TIDMERE
RNS Number : 2244Y
Eredene Capital PLC
28 November 2014
28 November 2014
Eredene Capital PLC
("Eredene" or the "Company")
(a closed-ended investment company registered in England and
Wales with company number 5330839)
Unaudited interim results for the six months ended 30 September
2014
Eredene Capital PLC, the AIM quoted investor in Indian
infrastructure, announces its interim results for the six months
ended 30 September 2014.
Highlights
-- Net asset value ("NAV") attributable to equity shareholders
as at 30 September 2014 of GBP26.4m (at 30 September 2013 restated:
GBP51.4m), representing 10.70p per share (at 30 September 2013
restated: 14.20p)
-- Return of capital of approximately GBP3.0m (10.0p per share)
in December 2014 offered to shareholders which follows GBP19.9m
(17.2p per share) returned to shareholders in October 2013 and
GBP15.3m (18.0p per share) returned in August 2012
-- Orderly process of realising investments in India continues
in line with stated strategy to extract maximum value from
portfolio with the sale of a 23% stake in Sattva CFS &
Logistics for GBP1.9m cash in July 2014 and the sale of 100% of
Aboyne Mauritius (including Matheran Realty and Gopi Resorts) for
GBP3.0m in cash in September 2014 and redeemable preferences shares
with potential value of up to INR 200m in the next three years
-- Cost reduction programme continues with operating costs for
the six months to 30 September 2014 significantly reduced to
GBP0.4m (six months to 30 September 2013 restated: GBP1.4m)
-- Cancellation of the admission of the Company's shares to
trading on AIM to take place in December 2014 and re-registration
as a private limited company expected to take place shortly
thereafter in order to further reduce operating costs and better
achieve its divestment strategy
Enquiries:
Ocean Dial Asset Management Limited (Investment Manager &
Administrator)
David Cornell
Robin Sellers Tel: +44 20 7802 8900
Grant Thornton UK LLP (NOMAD)
Philip Secrett
Jen Clarke Tel: +44 20 7383 5100
Numis Securities Limited (Broker)
David Benda
Hugh Jonathan Tel: +44 20 7260 1000
Chairman's Statement
Introduction
I am pleased to report the Company has continued to deliver its
stated strategy of realising assets, reducing operating expenses
and returning capital to shareholders in the period from the last
financial year end to the date of this statement. Further to my
letter and accompanying circular to shareholders posted on 3
November 2014, the Company will de-list from AIM and is expected to
become a private limited company before the end of the calendar
year, which should enhance the Company's ability to continue to
deliver on all three elements of its stated strategy.
Financial Results
The Company had a net asset value ("NAV") attributable to equity
shareholders as at 30 September 2014 of GBP26.4m (as at 30
September 2013 restated: GBP51.4m), representing 10.70p per share
(as at 30 September 2013 restated: 14.20p), having incurred a total
loss for the six months to 30 September 2014 of GBP1.5m (six months
to 30 September 2013 restated: GBP15.6m).
Cash balances as at 30 September 2014 totalled GBP5.6m (as at 30
September 2013 restated: GBP23.7m) having received GBP3.0m in
September 2014 for the sale of 100% of Aboyne Mauritius (including
Matheran Realty and Gopi Resorts), GBP1.9m in July 2014 from the
sale of a 23% stake in Sattva CFS & Logistics, and having
invested a further GBP0.2m in the portfolio during the period.
GBP19.9m was returned to shareholders in October 2013.
The Group's operating expenses for the six months to 30
September 2014 were GBP0.4m (six months to 30 September 2013
restated: GBP1.4m).
India's macroeconomic and political environment
The six month period to 30 September 2014 has been one of
considerable change in India. The economic cycle showed signs of
bottoming out following a period of turbulence in 2013 and a
national General Election in May 2014 which has revitalised the
political environment. Compared to a 15.5% fall in the same period
to September 2013, the Rupee was relatively stable in this period,
depreciating only 2.5% as an improvement in trade imbalances and
better monetary policy brought greater stability.
The period was dominated by the General Election which saw the
incumbent Congress led Government decimated by the opposition BJP.
