but which are held as part of an investment portfolio,
the value of which is through their marketable value as part of a
basket of investments, are not regarded as joint ventures or
associated undertakings. The treatment adopted is in accordance
with IAS 39 'Financial Instruments: Recognition and Measurement'
and the exemptions applying to venture capital organisations in IAS
28 'Investments in Associates' and IAS 31 'Interests in Joint
Ventures'.
These investments are measured at fair value through profit or
loss. Gains and losses arising from changes in the fair value of
these investments, including foreign exchange movements, are
included in profit or loss for the period.
Unquoted investments are valued using appropriate valuation
methodologies, based on the International Private Equity and
Venture Capital Guidelines, which reflect the price at which an
orderly transaction would take place between knowledgeable and
willing market participants.
Non-current assets held for sale and disposal groups
Non-current assets and disposal groups are classified as held
for sale when:
-- they are available for immediate sale;
-- management is committed to a plan to sell;
-- it is unlikely that significant changes to the plan will be
made or that the plan will be withdrawn;
-- an active programme to locate a buyer has been initiated;
-- the asset or disposal group is being marketed at a reasonable
price in relation to its fair value; and
-- a sale is expected to complete within 12 months from the date of classification.
Non-current assets and disposal groups classified as held for
sale are measured at the lower of:
-- their carrying amount immediately prior to being classified
as held for sale in accordance with the Group's accounting policy;
and
-- fair value less costs to sell.
The acquisition of a controlling stake in Matheran and its
subsidiary Gopi has been classified as held for sale on acquisition
and has been accounted for and disclosed in the financial
statements in accordance with the provisions under IFRS 5. The
Group has utilised the exemption under IFRS 5 paragraph 33c to not
disclose the net cashflows attributable to the operating, investing
and financing activities of the discontinued activities in the
consolidated cashflow statement.
- Loans and receivables
Other receivables
Other receivables are recognised and carried at amortised cost
less an allowance for any uncollectible amounts. Unless otherwise
indicated, the carrying amount of the group's financial assets are
a reasonable approximation to their fair value.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and
short term deposits of less than three months maturity.
- Financial liabilities held at amortised cost
Borrowings
Borrowings are recognised initially at fair value. Borrowings
are subsequently carried at amortised cost.
Trade and other payables
Trade payables and other payables are recognised and carried at
amortised cost and are a short term liability of the Group.
Foreign currency
Foreign currency transactions of individual companies are
translated at the rates ruling when they occurred. Foreign currency
monetary assets and liabilities are translated at the rate of
exchange ruling at the balance sheet date. Any differences are
taken to the income statement.
Non-monetary assets and liabilities denominated in foreign
currencies that are stated at fair value are translated at foreign
exchange rates ruling at the date the fair value was
determined.
On consolidation, the assets and liabilities of the Group's
overseas subsidiaries are translated at exchange rates prevailing
on the balance sheet date. Income and expense items are translated
at the average exchange rates for the period. Exchange differences
arising, if any, are classified as equity and translated to a
foreign exchange reserve.
Derivative financial instruments
Derivatives are initially recognised at fair value on the date a
derivative contract is entered into and are subsequently
re-measured at their fair value. Changes in the fair value of the
instruments are recognised immediately in the income statement.
Portfolio return and revenue
Change in fair value of equity investments represents
revaluation gains and losses on the Group's portfolio of
investments.
Dividends receivable from equity shares are included within
other portfolio income and recognised on the ex-dividend date or,
where no ex-dividend date is quoted, are recognised when the
Group's right to receive payment is established.
Revenue from services comprises the fair value of the
consideration received or receivable for the sale of goods and
services in the ordinary course of the group's activities. This is
primarily the provision of storage and transportation services, for
which revenue is recognised on provision of services and dispatch
of goods. Revenue is shown net of sales tax, returns, rebates and
discounts.
Share-based payments
Where share options are awarded to employees, the fair value of
the options at the date of grant is determined using an option
pricing model and charged to the income statement over the vesting
period. Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each
balance sheet date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of
options that eventually vest.
