TIDMPMEA
RNS Number : 5685Y
PME African Infrastructure Opps PLC
10 May 2019
10 May 2019
PME African Infrastructure Opportunities plc
("PME" or the "Company")
(AIM: PMEA.L)
Final Results for the year ended 31 December 2018
PME African Infrastructure Opportunities plc announces its
audited results for the year ended 31 December 2018.
Financial Highlights
-- Net Asset Value of US$3.7 million (2017: US$5.2 million)
-- Net Asset Value per share of US$0.15 (31 December 2017: US$0.21 per share)
-- Loss for the year ended 31 December 2018 was US$1.5 million (2017: loss of US$0.9 million)
-- Basic and diluted loss per share of US$0.0615 (2017: loss per share of US$0.0241)
For further information please contact:
Cenkos Securities plc
Nominated Adviser
Azhic Basirov / Ben Jeynes +44 20 7397 8900
Stifel Nicolaus Europe Limited
Broker
Neil Winward / Tom Yeadon +44 20 7710 7600
Market Abuse Regulation disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
Chairman's Statement
On behalf of the Board of Directors (the "Board"), I am pleased
to present the annual results for PME African Infrastructure
Opportunities plc ("PME" or the "Company" and together with its
subsidiaries the "Group") for the year ended 31 December 2018.
The remit of the Company's directors (the "Directors") under the
Company's investing policy is to seek to realise the remaining
assets of the Company and to return both existing cash reserves and
the proceeds of realisation of the remaining assets to
shareholders.
Investments
The Company now has one remaining asset, namely a leasehold
building in Dar-es-Salaam, Tanzania (the "Dar-es-Salaam Property").
The Dar-es-Salaam Property, which is managed by a local managing
agent and to which PME has the benefit of the remaining 20 year
lease, is currently 81.4% let. The investment continues to trade
profitably.
In 2010 PME Properties Limited acquired the Dar-es-Salaam
Property from Dovetel (T) Limited ("Dovetel"), the Company's former
telecommunication investee company in Tanzania. Dovetel was also a
tenant of part of the Dar-es-Salaam Property. On 19 October 2017,
PME Properties Limited issued an eviction notice to Dovetel for
non-payment of rent. On 3 December 2017 the eviction was carried
out. On 22 February 2018 the Directors were informed that a
representative from First Seal Ltd, the company who had acquired
the share capital of Dovetel had made a complaint to the police. On
28 February 2018 a letter was sent to the police by the lawyer
appointed by PME Properties Limited to explain the eviction to the
police. The letter outlined the background to the eviction and
documentation was provided to prove the Group's proper ownership of
the building and that Dovetel were merely a tenant of the property.
It was also explained to the police that the eviction was conducted
by the landlord through the Court Broker who is legally authorised
and therefore the eviction was not a criminal matter.
The police continued their investigation and presented their
findings to the public prosecutor. The public prosecutor decided to
charge the Court Broker who executed the eviction. The judge in the
case has asked for additional information from all parties. PME
have been asked to provide evidence that they are the rightful
owner of the tenancy agreement. This information has been provided.
The owner of the land on which the Dar-es-Salaam Property is
located has been asked by the police to confirm his ownership of
the land. The Company understands that the owner of the land will
be confirming ownership to the authorities shortly. It is difficult
to say when there will be a final judgement in respect of the
charges against the Court Broker.
The demand for high end offices in Tanzania has not improved due
to the ongoing economic outlook. The prospect of selling the
leasehold building in the short term for a reasonable price remains
uncertain. A data room has been prepared so that the Company will
be able to progress the marketing of the Dar-es-Salaam Property
when appropriate. In preparing the information for the data room it
was confirmed by the Company's lawyers that the caveat on the land
register had not been removed. The Directors had previously been
incorrectly advised that the caveat had lapsed. The formal process
to remove the caveat has started with an application being
submitted to the High Court in Tanzania.
At 31 December 2018, the Directors have decreased the value of
the Dar-es-Salaam Property to US$3.62m. This valuation is in line
with an updated value assessed by the local expert at that date and
reflects the continued uncertainty as to the economic position of
Tanzania, a decline in the market for high end office
accommodation, a decrease of rental income during the period and a
reduction in the remaining lease term.
In 2016 the Tanzanian Revenue Authority ("TRA") performed a tax
audit for the years 2013 to 2015 looking at inter alia withholding
tax, VAT and income tax. Noting the immaterial amount and the
likely timeframe for any review, the Board has accepted their
assessment for withholding tax and VAT which concluded that an
additional US$37k of tax was due. The Board would like to meet this
liability via the application of existing tax credits (the company
holds $221k of available tax credits up to 31 December 2015),
although this has yet to be accepted by the TRA.
As disclosed in prior results statements, the TRA also assessed
an additional income tax assessment of approximately US$256k for
the years 2013 to 2015. The Group did not agree with this
assessment and hence started an appeal process and did not make a
provision in the accounts for this balance. However since the tax
audit, the TRA has offered a tax amnesty for all prior tax
liabilities allowing interest on late payment to be ignored
provided the application was received by 30 November 2018 and the
amounts owed were settled prior to 30 June 2019. In order to ensure
that the Group is able to effectively wind down the operations in
line with its investment policy, the Group has decided to take
advantage of the amnesty and therefore has applied to make a total
payment in line with the TRA's assessment of income tax. The
majority of this payment will be made via the existing tax credits.
