TIDMIIP TIDMTTM
RNS Number : 5800W
Infrastructure India plc
12 December 2019
12 December 2019
Infrastructure India plc
("IIP" or the "Company" and together with its subsidiaries, the
"Group")
Interim results for the six months ended 30 September 2019
Infrastructure India plc, an AIM quoted infrastructure fund
investing directly into assets in India, announces its unaudited
interim results for the six months ended 30 September 2019.
Financial performance
-- Value of the Company's investments was GBP259.2 million as at
30 September 2019 (GBP179.4 million 31 March 2019; GBP200.0 million
30 September 2018).
-- Net Asset Value increased to GBP149.1 million as at 30
September 2019 (GBP106.0 million 31 March 2019; GBP145.3 million 30
September 2018).
-- NAV per share was GBP0.22 as at 30 September 2019 (GBP0.16
March 2019; GBP0.21 September 2018).
-- The principal drivers of the increase in net asset value as
at 30 September 2019 were strengthening of the Indian Rupee (INR)
against Sterling (GBP), a decrease in the yield of the Indian
10-year bond, which serves as the risk-free rate in asset
valuations, and revisions to business assumptions underpinning the
asset valuation of Distribution Logistics Infrastructure Limited
("DLI"), the Company's largest investment, including changes to the
Indian infrastructure tax regime.
Commenting on the half-year results Sonny Lulla, CEO of IIP,
said:
"Following the agreement of a new US$105 million debt facility
in April 2019, this has been a period of investment for the Company
with DLI now able to commission, ramp up and complete all of its
existing terminal facilities. The market environment in India
softened in the second half of 2019 and the government is
responding by providing tax and monetary initiatives to generate
further growth in 2020 from which DLI, in particular, is
increasingly well placed to benefit."
Enquiries:
www.iiplc.com
Infrastructure India plc Via Novella
Sonny Lulla
Cenkos Securities plc
Nominated Adviser & Joint Broker
Azhic Basirov / Ben Jeynes +44 (0) 20 7397 8900
Nplus1 Singer Advisory LLP
Joint Broker
James Maxwell - Corporate Finance
James Waterlow - Investment Fund Sales +44 (0) 20 7496 3000
Novella
Financial Public Relations
Tim Robertson / Fergus Young +44 (0) 20 3151 7008
JOINT STATEMENT FROM THE CHAIRMAN AND THE CHIEF EXECUTIVE
We are pleased to report Infrastructure India plc's ("IIP, the
"Company" and together with its subsidiaries the "IIP Group")
unaudited interim results for the six-month period ended 30
September 2019.
Net Asset Value increased to GBP149.1 million (GBP0.22 per
share) when compared to 31 March 2019 (GBP106.0 million, GBP0.16
per share) and 30 September 2018 (GBP145.3 million, GBP0.21 per
share), principally as a result of strengthening of the Indian
Rupee (INR) against Sterling (GBP), a decrease in the risk-free
rate in asset valuations and revisions to business assumptions at
Distribution Logistics Infrastructure Limited ("DLI"), including
changes to the Indian infrastructure tax regime.
On 2 April 2019, IIP announced that it had agreed a debt
facility of up to US$105 million with IIP Bridge Facility LLC (the
"Financing"), an affiliate of GGIC Ltd. The Financing is a secured
four-year term loan provided to IIP's wholly owned Mauritian
subsidiary, Infrastructure India Holdco, and matures on 1 April
2023. The Financing, which has been drawn in tranches, is expected
to provide sufficient capital to enable DLI to commission, ramp up
and complete all of its existing terminal facilities as well as to
meet other DLI lender requirements and to provide additional
working capital to the Group. IIP has drawn down US$75 million of
the Financing to-date and intends to draw the remaining US$30
million, conditionally available to it under the Financing, in one
further tranche in December 2019. The proceeds will be used to
progress construction and to meet operating overheads at DLI as
well as to provide working capital to the Group.
IIP announced on 20 June 2019 that the Asset Management
Agreement with Franklin Park Management LLC (the "Asset Manager")
had been extended. The Group has re-appointed the Asset Manager to
provide investment advisory, valuation and portfolio services to
the Group on an exclusive basis. The extension follows the
Financing on 2 April 2019 and aligns the minimum term of the Asset
Manager's appointment with the maturity of the IIP's loans and
provides for continuity of Group asset management whilst these
loans remain outstanding.
Following the Financing completed in April, the subsequent
deployment of capital has allowed steady construction progress to
be made at DLI during the first half of the fiscal year, with
construction works at Nagpur now almost complete. DLI's terminals
at Bangalore and Palwal are currently on track for completion by
the end of Q1 2020.
The macro landscape during the period softened with declining
growth momentum. The slowing growth of the Indian economy has been
evident in the logistics sector which is exposed to key industrial
and consumer markets. The Indian government is implementing a range
of initiatives from tax cuts to infrastructure spending, alongside
easing of monetary policy, to arrest the deceleration. Growth is
largely expected to pick up during 2020.