For the first time in thirty years India elected a majority
Government, swayed by a strong campaign led by Narendra Modi who
promised to deliver an open, accountable, pro-business, reform
driven environment. The Government's first Budget in July provided
a snapshot of what to expect over the course of this Parliament by
committing to reduce the fiscal deficit to what, at the time,
seemed an optimistic target of 4.1% of GDP. FDI limits were raised
to 49% for both the Insurance and Defence sectors and tax
incentives were introduced to encourage a revival in the
infrastructure sector. In October the decision was made to use the
collapse in global oil prices to end diesel subsidies, a radical
step but one taken at an opportunistic time.
A rejuvenated political environment has coincided with key
indicators showing improvements on the macroeconomic front. Under
the tenure of RBI Governor, Raghuram Rajan, the Rupee has shown
stability and inflation has started to come under control. The
stated CPI inflation targets of 8% by March 2015 and 6% by March
2016 now appear achievable, allowing the Central Bank to initiate
an interest rate easing cycle. GDP growth has started to show signs
of life as Q1 FY15 reported 5.7% versus 4.7% for the same quarter
last year. This is the strongest GDP report for the last eight
quarters and was driven by industrial output which grew by 4.2%,
agriculture which grew by 3.8% and services which were 6.8%
stronger. It will take time for India to return to growth exceeding
the 7% level and for this to translate into improved corporate
profitability but it is clear that the economy is bottoming
out.
The risks to full recovery remain several. Should oil prices
revert to an upward trend, the Government's mettle will be tested
on the subsidy reduction and the monetary easing cycle may well be
delayed. Although steps have been taken to introduce competition in
key industries, notably coal, the approach will have to be measured
in order to maximise the chances of reform success particularly as
vested interests remain strong. Nevertheless, the outlook for India
is considerably better than at the time of writing last year. There
will always be challenges, but the country is on the cusp of a
period of political and economic stability not recently
experienced.
Outlook
Whilst approximately a further GBP3.0m is shortly being returned
to shareholders, the Company will retain adequate cash on the
balance sheet to continue an orderly process of realising its
investments in India. However, significant realisations are not
expected in the short term as we seek to enhance the value of the
Company's three largest investments against a backdrop of improving
valuations in the infrastructure sector in India supported by the
better political and macroeconomic environment I have described in
my statement.
Struan Robertson
Non-Executive Chairman
28 November 2014
Investment Manager's report
Introduction
The period saw some significant positive developments in the
Indian political and economic climate as described by the Chairman.
Although the macroeconomic front is looking better with
improvements in key indicators, we are someway off seeing the
positive effect of these on the corporate sector. On the back of
this environment, Eredene remains confident of growth opportunities
for the portfolio companies over medium term.
Investee Companies at 30 September 2014
Apeejay Infra-Logistics
A joint venture with Apeejay Surrendra Group, Apeejay
Infra-Logistics owns and operates two logistics parks in East India
- a 90 acre facility near Haldia Port in West Bengal and a 30 acre
facility at Kalinganagar in Orissa. Eredene is currently exploring
strategic options for this investment as both the logistics parks
are likely to take considerable time to scale up and reach
profitability.
Fair value as at 30 September GBP0.8m
2014
Amount invested to 30 September GBP2.9m
2014
---------------------------------------
Ownership stake at 30 September
2014 50%
---------------------------------------
Investment Partner Apeejay Surrendra www.apeejaygroup.com
---------------------------------------
Apeejay Infra-Logistics Project Haldia Logistics Park
One
Sector Logistics Park
---------------------------------
Location Haldia, West Bengal, East
India
---------------------------------
Progress to date Operational & revenue generating
---------------------------------
Apeejay Infra-Logistics Project Kalinganagar Logistics Park
Two
Sector Logistics Park
---------------------------------
Location Kalinganagar, Orissa, East
India
---------------------------------
Progress to date Operational & revenue generating
---------------------------------
Contrans Logistic
Contrans Logistic's CFS located just outside Pipavav port in
Gujarat saw solid growth in container volumes during the period
(7,700 TEUs against 5,200 TEUs over same period last year) on the
back of upsurge in non-cotton exports and import volumes. The
company has made significant progress towards the renewal of
commercial permissions for the 128 acre greenfield site at Baroda
in Central Gujarat.