Whilst the appeal process continues, its timeline to resolution, as
well as the end result, are both inherently uncertain whilst
utilising the amnesty allows the Group to draw a financial line
under the tax queries raised by the TRA and hopefully closes out
this historic matter in an efficient way for shareholders. Due to
the Company applying to use the tax amnesty, the liability under
the tax amnesty application has now been recognised in the year-end
valuation of the real estate investment. The Board continues to
work with its subsidiary's advisers to finalise the tax position of
the Tanzanian company with the local tax authorities and hence
ensure that this does not become an impediment to the Company's
wind down, once the existing Dar-es-Salaam Property is sold.
PME has also been working with its local bank to have the inter
group loan between PME Properties Limited and PME TZ Property
(Mauritius) Limited registered with the National Bank of Tanzania.
This registration is time consuming and is being transferred to a
number of departments within the National Bank. A repayment cannot
be made until the registration process is complete. This is taking
considerably longer than expected.
Until the registration is resolved, the Group is not able to
pass funds through the Company. Delays in the Group's ability to
provide upstream funding to the Company may result in a lack of
working capital at the holding company level in the short term.
Optas GmbH ("Optas") a company related to me is assisting when the
Company has cash flow issues. On 3 May 2019 the Company entered
into a secured loan agreement with Optas to provide a facility of
up to EUR400,000 to assist with general working capital. The loan
is secured on the Company's cash receivables, is repayable within
18 months and attracts interest at a rate of 6% per annum on the
utilised facility and 1% on the remaining unutilised facility. I
hold 50% of Optas's issued share capital, therefore Optas is deemed
to be a related party of the Company and the loan is a related
party transaction.
Financial Results
The loss for the year to 31 December 2018 was US$1.513 million
(2017: loss of US$0.875 million), representing a US$0.0615 loss per
Ordinary Share (2017: loss per Ordinary Share US$0.0241). The loss
for the year was made up of the net loss in the fair value of
assets plus ongoing operating and administrative costs.
The Directors, having considered the latest valuation of the
Dar-es-Salaam Property, are of the opinion that the Dar-es-Salaam
Property is reflected in the balance sheet at realistic fair
value.
As at 31 December 2018, PME's Net Asset Value attributable to
ordinary shareholders in accordance with IFRS was US$3.7 million
(US$0.15 per share), compared to the US$5.2 million (US$0.21 per
share) that was reported as at 31 December 2017.
Return of Cash and Outlook
The Directors will market the sale of the Dar-es-Salaam
Property, provided the local economic uncertainty has receded, the
caveat has been removed and confirmation that the police
investigation has been finalised with no further action being
taken.
A further and final tender will be proposed once the building
has been sold. It is not possible to give a timeline as to when
this may take place.
Paul Macdonald
Chairman
9 May 2019
Statement of Comprehensive Income
Year ended Year ended
31 December 2018 31 December 2017
Note US$'000 US$'000
Net losses on financial assets at fair value through profit or loss 3 (1,220) (204)
Dividend income 270 226
Operating and administration expenses 9 (552) (898)
Foreign exchange (loss)/gain (11) 1
----------------------------------------------------------------------- ----- ------------------ ------------------
Loss before income tax (1,513) (875)
Income tax 13 - -
----------------------------------------------------------------------- ----- ------------------ ------------------
Loss and total comprehensive expense for the year (1,513) (875)
Basic and diluted loss per share (cents) attributable to the equity
holders of the Company
during the year 5 (6.15) (2.41)
----------------------------------------------------------------------- ----- ------------------ ------------------
The accompanying notes form an integral part of these financial
statements.