Where equity instruments are granted to persons other than
employees, the income statement is charged with fair value of goods
and services received. If it is not possible to identify the fair
value of these goods or services provided, the income statement is
charged with the fair value of the options granted.
Deferred tax
Deferred tax expected to be payable or recoverable on
differences at the balance sheet date between the tax bases of
assets and liabilities and their carrying amounts for financial
reporting purposes is accounted for using the balance sheet
liability method. Deferred tax liabilities are generally recognised
for all taxable temporary differences, and deferred tax assets are
recognised to the extent that it is probable that taxable profits
will be available against which deductible temporary differences
can be utilised.
Such assets and liabilities are not recognised if the temporary
differences arise from goodwill or from the initial recognition
(other than in a business combination) of other assets and
liabilities in a transaction that at the time of the transaction,
affects neither the taxable profit nor the accounting profit.
Deferred tax is calculated at the rates of taxation enacted or
substantively enacted at the balance sheet date.
Pension costs
The Company contributes to directors' personal money-purchase
pension schemes. Contributions are charged to the income statement
in the period in which they become payable.
National Insurance on share options
To the extent that the share price at the balance sheet date is
greater than the exercise price on options granted under unapproved
schemes, provision for any national insurance contributions has
been made based on the prevailing rate of national insurance. The
provision is accrued over the performance period attaching to the
award.
Operating leases
Operating lease rentals are charged to the income statement on a
straight-line basis over the term of the lease.
3. Critical accounting judgements and estimates
The preparation of the Group's financial statements requires the
directors to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities. Estimates and judgements are
continually evaluated and are based on historical experience and
other factors including expectations of future events that are
believed to be reasonable under the circumstances. Actual results
may differ from these estimates.
The directors consider that the following estimates and
judgements are likely to have the most significant effect on the
amounts recognised in the financial statements.
Accounting for investments
Investments in which the Group has a long-term interest and over
whose operating and financial policies it exerts significant
influence, but which are held as part of an investment portfolio,
the value of which is through their marketable value as part of a
basket of investments, are not regarded as joint ventures or
associated undertakings. The treatment adopted is in accordance
with IAS 39 'Financial Instruments: Recognition and Measurement'
and the exemptions applying to venture capital organisations in IAS
28 'Investments in Associates' and IAS 31 'Interests in Joint
Ventures'.
Value of investments
The Group's investments held at fair value through profit or
loss are valued based on the International Private Equity and
Venture Capital Guidelines. An independent valuer, Grant Thornton
India, was engaged to value the investments under those Guidelines.
The valuations are made based on market conditions and information
about the investment. These estimates are subjective in nature and
involve uncertainties and matters of significant judgement (e.g
interest rates, volatility and estimated cash flows). See note 7
for details of the valuation methodologies employed.
The determination of fair value for an unlisted investment
requires the use of estimates and assumptions.
Impairment of goodwill
The Group is required to test whether goodwill has suffered any
impairment on at least an annual basis. The recoverable amount is
determined using value in use calculations. The use of this method
requires the estimation of future cash flows and the selection of a
suitable discount rate in order to calculate the present value of
these cash flows.
Non-current assets held for sale and disposal groups
Non-current assets and disposal groups are classified as held
for sale when:
-- they are available for immediate sale;
-- management is committed to a plan to sell;
-- it is unlikely that significant changes to the plan will be
made or that the plan will be withdrawn;
-- an active programme to locate a buyer has been initiated;
-- the asset or disposal group is being marketed at a reasonable
price in relation to its fair value; and
-- a sale is expected to complete within 12 months from the date of classification.
Non-current assets and disposal groups classified as held for
sale are measured at the lower of their carrying amount immediately
prior to being classified as held for sale in accordance with the
Group's accounting policy; and fair value less costs to sell.
Judgement must be exercised when determining the timing of the
disposal and estimates must be made when determining the carrying
amount.