Fair value as at 30 September GBP5.5m
2014
Amount invested to 30 September GBP5.7m
2014
----------------
Ownership stake at 30 September
2014 44%
----------------
Website www.contrans.in
----------------
Contrans Project One Pipavav CFS
Sector Container Logistics
---------------------------------
Location Pipavav, Gujarat, North West
India
---------------------------------
Progress to date Operational & revenue generating
---------------------------------
Contrans Project Two Baroda ICD
Sector Container Logistics
----------------------------
Location Baroda, Gujarat, North West
India
----------------------------
Progress to date Pre-construction phase
----------------------------
MJ Logistic Services
MJ Logistic Services, a third party logistics and warehousing
business in which Eredene owns a majority stake, saw flat growth
compared to the same period last year; the cold storage business
suffered from low occupancy due to excess supply in the market.
However, the management however continues to be optimistic on its
prospects with a strong customer pipeline including a large and
established international quick service restaurant group.
Fair value as at 30 September GBP8.6m
2014
Amount invested to 30 September GBP11.0m
2014
---------------------------------
Ownership stake at 30 September
2014 86%
---------------------------------
Website www.mjlsl.com
---------------------------------
Sector Warehousing & Third Party
Logistics
---------------------------------
Location Delhi region, North India
---------------------------------
Progress to date Operational & revenue generating
---------------------------------
Sattva CFS & Logistics - Vichoor CFS
The 26 acre container freight station (CFS) at Vichoor, a joint
investment with the Sattva Business Group in Tamil Nadu, continues
to record healthy growth and maintain strong profitability. The CFS
which serves Chennai Port handled 41,876 TEUs (twenty foot
equivalent units, the length of a standard container) in the half
year ended 30 September 2014, compared to 39,908 TEUs during
similar period in the previous year, a 5% increase. Eredene
realised a 23% stake in the company through sale to Sattva Business
Group in July 2014 for GBP1.9m in cash.
Fair value as at 30 September GBP1.1m
2014
Amount invested to 30 September GBP0.7m
2014
-----------------------------
Ownership stake at 30 September
2014 16%
-----------------------------
Realisation proceeds since GBP1.9m (for 23% of Sattva
31 March 2014 CFS & Logistics)
-----------------------------
Sector Container Logistics
-----------------------------
Location Chennai, Tamil Nadu, South
East India
-----------------------------
Progress to date Profitable & dividend paying
-----------------------------
Investment partner Sattva Business Group
-----------------------------
Sattva Conware
Sattva Conware CFS, is located on a 56 acre site within reach of
both Ennore and Chennai ports and the newly opened Kattupalli
container terminal. The facility has a 92,000 square feet container
yard and a 60,000 square feet EXIM cum bonded warehouse in addition
to a 14,000 square feet domestic warehouse. This is the first full
year of operations for the CFS having obtained all planning
permissions earlier this year. It handled 4,458 TEUs of laden
containers for the six month period ended 30 September 2014 with
major cargo comprising rice, granite and auto components. The CFS
is undergoing further capacity expansion in anticipation of an
increase in the container traffic.
Fair value as at 30 September GBP5.2m
2014
Amount invested to 30 September GBP4.2m
2014
---------------------------------
Ownership stake at 30 September
2014 79%
---------------------------------
Sector Container Logistics
---------------------------------
Location Ennore, Tamil Nadu, South
East India
---------------------------------
Progress to date Operational & revenue generating
---------------------------------
Investment partner Sattva Business Group
---------------------------------
Ocean Dial Asset Management Limited
28 November 2014
Eredene Capital plc
Unaudited Consolidated Statement of Comprehensive Income
For the six months to 30 September 2014
Restated
Unaudited Unaudited Audited
Six months Six months Year
to 30.09.14 to 30.09.13 to 31.03.14
Note GBP'000 GBP'000 GBP'000
Portfolio return and revenue
Realised losses over fair value