Balance Sheet
Note As at 31 December 2018 As at 31 December 2017
US$'000 US$'000
------------------------------------------------------- ----- ----------------------- -----------------------
Assets
Current assets
Financial assets at fair value through profit or loss 3 3,584 4,687
Prepayments 26 26
Cash and cash equivalents 139 554
------------------------------------------------------- ----- ----------------------- -----------------------
Total current assets 3,749 5,267
------------------------------------------------------- ----- ----------------------- -----------------------
Total assets 3,749 5,267
------------------------------------------------------- ----- ----------------------- -----------------------
Equity and liabilities
Equity
Issued share capital 6 246 246
Capital redemption reserve 7 1,559 1,559
Retained earnings 1,852 3,365
------------------------------------------------------- ----- ----------------------- -----------------------
Total equity 3,657 5,170
------------------------------------------------------- ----- ----------------------- -----------------------
Current liabilities
Trade and other payables 8 92 97
-----
Total current liabilities 92 97
------------------------------------------------------- ----- ----------------------- -----------------------
Total liabilities 92 97
------------------------------------------------------- ----- ----------------------- -----------------------
Total equity and liabilities 3,749 5,267
------------------------------------------------------- ----- ----------------------- -----------------------
The financial statements were approved and authorised for issue
by the Board of Directors on 9 May 2019 and signed by:
Paul Macdonald Lawrence Kearns
Director Director
Statement of Changes in Equity
Share capital Capital Retained earnings Total
redemption
reserve
US$'000 US$'000 US$'000 US$'000
------------------------------------------ -------------- ------------------ --------
Balance at 1 January 2017 410 1,395 7,682 9,487
------------------------------------------- ------ ------ ------------------ --------
Comprehensive expense
Loss for the year - - (875) (875)
------------------------------------------- ------ ------ ------------------ --------
Total comprehensive expense for the year - - (875) (875)
------------------------------------------- ------ ------ ------------------ --------
Transactions with owners
Tender offer (note 6) (164) 164 (3,442) (3,442)
------------------------------------------- ------ ------ ------------------ --------
Total transactions with owners (164) 164 (3,442) (3,442)
------------------------------------------- ------ ------ ------------------ --------
Balance at 31 December 2017 246 1,559 3,365 5,170
------------------------------------------- ------ ------ ------------------ --------
Balance at 1 January 2018 246 1,559 3,365 5,170
------------------------------------------ ---- ------ -------- --------
Comprehensive expense
Loss for the year - - (1,513) (1,513)
------------------------------------------ ---- ------ -------- --------
Total comprehensive expense for the year - - (1,513) (1,513)
------------------------------------------ ---- ------ -------- --------
Balance at 31 December 2018 246 1,559 1,852 3,657
------------------------------------------ ---- ------ -------- --------
Cash Flow Statement
Note Year ended Year ended
31 December 2018 31 December 2017
US$'000 US$'000
-------------------------------------------------------------- ----- ------------------ ------------------
Cash flows from operating activities
Purchase of financial assets - loans to investee companies 3 (40) (14)
Proceeds from sale of financial assets - return of capital 3 - 4,400
Dividends received 188 226
Operating and administration expenses paid (562) (879)
------------------ ------------------
Net cash (used in)/generated from operating activities (414) 3,733
-------------------------------------------------------------- ----- ------------------ ------------------
Financing activities
Tender offer 6 - (3,442)
Net cash used in financing activities - (3,442)
-------------------------------------------------------------- ----- ------------------ ------------------
Net (decrease)/increase in cash and cash equivalents (414) 291
Cash and cash equivalents at beginning of year 554 261
Foreign exchange (losses)/gains on cash and cash equivalents (1) 2
-------------------------------------------------------------- ----- ------------------ ------------------
Cash and cash equivalents at end of year 139 554
-------------------------------------------------------------- ----- ------------------ ------------------
Notes to the Financial Statements
1 General Information
PME African Infrastructure Opportunities plc (the "Company") was
incorporated and is registered and domiciled in the Isle of Man
under the Isle of Man Companies Acts 1931 to 2004 on 19 June 2007
as a public limited company with registered number 120060C. The
investment objective of PME African Infrastructure Opportunities
plc and its subsidiaries (the "Group") was to achieve significant
total return to investors through investing in various
infrastructure projects and related opportunities across a range of
countries in sub-Saharan Africa. On 19 October 2012 the
shareholders approved the revision of the Company's investing
policy which is now to realise the remaining assets of the Company
and to return both existing cash reserves and the proceeds of
realisation of the remaining assets to shareholders.
The Company's investment activities were managed by PME
Infrastructure Managers Limited (the "Investment Manager") to 6
July 2012. No alternate has been appointed and the Board of
Directors has assumed responsibility for the management of the
Company's remaining assets. The Company's administration is
delegated to Mainstream Fund Services (IOM) Limited formerly known
as Galileo Fund Services Limited (the "Administrator"). The
registered office of the Company is Millennium House, 46 Athol
Street, Douglas, Isle of Man, IM1 1JB.
Pursuant to its AIM admission document dated 6 July 2007, there
was an original placing of up to 180,450,000 Ordinary Shares with
Warrants attached on the basis of 1 Warrant for every 5 Ordinary
Shares. Following the close of the placing on 12 July 2007,
180,450,000 Shares and 36,090,000 Warrants were issued. The
Warrants lapsed in July 2012. The Shares of the Company were
admitted to trading on AIM, a market of the London Stock Exchange,
on 12 July 2007 when dealings also commenced.
Financial year end
The financial year end for the Company is 31 December in each
year.
Dividends
In the year to 31 December 2018 the Company declared and paid
dividends of US$nil (2017: US$nil).
Going concern
In assessing the going concern basis of preparation of the
financial statements for the year ended 31 December 2018, the
Directors have taken into account the status of current
negotiations on the realisation of the remaining assets and the
general working capital facility of up to EUR400,000 as explained
in note 14. The Directors consider that the Group has sufficient
funds for its ongoing operations for the foreseeable future and
therefore have continued to adopt the going concern basis in
preparing these financial statements.
2 Summary of Significant Accounting Policies
This note provides a list of the significant accounting policies
adopted in the preparation of these financial statements to the
extent that they have not already been disclosed in the other notes
below. These policies have been consistently applied to all years
presented unless otherwise stated.