During the period, DLI saw slackening of freight traffic in
direct correlation with the slowdown in Indian economic growth,
with weaker movement of certain manufactured goods and some
commodities. Freight traffic handled by Indian Railways was
marginally down during the period. In an effort to support
industry, Indian Railways has deferred its Busy Season Charge
("BSC") of 15% and this is expected to give some impetus to cement,
steel, grain and fertilizer loading. The BSC is usually levied from
1 October to 30 June each year on freight, although container
traffic is exempt.
IIP's wind and small hydro assets performed largely as expected
during the period. For the Company's large hydro asset, Shree
Maheshwar Hydel Power Corporation Limited ("SMH"), uncertainty
remains as there is little visibility on progress by the promoter,
Entegra, to arrange completion financing for the project - a
requirement in achieving any settlement with the SMH lenders.
Financial performance
As at 30 September 2019, the value of the IIP Group's
investments in its subsidiaries was GBP259.2 million (GBP179.4
million 31 March 2019; GBP200.0 million 30 September 2018). The
Indian Rupee strengthened at the end of the period with a GBP:INR
rate of 86.92 as at 30 September 2019 against 90.28 as at 31 March
2019 and 94.21 as at 30 September 2018. The risk-free rate of
return, based on the Indian 10-year bond, decreased to 6.68% as at
30 September 2019 from 7.35% as at 31 March 2019 and 8.02% as at 30
September 2018.
Total investments during the first six months of the fiscal year
were GBP22.7 million, all of which was advanced to DLI to fund
construction as well as some debt cover and operating expenses.
Transport
DLI is a supply chain transportation and container
infrastructure company and one of the largest private operators in
India with a nationwide network of terminals and a quality road and
rail transportation fleet. Following the Financing in April and
deployment of the first tranches of capital, construction at DLI's
terminals is underway with most works tracking largely to schedule.
Recent heavy rains at Bangalore and Palwal slowed construction but
did not impact overall schedules.
Works at Nagpur, including a Private Freight Terminal ("PFT")
and additional warehousing should be completed before the calendar
year end. DLI is actively marketing the PFT and DLI expects an
uptick in bulk cargo volumes as these facilities ramp up. Nagpur
has expanded commodity freight with the addition of sugar and
cotton exports during the period and the terminal maintains strong
market share of the export-import market of around 40%.
The terminals at Bangalore and Palwal are both expected to be
completed and to commence initial commercial operations by the end
of the current fiscal year. Completion of the terminal at Chennai,
along with its Free Trade Warehousing Zone, is expected to be later
in 2020, as the team work through the regulatory approvals required
for the facility.
Energy
India Hydropower Development Company's ("IHDC") overall
production was lower than the same period last year due to delayed
and inconsistent monsoon inflows and lower production from the
Bhandardara projects during the first quarter. At Panwi, an
upstream landslide caused silting which had an impact on production
during the period. The Raura project, which was commissioned in
September 2019, is resolving early production teething issues.
IHDC is in discussions with various off-takers for Raura's
power, but full generation and a permanent tariff will not be
achieved until the Himachal Pradesh State Electricity Board
completes a required transmission line and substation, which is
currently expected to be achieved during the first half of
2020.
Overall production at Indian Energy Limited ("IEL") was
marginally lower than the same period last year, with both of IEL's
projects impacted by issues with O&M contractors and timely
maintenance and replacement of parts. The offtake at Theni - which
sells power under a Group Captive Scheme with commercial customers
- has been affected by lower customer demand in the automotive and
textile sectors. There was also some grid curtailment imposed at
both of IEL's sites during the period.
For SMH, there is currently little visibility around the
progress of completion financing being arranged by the promoter,
Entegra, although a new Chairman and several executives have been
appointed. In July 2019, the SMH board approved entry into an MOU
between SMH and the promoter, whereby the promoter will be
provisionally handed back equity acquired by the lenders and given
management control of SMH. The promoter must provide funding to
meet the most immediate needs of SMH and will have 12 months to
raise finance to complete the project as well as conclude a
settlement with the lenders. Although this is potentially a path
forward, IIP maintains a cautious outlook.
Company liquidity and financing
As at 30 September 2019, the IIP Group had unaudited cash
available of GBP28.3 million.
The US$105 million financing with IIP Bridge Facility LLC,
announced on 2 April 2019, is a secured four-year term loan
provided to IIP's wholly owned Mauritian subsidiary, Infrastructure
India Holdco, and matures on 1 April 2023. The Financing is
expected to provide sufficient capital to enable DLI to commission,
ramp up and complete all of its existing terminal facilities as
well as meeting other DLI lender requirements and provide
additional working capital to the Group. IIP has drawn down US$75
million of the Financing to-date, with the remaining US$30 million
scheduled for drawdown in December 2019.