4. Taxation
Year ended Year ended
31 March 31 March
Recognised in the income statement: 2013 2012
GBP'000 GBP'000
Current tax expense
Corporate income tax 15 -
Deferred tax
Movement in deferred tax asset 6 (29)
Income tax charge/(credit) 21 (29)
----------- -----------
The tax assessed for the period differs from the standard rate
of corporation tax in the UK applied to the Group profit before
tax. The differences are explained below:
Year ended Year ended
31 March 31 March
2013 2012
GBP'000 GBP'000
Loss on ordinary activities before tax
in respect of continuing operations (2,760) (6,022)
----------- -----------
Loss on ordinary activities at the standard
rate of
corporation tax in the UK for the period
of 24.0% (2012: 26.0%) (662) (1,566)
Effects of:
Expenses not deductible for tax purposes 109 229
Adjustment to capitalised expenses deductible
for tax purposes 6 (29)
Depreciation less than capital allowances 1 1
Non-taxable (gains)/losses on investments (68) 715
Non-UK recoverable overseas losses 342 350
Non-taxable dividend income (17) (24)
Tax losses carried forward 311 302
Non-taxable finance income (1) (7)
Tax charge/(credit) for period 21 (29)
----------- -----------
The change in the tax rate applied compared to the previous year
reflects the reduction in the UK corporation tax rate from 1 April
2012.
Deferred tax
No deferred tax asset has been recognised on unutilised taxable
losses due to lack of certainty that taxable profits will be
available against which deductible temporary differences can be
utilised. The unutilised tax losses carried forward are GBP6.1m
(2012: GBP4.7m).
5. Dividends
The Board does not recommend the payment of a dividend for the
year (2012 - nil).
6. Earnings per share and net assets per share
The calculation of the basic earnings per share is based on the
loss for the period attributable to equity shareholders of GBP9.1m
(2012: loss of GBP6.0m) and the weighted average number of shares
in issue during the period of 393,865,608 (2012: 427,781,015). 23.1
million shares under option (2012: 23.9 million) were non-dilutive
due to the loss for the period.
The calculation of net asset value per share is based on the net
assets attributable to equity shareholders of GBP62.4m (2012:
GBP87.4m) and the number of shares in issue at the period end of
361,994,426 (2012: 446,906,698).
7. Investments held at fair value through profit or loss
The Group has the following principal investments held at fair
value through profit or loss, all of which are incorporated in
India:
Class Net Profit/(loss) Date of % held % held
of Assets before financial 31 March 31 March
shares GBP'000 tax GBP'000 statements 2013 2012
held
Apeejay Infra-Logistics
Pvt Ltd Ord. 4,704 (60) 31/3/2012 50% 50%
Contrans Logistic
Pvt Ltd Ord. 6,209 89 31/3/2012 44% 44%
Sattva CFS & Logistics
Pvt Ltd Ord. 3,503 1,438 31/3/2012 39% 39%
The Group's investments in the following companies were
re-classified as assets held for resale as at 31 March 2013.
Class Net Assets Profit/(loss) Date of % held % held
of GBP'000 before financial 31 March 31 March
shares tax GBP'000 statements 2013 2012
held
Ocean Sparkle Ltd Ord. 45,481 6,908 31/3/2012 8% 8%
Matheran Realty Pvt
Ltd A 9,911 (30) 31/3/12 87% 63%
Gopi Resorts Pvt
Ltd A & B 1,144 (385) 31/3/12 32% 32%
The Group's investment in Ocean Sparkle Ltd was realised in full
in June 2013, see note 9 for further details.