2.1 Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted by
the European Union. The financial statements have been prepared
under the historical cost convention, as modified by the
revaluation of financial assets at fair value through profit or
loss, and the requirements of the Isle of Man Companies Acts 1931
to 2004. The preparation of financial statements in conformity with
IFRS requires the use of accounting estimates. It also requires
management to exercise its judgement in the process of applying the
Company's accounting policies. The areas involving a higher degree
of judgement or complexity, or areas where assumptions and
estimates are significant to the financial statements are disclosed
in note 3.
In accordance with IFRS 10, 'Consolidated financial statements',
the Directors have concluded that the Company falls under the
definition of an investment entity because the Company has the
following characteristics:
-- the Company has obtained funds for the purpose of providing
investors with investment management services;
-- the Company's investing policy, which was communicated
directly to investors, is investment solely for returns from
capital appreciation and investment income; and
-- the performance of investments is measured and evaluated on a fair value basis.
As a result, the Company does not consolidate its subsidiaries,
instead it is required to account for these subsidiaries at fair
value through profit or loss in accordance with IFRS 9, 'Financial
instruments' and prepares separate company financial statements
only.
a) New and amended standards and interpretations adopted by the
Company
IFRS 9, 'Financial instruments', final version issued July 2014.
This standard replaces the guidance in IAS 39, 'Financial
instruments: recognition and measurement' that relate to the
recognition, derecognition, classification, measurement and
impairment of financial assets and financial liabilities.
The standard became applicable and was adopted by the Company
from 1 January 2018. The adoption of the revised standard resulted
in changes in accounting policies, but these had no material impact
on the amounts recognised in the financial statements and did not
require any retrospective adjustment.
The Company classifies its financial assets in the following
categories: at fair value through profit or loss, and at amortised
cost. The classification depends on the Company's business model
for managing the financial assets and the contractual terms of the
cash flows.
Assets that are debt instruments held for collection of
contractual cash flows where those cash flows represent solely
payment of principal and interest are measured at amortised cost.
The Company's financial assets at amortised cost comprise 'cash and
cash equivalents' in the balance sheet.
The Company classifies its equity investments as financial
assets at fair value through profit or loss upon initial
recognition as it has not taken the option to irrevocably designate
any as fair value through other comprehensive income. Related loans
and similar debt instruments are also measured at fair value
through profit or loss if they do not meet the criteria for
amortised cost and the business model for holding the financial
assets does not include the collection of contractual cash flows.
The business model is for selling the financial assets in
accordance with the Company's investing policy.
There has been no change to the Company's measurement policies
for financial assets or financial liabilities. However from 1
January 2018, a provision for impairment is established by the
Company assessing, on a forward looking basis the expected credit
losses associated with its debt instruments carried at amortised
cost. The impairment methodology applied depends on whether there
has been a significant increase in credit risk. There has been no
material impact as a result of the adoption of this standard.
2.2 Foreign currency translation
a) Functional and presentation currency
Items included in the financial statements are measured using
the currency of the primary economic environment in which the
entity operates ('the functional currency'). These financial
statements are presented in US Dollars, which is the Company's
functional and presentation currency.
b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the statement
of comprehensive income.
2.3 Revenue and expense recognition
Dividend income is recognised when the right to receive payment
is established.
Expenses are accounted for on an accruals basis.
2.4 Financial assets and financial liabilities
The Company classifies its financial assets in the following
categories: at fair value through profit or loss, and at amortised
cost. The classification depends on the Company's business model
for managing the financial assets and the contractual terms of the
cash flows. Management determines the classification of its
financial assets at initial recognition.
Assets that are debt instruments held for collection of
contractual cash flows where those cash flows represent solely
payment of principal and interest are measured at amortised cost.
The Company's financial assets at amortised cost comprise 'cash and
cash equivalents' in the balance sheet.
The Company classifies its equity investments as financial
assets at fair value through profit or loss upon initial
recognition as it has not taken the option to irrevocably designate
any as fair value through other comprehensive income. Related loans
and similar debt instruments are also measured at fair value
through profit or loss if they do not meet the criteria for
amortised cost and the business model for holding the financial
assets does not include the collection of contractual cash flows.
The business model is for selling the financial assets in
accordance with the Company's investing policy.
Financial assets at amortised cost are included in current
assets, except for maturities greater than 12 months after the
balance sheet date which are classified as non-current assets. The
Company's financial assets at amortised cost comprise 'cash and
cash equivalents' in the balance sheet. Financial assets at
amortised cost are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment. From 1 January
2018, a provision for impairment is established by the Company
assessing, on a forward-looking basis, the expected credit losses
associated with its debt instruments carried at amortised cost. The
impairment methodology applied depends on whether there has been a
significant increase in credit risk.
The Company classifies its financial liabilities as other
liabilities. Other liabilities are 'trade and other payables' in
the balance sheet (note 8).
2.5 Cash and cash equivalents
Cash and cash equivalents comprise cash deposited with banks
held with original maturities of less than three months.