on disposal of investments (275) (529) (529)
Unrealised adjustments on the
revaluation of investments 3 (734) (13,364) (15,691)
Other portfolio income - 33 86
------------- ------------- ------------------
(1,009) (13,860) (16,134)
Operating expenses (412) (1,350) (2,418)
(Loss)/Gain on foreign currency
transactions (21) (395) (278)
Other expenses (50) (1) (334)
Other income 25 - -
Finance income 2 23 32
------------- ------------- ------------------
Loss before taxation (1,465) (15,583) (19,132)
Taxation charge (7) (5) (12)
------------- ------------- ------------------
Loss for the period (1,472) (15,588) (19,144)
Other comprehensive income
Foreign currency translation (1) (53) (52)
------------- ------------- ------------------
Total comprehensive loss for
the period (1,473) (15,641) (19,196)
------------- ------------- ------------------
Loss per share - Basic and
diluted 2 (0.60)p (4.31)p (6.21)p
Eredene Capital plc
Unaudited Consolidated Statement of Financial Position
At 30 September 2014
Restated Restated
Unaudited Unaudited Audited
30.09.14 30.09.13 31.03.14
Note GBP'000 GBP'000 GBP'000
Non-Current Assets
Property, plant and equipment 12 15 13
Investments held at fair value 3 21,145 25,040 26,832
Intangible assets - 92 -
Other receivables 4 4 5
21,161 25,151 26,850
Current Assets
Trade and other receivables 179 53 70
Cash and cash equivalents 5,558 23,748 1,516
----------- ----------
5,737 23,801 1,586
Assets of disposal group classified
as held for sale - 2,921 -
Total Assets 26,898 51,873 28,436
------------ ----------- ----------
Current Liabilities
Trade and other payables (237) (161) (297)
Provisions (310) (310) (310)
(547) (471) (607)
Non-Current Liabilities
Corporation tax liabilities - - (5)
Total Liabilities (547) (471) (612)
TOTAL NET ASSETS 26,351 51,402 27,824
============ =========== ==========
Equity
Share capital 24,616 36,199 24,616
Share premium - 16,268 -
Special reserve 22,047 17,311 22,047
Capital redemption reserve 11,583 8,491 11,583
Foreign exchange deficit (50) (50) (49)
Other reserves 997 997 997
Retained deficit (32,842) (27,814) (31,370)
TOTAL EQUITY 26,351 51,402 27,824
============ =========== ==========
Number of ordinary shares
in issue (000s) 246,156 361,994 246,156
NAV per share - Basic and
diluted 10.70p 14.20p 11.30p
Eredene Capital plc
Unaudited Consolidated Statement of Changes in Equity
For the six months to 30 September 2014
Capital Foreign Share
Share Share Special redemption Other exchange Retained holders
capital premium reserve reserve reserve reserve deficit equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Unaudited
Six months ended
30 September 2014
As at 1 April
2014 24,616 - 22,047 11,583 997 (49) (31,370) 27,824
--------- --------- --------- ------------ --------- ---------- --------- ---------
Loss for the period - - - - - - (1,472) (1,472)
Other comprehensive
income for the
period - - - - - (1) - (1)
--------- --------- --------- ------------ --------- ---------- --------- ---------
Total comprehensive
income
for the period - - - - - (1) (1,472) (1,473)
As at 30 September
2014 24,616 - 22,047 11,583 997 (50) (32,842) 26,351
--------- --------- --------- ------------ --------- ---------- --------- ---------
Restated
Unaudited
Six months ended
30 September 2013
As at 1 April
2013
(as previously
reported) 36,199 16,268 17,311 8,492 - (466) (15,409) 62,395
Restatement due
to change in accounting
policy - - - (1) 996 469 3,183 4,647
--------- --------- --------- ------------ --------- ---------- --------- ---------
As at 1 April
2013 (restated) 36,199 16,268 17,311 8,491 996 3 (12,226) 67,042
--------- --------- --------- ------------ --------- ---------- --------- ---------
Loss for the period - - - - - - (15,588) (15,588)
Other comprehensive
income for the
period - - - - - (53) - (53)
--------- --------- --------- ------------ --------- ---------- --------- ---------
Total comprehensive
income for the
period - - - - - (53) (15,588) (15,641)
Share based payment - - - - 1 - - 1
--------- --------- --------- ------------ --------- ---------- --------- ---------
As at 30 September
2013 36,199 16,268 17,311 8,491 997 (50) (27,814) 51,402
--------- --------- --------- ------------ --------- ---------- --------- ---------
Restated
Audited
Year ended
31 March 2014
As at 1 April
2013
(as previously
reported) 36,199 16,268 17,311 8,492 - (466) (15,409) 62,395