At 31 March 2013 the cost and valuation of the Group's
investments was as follows:
Fair value Fair Value
Historical Prior periods adjustment adjustments
cost Fair Value on shares 1/4/12 - Fair value
at 31/3/13 adjustments disposed 31/3/13 at 31/3/13
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Apeejay Infra-Logistics 2,900 2,327 - (1,122) 4,105
Contrans Logistic 5,618 2,631 - 240 8,489
Sattva CFS & Logistics 697 3,372 - 398 4,467
9,215 8,330 - (484) 17,061
----------- ------------- ----------- ------------- ----------------
Reclassified as
asset
held for sale
----------- ------------- ----------- ------------- ----------------
Ocean Sparkle 7,343 612 - 769 8,724
----------- ------------- ----------- ------------- ----------------
At 31 March 2012 the cost and valuation of the Group's
investments was as follows:
Fair value Fair Value
Historical Prior periods adjustment adjustments
cost Fair Value on shares 1/4/11 - Fair value
at 31/3/12 adjustments disposed 31/3/12 at 31/3/12
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Apeejay Infra-Logistics 2,442 2,658 - (331) 4,769
Contrans Logistic 5,572 2,594 - 37 8,203
Sattva CFS & Logistics 697 3,760 (765) 377 4,069
Ocean Sparkle 7,343 1,412 - (800) 7,955
Matheran Realty 10,128 (1,610) - (571) 7,947
Gopi Resorts 2,542 825 - (181) 3,186
Sribha Infrastructure 2,126 (1,656) - (470) -
Bay of Bengal GT 940 3 - (943) -
31,790 7,986 (765) (2,882) 36,129
----------- ------------- ----------- ------------- ---------------
The Group's holdings in the above investments are all held by
wholly owned intermediate Mauritian registered holding
companies.
The investments were independently valued at 31 March 2013 by
Grant Thornton India. The investments are valued using appropriate
valuation methodologies, in accordance with the International
Private Equity and Venture Capital Guidelines endorsed by the
British & European Venture Capital Associations, which reflect
the amount for which an asset could be exchanged between
knowledgeable, willing parties on an arm's length basis. The
companies in which the Group has invested are at various stages of
development. The methodologies used in the valuation of these
investments include Earnings Multiples, Net Assets and Discounted
Cash Flow.
Earnings Multiple - this methodology involves the application of
an earnings multiple to the earnings of the business being valued
in order to derive a value for the business. This methodology is
appropriate where the business has an identifiable stream of
continuing earnings that can be considered to be maintainable. A
number of earnings multiples may be used including price/earnings
and enterprise value/earnings before interest, tax, depreciation
and amortisation.
Net Assets - this methodology involves deriving the value of a
business by reference to the value of its assets. The assets and
liabilities may be adjusted to reflect the fair value of those
assets and liabilities as at the valuation date.
Discounted Cash Flow - this methodology involves deriving the
value of a business by calculating the present value of expected
future cash flows. The cash flows and the terminal value are those
of the underlying business rather than from the investment itself.
A suitable discount rate is estimated based on the weighted average
cost of capital of the business.
The actual methodologies used vary from investment to investment
with the independent valuers applying an appropriate methodology
based on the particular circumstances of the underlying
business.
The following key assumptions were used to
determine fair value:
Discount factor
Apeejay Infra-Logistics 19.0%
Contrans Logistic 16.0%
Sattva CFS & Logistics 16.0%
Corporate tax rate in terminal period 32.45%
Terminal value growth rate 4%
The movements in non-current investments were as follows:
GBP'000
Carrying value at 31 March 2011 39,713
--------
Purchases, at cost 246
Fair value adjustment (2,882)
Less fair value of disposals (948)
Carrying value at 31 March 2012 36,129
--------
Purchases, at cost 504
Fair value adjustment 285
Re-categorised as assets held for
sale (19,857)
Carrying value at 31 March 2013 17,061
--------
8. Assets classified as held for sale
Assets and liabilities of disposal group held for sale
At 31 March 2012, the Group held stakes of 45% in Matheran
Realty Pvt Ltd ("Matheran") and 32% in Matheran's subsidiary, Gopi
Resorts Pvt Ltd ("Gopi"). Matheran and Gopi are the developer of an
affordable housing project near Mumbai.