3 Financial Assets at Fair Value through Profit or Loss
Investments are classified at fair value through profit or loss.
Such investments are initially recorded at fair value, and
transaction costs for all financial assets carried at fair value
through profit or loss are expensed as incurred. Gains and losses
arising from changes in the fair value of financial assets,
including foreign exchange movements, are recognised in the
statement of comprehensive income.
The Company makes estimates and assumptions concerning the
future. The resulting accounting estimates will, by definition,
seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year are in relation to the financial assets at
fair value through profit or loss.
Fair value is the price that would be received to sell an asset
in an orderly transaction between market participants at the
measurement date. The fair value of financial assets that are not
traded in an active market is determined using valuation
techniques. The Company uses a variety of methods and makes
assumptions that are based on market conditions existing at each
reporting date. Valuation techniques used include the use of
comparable recent or proposed arm's length transactions, discounted
cash flow analysis and other valuation techniques commonly used by
market participants.
Regular purchases and sales of financial assets are recognised
on the trade date, being the date on which the Company commits to
purchase or sell the asset. Financial assets are derecognised when
the rights to receive cash flows from the investments have expired
or the Company has transferred substantially all risks and rewards
of ownership.
The following subsidiaries of the Company which are classified
as financial assets at fair value through profit or loss are held
at fair value in accordance with IFRS 10:
Country of incorporation Percentage of shares held
------------------------------------- -------------------------- --------------------------
PME Locomotives (Mauritius) Limited Mauritius 100%
PME TZ Property (Mauritius) Limited Mauritius 100%
------------------------------------- -------------------------- --------------------------
The following company is an indirect investment of the Company
and is included within the fair value of the direct
investments:
Country of incorporation Percentage of shares held Parent company
----------------------- ------------------------- -------------------------- ------------------------------------
PME Properties Limited Tanzania 100% PME TZ Property (Mauritius) Limited
----------------------- ------------------------- -------------------------- ------------------------------------
The following table shows a reconciliation of the opening
balances to the closing balances for fair value measurements:
31 December 2018 31 December 2017
US$'000 US$'000
------------------------------------------------ ----------------- -----------------
Start of the year 4,687 9,260
Increase in loans to investee companies 40 14
Subsidiary expenses to be paid by the Company* (4) 17
Dividend** 81 -
Return of capital - (4,400)
Movement in fair value of financial assets (1,220) (204)
End of the year 3,584 4,687
------------------------------------------------ ----------------- -----------------
* The bank account for PME Locomotives (Mauritius) Limited was
closed during 2017 and all money transferred to the Company's bank
account. The Company is therefore responsible for its subsidiary's
creditors at the year-end (note 8).
** PME TZ Property (Mauritius) Limited declared a dividend of
US$269,640 in August 2018 of which US$81,198 was offset against the
intercompany loan with the Company.
Assets carried at amounts based on fair value are defined as
follows:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
-- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (Level
2).
-- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (Level
3).
The fair values of all financial assets at fair value through
profit or loss are determined using valuation techniques which
include significant unobservable inputs. The principal asset
remaining in the group is the Dar-es-Salaam property. Accordingly,
the fair values are classified as level 3. There were no transfers
between levels during the year. The valuation techniques and the
significant unobservable inputs are shown below.
Fair value as at Fair value as at Valuation Significant Sensitivity to
31 December 2018 31 December 2017 techniques and unobservable significant
US$'000 US$'000 inputs inputs unobservable inputs
------------------ ----------------- ----------------- ------------------ ------------------ --------------------
Real estate 3,581 4,683 Discounted cash Discount rate If the discount
investments (PME flow property rate were 1%
TZ Property valuation (inputs higher/lower the
(Mauritius) including rental estimated fair
Limited) income, operating value would
costs, (decrease)/increase
vacancy and by US$18,000
discount rate)
plus fair value
of other net
assets
Other
(PME Locomotives
(Mauritius) Fair value of
Limited) 3 4 net assets N/A N/A
------------------ ----------------- ----------------- ------------------ ------------------ --------------------
Total 3,584 4,687
------------------ ----------------- ----------------- ------------------ ------------------ --------------------
The Dar-es-Salaam property was revalued at 31 December 2018 by
independent professionally qualified valuer, M&R Agency Limited
who has recent experience in the locations and categories of the
respective investment property valued. The details of key
assumptions used by the valuer are as follows:
Rental income wherein potential income is US$600,220 per annum
(2017: US$ 877,815), rent reviews are assumed to be after every 3
years at 5% (2017: assumed to be after every 3 years at 5%) and
remaining leasehold term of 20 years (2017: 21 years) from a
30-year lease since 2009 - this is supported by the terms of any
existing lease, other contracts or external evidence such as
current market rents for similar properties. Decrease in potential
income is mainly due to the lower rate of the new rental
agreements.
Operating cost at 20% (2017: 25%) of total revenue from the
property - this includes necessary expenditure to maintain the
property for its expected useful life. This percentage is
comparable to the current level of operating cost.
Short and long term vacancy rate at 20% (2017: short term at 30%
and long term at 20%) - based on current and expected future market
conditions after expiry of any current lease agreements.