Restatement due
to change in accounting
policy - - - (1) 996 469 3,183 4,647
--------- --------- --------- ------------ --------- ---------- --------- ---------
As at 1 April
2013 (restated) 36,199 16,268 17,311 8,491 996 3 (12,226) 67,042
--------- --------- --------- ------------ --------- ---------- --------- ---------
Loss for the period - - - - - - (19,144) (19,144)
Other comprehensive
income for the
period - - - - - (52) - (52)
--------- --------- --------- ------------ --------- ---------- --------- ---------
Total comprehensive
income
for the period - - - - - (52) (19,144) (19,196)
Share based payment - - - - 1 - 1
Reduction of share
premium - (16,268) 24,759 (8,491) - - - -
Purchase of treasury
shares (11,583) - (8,440) - - - - (20,023)
Cancellation of
treasury shares - - (11,583) 11,583 - - - -
As at 31 March
2014 (restated) 24,616 - 22,047 11,583 997 (49) (31,370) 27,824
--------- --------- --------- ------------ --------- ---------- --------- ---------
Eredene Capital plc
Unaudited Consolidated Cash Flow Statement
For the six months to 30 September 2014
Restated
Unaudited Unaudited Audited
Six months Six months Year to
to 30.09.14 to 30.09.13 31.03.14
GBP'000 GBP'000 GBP'000
Cash flow from operating activities
Loss before taxation (1,465) (15,583) (19,132)
Adjustments for:
Finance income (2) (23) -
Dividend income - (33) (87)
Realised loss over fair value on disposal
of investments 275 529 564
Unrealised adjustments on the revaluation
of investments 734 13,364 15,691
Share based payment charge - 1 2
Depreciation 2 3 6
Amortisation - 12 104
Decrease/(increase) in trade and other
receivables (108) (13) (31)
(Decrease)/increase in trade and other
payables (72) (334) (187)
Taxation paid - - (12)
Net cash used in operating activities (636) (2,077) (3,082)
------------- ------------- ---------------
Cash flows from investing activities
Purchase of property, plant and equipment (1) (10) (12)
Purchase of investments (220) (127) (1,362)
Disposal of investments 4,898 8,160 8,160
Interest received 2 23 -
Dividends received - 33 87
Net cash used in investing activities 4,679 8,079 6,873
------------- ------------- ---------------
Cash flows from financing activities
Purchase of treasury shares - - (20,023)
Net cash used in financing activities - - (20,023)
------------- ------------- ---------------
Net decrease in cash and cash equivalents 4,043 6,002 (16,232)
Cash and cash equivalents at the beginning
of the period 1,516 17,799 17,799
Exchange losses (1) (53) (51)
Cash and cash equivalents at the end
of the period 5,558 23,748 1,516
============= ============= ===============
Eredene Capital plc
Notes forming part of the unaudited interim results
for the six months ended 30 September 2014
1. Accounting policies
A. Basis of preparation
The interim financial information for the periods ended 30
September 2014 and 30 September 2013 has neither been audited nor
reviewed pursuant to guidance issued by the Auditing Practices
Board and does not constitute statutory accounts within the meaning
of the Companies Act 2006. The statutory accounts for the period
ended 31 March 2014, which were prepared in accordance with
International Financial Reporting Standards as endorsed by the
European Union ("IFRS") and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS, have been
delivered to the Registrar of Companies. The auditors' opinion on
those accounts was unqualified, did not include any references to
any matters to which the auditors drew attention without qualifying
their report, and did not contain a statement made under Section
498(2) or Section 498(3) of the Companies Act 2006.
The financial information in this report comprises the Group
balance sheets as at 30 September 2014, 31 March 2014 and 30
September 2013 and related statements of comprehensive income, cash
flow, changes in equity and related notes for the period then ended
("financial information"). The financial information has been
prepared in accordance with the Group's principal accounting
policies as set out in the Annual Report for the period ended 31
March 2014. There have been no changes in the existing policies. It
has been prepared on the historical cost basis, except for the
revaluation of certain investments. As permitted, the Group has not
applied IAS 34 "Interim Reporting" in preparing this interim
report.