The Eredene Group also held a 43.5% stake in Alibante
Developments Ltd which was the owner of 42% of Matheran. The
Eredene Group initiated arbitration proceedings with Alibante
Developments and other parties at the London Court of International
Arbitration and was successful in its application. As a result of
the tribunal order, the Eredene Group was able to purchase
Alibante's 42% stake in Matheran in July 2012.
The purchase of the additional 42% in Matheran took the Group to
a controlling position of 87%. In addition, by virtue of
controlling Matheran, the Group also had a controlling interest in
Gopi.
By taking control of Matheran and Gopi, the Eredene Group was
then able to initiate a realisation process for its stake in both
companies and an advisor was appointed to assist with that sale
programme.
It was determined that Matheran and Gopi formed a disposal group
and should be classified as held for sale at 31 March 2013 under
the requirements of IFRS 5 as
-- Matheran and Gopi are available for immediate sale;
-- Eredene's management is committed to a plan to sell;
-- it is unlikely that significant changes to the plan will be
made or that the plan will be withdrawn;
-- an active programme to locate a buyer has been initiated;
-- the asset or disposal group is being marketed at a reasonable
price in relation to its fair value; and
-- a sale is expected to complete within 12 months from the date of classification.
Disposal groups classified as held for sale are measured at the
lower of:
-- their carrying amount immediately prior to being classified as held for sale; and
-- fair value less costs to sell.
The board has determined that the fair value is lower than the
carrying amount and so the disposal group is now held at its fair
value.
GBP'000
Fair value of Matheran and Gopi at 31 March
2012 11,132
Acquisition consideration 2,642
--------
13,774
Fair value less costs to sell adjustment (6,301)
Fair value less costs to sell 7,473
--------
The assets and liabilities of Matheran and Gopi are separately
disclosed on the consolidated balance sheet as assets and
liabilities of a disposal group classified as held for sale.
GBP'000
Assets 16,673
Liabilities (8,478)
Non-controlling interest (722)
Fair value less costs to sell 7,473
--------
Non-current assets held for sale
31 March 31 March
2013 2012
GBP'000 GBP'000
Investments 8,724 -
--------- ---------
The Group announced on 11 March 2013 that it had appointed an
advisor to manage the sale of its stake in Ocean Sparkle and an
active realisation programme was initiated. It was determined that,
at the balance sheet date, the investment in Ocean Sparkle met the
IFRS 5 criteria to be classified as an asset held for sale. The
investment has therefore been reclassified from "Investments held
at fair value through profit or loss" to "Non-current assets
classified as held for sale" and is held at its realisable value
less costs to sell.
The Group sold its stake in Ocean Sparkle on 13 June 2013 for
GBP8.2m. The variance between the carrying value at 31 March 2013
and the final disposal value was solely due to adverse foreign
exchange movements with the sale price in Indian Rupees having
remained constant.
9. Post balance sheet events
The Company announced on 13 June 2013 that its subsidiary, West
Coast Port Ltd, had sold its stake in Ocean Sparkle Limited ("OSL")
to Mauritius-based Infrastructure India Holdings Fund LLC for
GBP8.2m. The sale is part of Eredene's strategy of realising its
investments in India and returning capital to shareholders.
10. Forward-looking statements
This document may contain forward-looking statements with
respect to certain of the plans and current goals and expectations
relating to the future financial condition, business performance
and results of Eredene Capital PLC. By their nature, all
forward-looking statements involve risk and uncertainty because
they relate to future events and circumstances that are beyond the
control of Eredene Capital PLC including, amongst other things, UK
domestic and global economic and business conditions, market
related risks such as fluctuations in interest rates, foreign
exchange rates, inflation, the impact of competition, delays in
implementing proposals, the timing, impact and other uncertainties
of future investments, the impact of tax or other legislation and
other regulations in the jurisdictions in which Eredene Capital PLC
and its affiliates operate. As a result, Eredene Capital PLC's
actual future condition, business performance and results may
differ materially from the plans, goals and expectations expressed
or implied in these forward-looking statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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