Discount rate at 9.05% (2017: 9.66%) - reflects current market
assessments of the uncertainty in the amount and timing of cash
flows. Calculation of discount rates includes the following
inputs:
-- Lending rate at 8% (2017: 8.10%) which is annual US$ lending rate by commercial banks;
-- Yield: 12% (2017: 12%); and
-- Capital mix of 30% equity and 70% loan (2017: 40% equity and 60% loan).
4 Net Asset Value per Share
As at 31 December 2018 As at 31 December 2017
-------------------------------------------------------------------- ----------------------- -----------------------
Net assets attributable to equity holders of the Company (US$'000) 3,657 5,170
Shares in issue (thousands) 24,584 24,584
-------------------------------------------------------------------- ----------------------- -----------------------
NAV per share (US$) 0.15 0.21
-------------------------------------------------------------------- ----------------------- -----------------------
The NAV per share is calculated by dividing the net assets
attributable to equity holders of the Company by the number of
Ordinary Shares in issue.
5 Basic and Diluted Loss per Share
Basic loss per share is calculated by dividing the loss
attributable to equity holders of the Company by the weighted
average number of Ordinary Shares in issue during the year.
Year ended Year ended
31 December 2018 31 December 2017
----------------------------------------------------------------- ------------------ ------------------
Loss attributable to equity holders of the Company (US$'000) (1,513) (875)
Weighted average number of Ordinary Shares in issue (thousands) 24,584 36,303
----------------------------------------------------------------- ------------------ ------------------
Basic loss per share (cents) for the year (6.15) (2.41)
----------------------------------------------------------------- ------------------ ------------------
There is no difference between basic and diluted Ordinary Shares
as there are no potential dilutive Ordinary Shares.
6 Share Capital
Ordinary Shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds.
Ordinary Shares of US$0.01 each 31 December 2018 and 2017 31 December 2018 and 2017
Number US$'000
--------------------------------- -------------------------- --------------------------
Authorised 500,000,000 5,000
--------------------------------- -------------------------- --------------------------
C Shares of US$1 each 31 December 2018 and 2017 31 December 2018 and 2017
Number US$'000
----------------------- -------------------------- --------------------------
Authorised 5,000,000 5,000
Issued - -
----------------------- -------------------------- --------------------------
Ordinary Shares of US$0.01 each 31 December 2018 31 December 2017
US$'000 US$'000
-------------------------------------------------------------------------------- ----------------- -----------------
24,583,942 (31 December 2017: 24,583,942) Ordinary Shares in issue, with full
voting rights 246 246
-------------------------------------------------------------------------------- ----------------- -----------------
At incorporation the authorised share capital of the Company was
US$10,000,000 divided into 500,000,000 Ordinary Shares of US$0.01
each and 5,000,000 C Shares of US$1.00 each. The holders of
Ordinary Shares are entitled to receive dividends as declared from
time to time and are entitled to one vote per share at meetings of
the Company.
The holders of C Shares would be entitled to one vote per share
at the meetings of the Company. The C Shares can be converted into
Ordinary Shares on the approval of the Directors. On conversion
each C share would be sub-divided into 100 C Shares of US$0.01 each
and will be automatically converted into New Ordinary Shares of
US$0.01 each.
A tender offer took place in September 2017. Up to 16,389,294
Ordinary Shares were available for tender at a price of US$0.21 per
share. A total of 16,389,294 Ordinary Shares with an aggregate
nominal value of US$163,893 were validly tendered and were
cancelled upon completion on 19 September 2017. Retained earnings
were reduced by US$3,441,752, being the consideration paid for
these shares.
Dividends and tender offers are recognised as a liability in the
year in which they are declared and approved.
7 Capital Redemption Reserve
The capital redemption reserve is created on the cancellation of
shares equal to the par value of shares cancelled. This reserve is
not distributable.
8 Trade and Other Payables
Trade and other payables are recognised initially at fair value
and subsequently at amortised cost using the effective interest
method.
31 December 2018 31 December 2017
US$'000 US$'000
-------------------------------------------------------- ----------------- -----------------
Administration fees payable 17 19
Audit fee payable 40 42
CREST service provider fee payable 6 6
Subsidiary expenses to be paid by the Company (note 3) 13 17
Other sundry creditors 16 13
92 97
-------------------------------------------------------- ----------------- -----------------
The fair value of the above financial liabilities approximates
their carrying amounts.
9 Operating and Administration Expenses
Year ended Year ended
31 December 2018 31 December 2017
US$'000 US$'000
--------------------------------------- ------------------ ------------------
Administration expenses 117 167
Administrator and Registrar fees 67 84
Audit fees 41 41
Directors' fees 224 222
Professional fees 60 336
Other 43 48
--------------------------------------- ------------------ ------------------
Operating and administration expenses 552 898
--------------------------------------- ------------------ ------------------
Administrator and Registrar fees
The Administrator receives fees on a time spent basis, subject
to a minimum quarterly fee of GBP8,250, payable quarterly in
arrears.