The nancial statements are presented in sterling, the functional
currency of the Company, rounded to the nearest thousand pounds
(GBP000) except where otherwise indicated. The preparation of
nancial statements in conformity with IFRS requires management to
make judgments, estimates and assumptions that affect the
application of policies and reported amounts of assets and
liabilities, income and expenses. In the process of applying the
Group's accounting policies, management has made the following
judgments, which have the most signi cant effect on the amounts
recognised in the nancial statements:
Assessment as investment entity
Entities that meet the de nition of an investment entity within
IFRS 10 are required to account for most investments in controlled
entities at fair value through pro t and loss. Subsidiaries that
provide investment related services or engage in permitted
investment related activities with investees continue to be
consolidated unless they are also investment entities. The criteria
which de ne an investment entity are currently as follows:
-- An entity that obtains funds from one or more investors for
the purpose of providing those investors with investment
services;
-- An entity that commits to its investors that its business
purpose is to invest funds solely for returns from capital
appreciation, investment income or both;
-- An entity that measures and evaluates the performance of
substantially all of its investments on a fair value basis.
The Group's annual and interim accounts clearly state its
objective of investing directly into portfolio investments for the
purpose of generating returns in the form of capital appreciation.
The Group has always reported its investment in portfolio
investments at fair value. It also produces reports for investors
of the funds it manages and its internal management report on a
fair value basis.
The Board has concluded that the Company meets the additional
characteristics of an investment entity, in that it has more than
one investment; the investments are predominantly in the form of
equities and similar securities; it has more than one investor and
its investors are not related parties. The Board has also concluded
that the Company therefore meets the de nition of an investment
entity. These conclusions will be reassessed on an annual basis for
changes in any of these criteria or characteristics.
Application and signi cant judgments
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
The most signi cant estimates relate to the fair valuation of
the investment portfolio. Two entities, MJ Logistics and Sattva
Conware, which the Group previously consolidated, is now recognised
at fair value.
The Group's investments held at fair value through profit or
loss are valued based on the International Private Equity and
Venture Capital Guidelines. Apart from Apeejay Infra-Logistics 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).
The determination of fair value for an unlisted investment
requires the use of estimates and assumptions. Revisions to
accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in
the period of the revision and future periods if the revision
affects both current and future periods.
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. At 30
September 2013, investments in Matheran Realty and Gopi Resorts
were classified as a disposal group. At 30 September 2014, Matheran
& Gopi had been sold.
B. Restatement - Impact of the application of IFRS 10
In line with the year end policy, the Group applied IFRS 10
Consolidated Financial Statements, which requires restatement of
previous nancial statements. Further, the application of IFRS 13
Fair Value Measurement resulted in additional disclosures in the
consolidated nancial statements.
The nature and the impact of this new standard and amendment are
described below:
IFRS 10 Consolidated Financial Statements
Under IFRS 10, MJ Logistics and Sattva Conware CFS have been
classi ed as investment entities. Previously, they were carried at
fair value in accordance with IAS 39 having taken the exemption
allowed under IAS 28.
Impact on statement of comprehensive income
As a result of this change in treatment the total return
generated by the investment entities is no longer presented on a
line-by-line basis but combined and shown as a new line in the
Statement of comprehensive income - "Unrealised adjustments on the
revaluation of investments". This has resulted in a restatement of
prior year gures where previously consolidated line items are now
aggregated into this line.
Translation of investment entity subsidiaries which are
non-sterling denominated will no longer be shown as part of other
comprehensive income "Foreign currency translations" and will now
be included as part of the fair value movement on investment entity
subsidiaries held at fair value. Consequently these translation
amounts will no longer be shown as a movement in the translation
reserve and it will become a movement in capital reserves. IFRS 10
has been retrospectively applied as if IFRS 10 was in effect from 1
April 2013. The translation reserve has been restated to re ect the
impact of IFRS 10 for the six months to 30 September 2013 by
GBP469,000, with corresponding movements in capital reserves. Basic
and diluted earnings per share of the Group have been restated as a
result of adopting IFRS 10.
Impact on statement of nancial position
The closing fair value of the net assets of the investment
entities is now combined and stated in 'Investments held at fair
value through profit and loss'. This has resulted in a restatement
of prior year gures where previously consolidated line items are
now aggregated into this line. Cash balances held in investment
entity subsidiaries are aggregated into the "Investments held at
fair value" line and not consolidated. Group transactions which
would have previously been eliminated on consolidation are no
longer eliminated.
Impact on cash ow statement
The cash ow statement is impacted by the adoption of IFRS 10
because the cash held by investment entity subsidiaries is no
longer consolidated. It now forms part of the fair value of the
investment entity subsidiary.