Administration fees expensed by the Company for the year ended
31 December 2018 amounted to US$59,077 (31 December 2017:
US$76,313).
The Administrator provides general secretarial services to the
Company, for which it receives a minimum annual fee of GBP5,000.
Additional fees for management information can also be charged on a
time spent basis. For attendance at meetings not held in the Isle
of Man, an attendance fee of GBP1,000 per day or part thereof will
be charged. The fees payable by the Company for general secretarial
services for the year ended 31 December 2018 amounted to US$7,785
(31 December 2017: US$7,949).
Administration fees of the Mauritian subsidiaries for the year
ended 31 December 2018 amounted to US$13,991 (31 December 2017:
US$17,325).
Administration fees of PME Properties Limited for the year ended
31 December 2018 amounted to US$39,158 (31 December 2017:
US$53,405).
Directors' remuneration
The maximum amount of basic remuneration payable by the Company
by way of fees to the Directors permitted under the Articles of
Association is GBP200,000 per annum. The Directors are each
entitled to receive reimbursement of any expenses incurred in
relation to their appointment. The Executive Directors are
currently entitled to receive annual basic salaries of
GBP75,000.
Total fees and basic remuneration (including VAT where
applicable) and expenses payable by the Company for the year ended
31 December 2018 amounted to US$224,156 (31 December 2017:
US$222,143) and was split as below. Directors' insurance cover
payable amounted to US$30,000 (31 December 2017: US$30,000).
Year ended Year ended
31 December 2018 31 December 2017
US$'000 US$'000
----------------------- ------------------ ------------------
Paul Macdonald 97 99
Lawrence Kearns 109 111
Expense reimbursement 18 12
224 222
----------------------- ------------------ ------------------
10 Operating Segments
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker is the person or group that
allocates resources to and assesses the performance of the
operating segments of an entity. The chief operating
decision-makers have been identified as the Board of Directors.
The Board reviews the Company's internal reporting in order to
assess performance and allocate resources. It has determined the
operating segments based on these reports. The Board considers the
business on a project by project basis by type of business. The
type of business is transport (railway) and leasehold property.
Year ended 31 December 2018 Transport Leasehold Other* Total
Property
PME Locomotives PME TZ Property
US$'000 US$'000 US$'000 US$'000
--------------------------------------------------------- -------------------- ---------------- -------- --------
Net losses on financial assets at fair value through
profit or loss (29) (1,191) - (1,220)
Dividend income - 270 - 270
(Loss)/profit for the year (29) (921) (563) (1,513)
Segment assets 3 3,581 165 3,749
Segment liabilities - - (92) (92)
---------------------------------------------------------- -------------------- ---------------- -------- --------
* Other refers to income and expenses of the Company not
specific to any specific sector such as income on un-invested funds
and corporate expenses. Other assets comprise cash and cash
equivalents US$139,141 and other assets US$26,137.
Year ended 31 December 2017 Transport Leasehold Other** Total
Property
PME Locomotives PME TZ Property
US$'000 US$'000 US$'000 US$'000
--------------------------------------------------------- -------------------- ---------------- -------- --------
Net gains/(losses) on financial assets at fair value
through profit or loss 116 (320) - (204)
Dividend income - 226 - 226
Profit/(loss) for the year 116 (94) (897) (875)
Segment assets 4 4,683 580 5,267
Segment liabilities - - (97) (97)
---------------------------------------------------------- -------------------- ---------------- -------- --------
** Other refers to income and expenses of the Company not
specific to any specific sector such as income on un-invested funds
and corporate expenses. Other assets comprise cash and cash
equivalents US$554,414 and other assets US$26,460.
11 Risk Management
The Company's activities expose it to a variety of financial
risks: market risk (including foreign currency risk and interest
rate risk), credit risk and liquidity risk. The financial risks
relate to the following financial instruments: financial assets at
fair value through profit or loss, trade and other receivables,
cash and cash equivalents and trade and other payables. The
accounting policies with respect to the significant financial
instruments are described in notes 2, 3 and 8.
Risk management is carried out by the Executive Directors.
Foreign currency risk
Foreign currency risk is the risk that the value of financial
instruments will fluctuate due to changes in foreign exchange
rates. Certain of the Company's operations are conducted in
jurisdictions which generate revenue, expenses, assets and
liabilities in currencies other than US Dollars. As a result, the
Company is subject to the effects of exchange rate fluctuations
with respect to these currencies. The currencies giving rise to
this risk are Euro and Pound Sterling.
The Company's policy is not to enter into any currency hedging
transactions.
The table below summarises the Company's exposure to foreign
currency risk:
31 December 2018 Monetary Assets Monetary Liabilities Total
US$'000 US$'000 US$'000
------------------ ---------------- --------------------- ---------
Euro - (1) (1)
Pound Sterling 20 (77) (57)
20 (78) (58)
------------------ ---------------- --------------------- ---------
31 December 2017 Monetary Assets Monetary Liabilities Total
US$'000 US$'000 US$'000
------------------ ---------------- --------------------- ---------
Euro - - -
Pound Sterling 22 (80) (58)
22 (80) (58)
------------------ ---------------- --------------------- ---------
The Board of Directors monitors and reviews the Company's
currency position on a continuous basis and act accordingly.
At 31 December 2018, had the US Dollar weakened/strengthened by
4% (2017: weakened/strengthened by 3%) in relation to Euro and
Pound Sterling, with all other variables held constant, the
shareholders' equity would have (decreased)/increased by the
amounts shown below:
2018 2017
US$'000 US$'000
---------------------- --------- ---------
Euro - -
Pound Sterling 2 2
Effect on net assets 2 2
---------------------- --------- ---------
Interest rate risk
Interest rate risk is the risk that the value of financial
instruments will fluctuate due to changes in market interest rates.
The Company is not exposed to significant interest rate risk from
the cash held in interest bearing accounts at floating rates or
short term deposits of one month or less. The Board of Directors
monitor and review the interest rate fluctuations on a continuous
basis and act accordingly.
During the year ended 31 December 2018 should interest rates
have increased by 100 basis points, with all other variables held
constant, the shareholders' equity and the result for the year
would have been US$nil (2017: increased 100 basis points US$4,000)
higher as a result of the impact on bank balances.
Credit risk
Credit risk is the risk that a counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Company.
The carrying amounts of financial assets best represent the
maximum credit risk exposure at the balance sheet date. This
relates also to financial assets carried at amortised cost. Any
change in credit quality of financial assets at fair value through
profit or loss is reflected in the fair value of the asset.
At the reporting date, the Company's financial assets exposed to
credit risk amounted to the following:
31 December 2018 31 December 2017
US$'000 US$'000
--------------------------- ----------------- -----------------
Cash and cash equivalents 139 554
--------------------------- ----------------- -----------------
The Company's financial assets at fair value through profit or
loss are equity investments of the Company which would not usually
be subject to credit risk. Portions of the underlying investments
are in the form of loans and receivables, cash and cash equivalents
or other instruments that are subject to credit risk, and therefore
the value attributable to such instruments is provided in the
credit risk table above. None of the financial assets are either
past due or impaired. In addition, the Company has indirect credit
risk within its financial asset at fair value through profit or
loss, whose underlying assets includes cash and cash equivalents of
US$235,271 (31 December 2017: US$282,835) and receivables of
US$134,528 (31 December 2017: US$100,401).
The Company manages its credit risk by monitoring the
creditworthiness of counterparties regularly. Cash transactions and
balances are limited to high-credit-quality financial institutions
(at least an Aa2 credit rating).
Liquidity risk
Liquidity risk is the risk that the Company will not be able to
meet its obligations as they fall due. The Company currently
manages its liquidity risk by maintaining sufficient cash. The
Company and the Group's liquidity positions are monitored by the
Board of Directors.
The residual undiscounted contractual maturities of financial
liabilities are as follows:
31 December 2018 Less than 1 month 1-3 months 3 months to 1 1-5 years Over 5 years No stated
year maturity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------ ------------------ ----------- ------------------ ---------- ------------- ------------------
Financial
liabilities
Trade and other 92 - - - - -
payables
92 - - - - -
------------------ ------------------ ----------- ------------------ ---------- ------------- ------------------
31 December 2017 Less than 1 month 1-3 months 3 months to 1 1-5 years Over 5 years No stated
year maturity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------ ------------------ ----------- ------------------ ---------- ------------- ------------------
Financial
liabilities
Trade and other 97 - - - - -
payables
97 - - - - -
------------------ ------------------ ----------- ------------------ ---------- ------------- ------------------
Capital risk management
The Company's primary objective when managing its capital base
was to safeguard the Company's ability to continue as a going
concern in order to realise the remaining assets of the Company at
a time and under such conditions as the Directors may determine in
order to maximise value on behalf of the shareholders of the
Company and to return both existing cash reserves and the proceeds
of realisation of the remaining assets to shareholders.
Company capital comprises share capital and reserves.
No changes were made in respect of the objectives, policies or
processes in respect of capital management during the years ended
31 December 2017 and 2018.
12 Related Party Transactions
Parties are considered to be related if one party has the
ability to control the other party or to exercise significant
influence over the other party in making financial or operational
decisions. Key management is made up of the Board of Directors.
The Directors of the Company are considered to be related
parties by virtue of their influence over making operational
decisions. Directors' remuneration is disclosed in note 9.
13 Income Tax Expense
The Company is resident for taxation purposes in the Isle of Man
and is subject to income tax at a rate of zero per cent (2017: zero
per cent).
14 Post Balance Sheet Events
On 3 May 2019 the Company entered into a secured loan agreement
with Optas GmbH ("Optas") to provide a facility of up to EUR400,000
to assist with general working capital. The loan is secured on the
Company's cash receivables, is repayable within 18 months and
attracts interest at a rate of 6% per annum on the utilised
facility and 1% on the remaining unutilised facility. Paul
Macdonald holds 50% of Optas's issued share capital, therefore
Optas is deemed to be a related party of the Company and the loan
is a related party transaction.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR ALMITMBAMBPL
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May 10, 2019 02:00 ET (06:00 GMT)
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