IFRS 13 Fair Value Measurement
The Group has adopted IFRS 13 which relates to the fair value
measurement of assets and liabilities. Investments are recognised
and de-recognised on the date where the purchase or sale of an
investment is under a contract whose terms require the delivery or
settlement of the investment. The Group manages its investments
with a view to pro ting from the receipt of investment income and
capital appreciation from changes in the fair value of equity
investments.
Unquoted investments are designated at fair value through pro t
and loss and are subsequently carried in the balance sheet at fair
value. Fair value is measured using the International Private
Equity and Venture Capital valuation guidelines (IPEV).
All investments are initially recognised at the fair value of
the consideration given and held at this value until it is
appropriate to measure fair value on a different basis, applying
the Group's valuation policies.
IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations
At 30 September 2013, investments in Matheran and Gopi were
classified as held for resale on account that they met the criteria
laid out in IFRS 5. At 31 March 2014, the Board had withdrawn from
the sale and as a consequence, both investments were reclassified
back to investments held at fair value through profit and loss. The
investments have subsequently been sold during the current
period.
Statement of Changes in Equity
The Statement of Changes in Equity for the year ended 31 March
2014 disclosed in these unaudited interim results for the six
months ended 30 September 2014 has been restated compared to the
same statement in the audited annual results for the year ended 31
March 2014, as a result of the misclassification of the movement in
reserves resulting from the purchase and subsequent cancellation of
treasury shares in October 2013 when the Company returned capital
to shareholders. The effect of the restatement is to increase the
Capital Redemption Reserve by GBP11,583,000 and to reduce the
Special Reserve by the same amount as at 31 March 2014.
C. Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. Control, as
de ned by IFRS 10, is achieved when the Group is exposed, or has
rights, to variable returns from its involvement with the investee
and has the ability to affect those returns through its power over
the investee. Speci cally, the Group controls an investee if and
only if the Group has:
-- Power over the investee (i.e. existing rights that give it
the current ability to direct the relevant activities of the
investee);
-- Exposure, or rights, to variable returns from its involvement with the investee; and
-- The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar
rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee,
including:
-- Rights arising from other contractual arrangements; and
-- The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the elements of control. Most of the Group's interests in
subsidiaries are recognised as fair value through pro t or loss,
and measured at fair value. This represents a change in accounting
policy in the current year. Eredene Capital Advisors Private
Limited, which provides investment advisory services, is not classi
ed at fair value through pro t and loss and continues to be
consolidated. The Group also continues to consolidate the holding
companies in Mauritius through which the investments are held.
The accounting policies set out below have been applied
consistently to all periods presented in these consolidated nancial
statements.
D. 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). In
prior periods, the Group has recognised an intangible asset
relating to a pipeline of investments (at 30 September 2013:
GBP92,000) At 31 March 2014, the Board concluded the pipeline no
longer held any value and the remaining value was impaired down to
GBPnil.
E. 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
F. 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.
At 30 September 2013, the controlling stake in Matheran and its
subsidiary Gopi had been classified as held for sale on acquisition
as it fulfilled the criteria. The investments were sold during the
current six months.
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 amounts 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.
G. 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.
H. 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.
I. 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.
J. 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.
K. Pension costs
The Company contributed to directors' personal money-purchase
pension schemes. Contributions were charged to the income statement
in the period in which they become payable. No charges were made in
the six months to 30 September 2014.
L. 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.
M. Operating leases
Operating lease rentals are charged to the income statement on a
straight-line basis over the term of the lease.
2. Earnings per share and net assets per share
The calculation of the basic earnings per share is based on the
loss for the six months to 30 September 2014 attributable to equity
shareholders of GBP1.5m (six months to 30 September 2013 restated:
loss of GBP15.6m) and the weighted average number of shares in
issue during the six months to 30 September 2014 of 246,156,210
(six months to 30 September 2013: 361,994,426). 23.1m shares under
option (as at 30 September 2013: 23.1m) were non-dilutive due to
the Company being loss making.
The calculation of net asset value per share is based on the net
assets attributable to equity shareholders of GBP26.4m (as at 30
September 2013 restated: GBP51.4m) and the number of shares in
issue at 30 September 2014 of 246,156,210 (as at 30 September 2013:
361,994,426).
3. Investments held at fair value through profit or loss
At 30 September 2014 the Group has the following principal
investments held at fair value through profit or loss, all of which
are incorporated in India:
Class of
shares held % held % held 30.09.13 % held
30.09.14 31.03.14
Apeejay Infra-Logistics Ord. 50.0% 50.0% 50.0%
Contrans Logistic Ord. 44.0% 44.0% 44.0%
MJL Logistic Services Ord. 86.0% 86.0% 86.0%
Sattva CFS & Logistics Ord. 16.0% 39.0% 39.0%
Sattva Conware Ord. 79.0% 83.0% 79.0%
At 30 September 2014 the cost and valuation of the Group's
investments were as follows:
Fair value Fair Value
Historical Prior periods adjustment adjustments
cost Fair Value on shares 01.04.14 Fair value
at 30.09.14 adjustments disposed - 30.09.14 at 30.09.14
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Apeejay Infra-Logistics 2,900 (2,150) - - 750
Contrans Logistic 5,687 (171) - 18 5,534
MJ Logistic Services 11,001 (2,294) - (143) 8,564
Sattva CFS & Logistics 697 2,349 (1,740) (229) 1,077
Sattva Conware 4,177 1,423 - (380) 5,220
24,462 (843) (1,740) (734) 21,145
------------ ------------- ----------- ------------- -----------------
At 30 September 2013 the restated cost and valuation of the
Group's investments were as follows:
Fair value Fair Value
Historical Prior periods adjustment adjustments
cost Fair Value on shares 01.04.13 Fair value
at 30.09.13 adjustments disposed - 30.09.13 at 30.09.13
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Apeejay Infra-Logistics 2,900 1,206 - (1,791) 2,315
Contrans Logistic 5,687 2,872 - (2,552) 6,007
MJ Logistic Services 10,851 (273) - (2,438) 8,140
Sattva CFS & Logistics 697 3,770 - (669) 3,798
Sattva Conware 3,912 2,229 - (1,361) 4,780
------------ ------------- ----------- ------------- ----------------
24,047 9,804 - (8,811) 25,040
Reclassified as
asset
held for sale
Matheran Realty 12,770 (7,707) - (3,084) 1,979
Gopi Resorts 2,542 (131) - (1,469) 942
39,359 1,966 - (13,364) 27,961
------------ ------------- ----------- ------------- ----------------
At 31 March 2014 the cost and valuation of the Group's
investments were as follows:
Fair value Fair Value
Historical Prior periods adjustment adjustments
cost Fair Value on shares 01.04.13 Fair value
at 31.03.14 adjustments disposed - 31.03.14 at 31.03.14
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Apeejay Infra-Logistics 2,900 1,206 - (3,356) 750
Contrans Logistic 5,687 2,872 - (3,043) 5,516
Gopi Resorts 2,542 (131) - (1,420) 991
Matheran Realty 13,553 (7,707) - (3,623) 2,223
MJ Logistic Services 11,001 (273) - (2,021) 8,707
Sattva CFS & Logistics 697 3,770 - (1,421) 3,046
Sattva Conware 4,177 2,229 - (807) 5,599
40,557 1,966 - (15,691) 26,832
------------ ------------- ----------- ------------- -----------------
The Group's holdings in the above investments are all held by
wholly owned intermediate Mauritian registered holding
companies.
4. Investment disposals
On 18 September 2014, Aboyne Mauritius Limited, the Mauritian
holding company which holds the investment in the real estate
projects, Matheran Realty and Gopi Resorts, was sold for a total
consideration of up to INR 500.0m of which INR 300.0m (GBP3.0m) was
received in cash on the date of sale. Subject to the future
profitability of the real estate projects, the balance of INR
200.0m is expected to be satisfied by the redemption of Redeemable
Preference Shares (RPS's) with a maturity of three years ending on
18 September 2017. Given the early development stage of these
projects, the RPS's have been valued at the nominal amount of GBP1
as at 30 September 2014.
On 29 July 2014, a 23% stake in Sattva CFS & Logistics Pvt
Limited was sold for GBP1.9m in cash. The remaining stake of 16% is
included in the Group's investment portfolio disclosed in note 3
above.
5. 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.
6. Interim Results
Copies of the Interim Results will be available from
www.eredene.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GMMZMKNNGDZM
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