Alongside the Financing, and during the period, the Company
extended the maturity of the working capital loan facility provided
to the Company by GGIC Ltd. ("GGIC") (the "Working Capital Loan")
and extended and enlarged the unsecured bridging loan facility
provided to the Company by Cedar Valley Financial, an affiliate of
GGIC (the "Bridging Loan").
The Working Capital Loan was originally provided to the Company
in April 2013 by GGIC in an amount of US$17 million and increased
to US$21.5 million in September 2017. The Working Capital Loan
carried an interest rate of 7.5% per annum on its principal amount.
The Company and GGIC agreed to extend the maturity of the Working
Capital Loan to 30 June 2023 and increase its interest rate to 15%
per annum from 1 April 2019.
The Bridging Loan was originally provided to the Company in June
2017 by Cedar Valley Financial in an amount of US$8.0 million and
was subsequently increased in multiple tranches to US$64.1 million
in March 2019. The Bridging Loan carried an interest rate of 12.0%
per annum on its principal. The Company and Cedar Valley Financial
agreed to extend the maturity of the Bridging Loan which will now
mature on 30 June 2023 and increase its interest rate to 15% per
annum from 1 April 2019. IIP utilised US$7.5 million of the funds
from the Financing to repay the Cedar Valley Financial bridging
loan (together with accrued interest) in accordance with its terms
such that the remaining principal under the bridging loan
(following this partial repayment) amounts to US$56.6 million.
We look forward to updating shareholders on progress at DLI,
particularly with the upcoming completion of construction across
Nagpur, Bangalore and Palwal, as well as developments at the
Company's other investments in the periods to come.
Tom Tribone & Sonny Lulla
11 December 2019
REVIEW OF INVESTMENTS
Distribution Logistics Infrastructure Private Limited
("DLI")
Description Supply chain transportation and container
infrastructure company with a large operational
road and rail fleet; developing four large
container terminals across India.
Promoter A subsidiary of IIP
Date of investment 3 Mar 2011 15 Oct 2011 Jan 12- Sept
2019
Investment amount GBP34.8m (implied) GBP58.4m (implied) GBP146.7 million
Aggregate percentage
interest 37.4% 99.9% 99.9%
Investment during the GBP22.7 million
period
Valuation as at 30 Sep GBP222.8 million
2019
Project debt outstanding GBP74.8 million
as at 30 Sep 2019
Key developments * In April 2019, IIP agreed a loan facility for up to
US$105 million with IIP Bridge Facility LLC.
* The loan amount is expected to be sufficient to
complete DLI construction, meet debt obligations and
provide working capital.
* Following completion of the agreed financing and
deployment of the first tranches, construction is
underway and business assumptions have been revised.
* The terminal at Nagpur has expanded commodity freight
with the addition of sugar and cotton exports.
* Nagpur maintains strong local market share of around
40%.
Investment details
DLI is a supply chain transportation and container
infrastructure company headquartered in Bangalore and Gurgaon with
a material presence in central, northern and southern India. DLI
provides a broad range of logistics services including rail
freight, trucking, handling, customs clearing and bonded
warehousing with terminals located in the strategic locations of
Nagpur, Bangalore, Palwal (in the National Capital Region) and
Chennai.
Developments
IIP secured a loan facility of up to $105 million from
affiliates of GGIC in April 2019 (the "Financing"). During the
first half of the fiscal year to 30 September 2019, IIP invested
GBP22.7 million in DLI. The capital is being utilised for
construction works as well as well as debt servicing and some
operating expenses.
DLI construction is underway, with most works tracking largely
to schedule. Heavy rains affected progress at Bangalore and to some
extent at Palwal but neither has impacted the overall delivery
schedules.
During the period, Indian economic growth slowed which was
evident in the logistics sector. Growth of containerised trade
slowed, impacted by global as well as domestic factors, including
rural consumer distress, tightening liquidity and a slowdown in key
manufacturing sectors. This macro environment impacted DLI's
performance in the first half of the fiscal year with weaker
movement of certain manufactured goods and some commodities. In an
effort to support industry, Indian Railways has deferred its Busy
Season Charge of 15% and this is expected to give some impetus to
cement, steel, grains and fertilizer loading and movement. Other
government organisations are also providing incentives to boost
activity.
Works at Nagpur, including a Private Freight Terminal ("PFT")
and additional warehousing should be completed before the calendar
year end. DLI expect ramp-up of the PFT - which should take around
6 months to be fully operational - to begin shortly and are
actively marketing the PFT for bulk cargo. Nagpur has expanded
commodity freight with the addition of sugar and cotton exports
during the period and the terminal maintains strong market share of
the local export-import market of around 40%.
Valuation
Revised business and construction-related assumptions have been
applied, based on a detailed review and update of the budget
prepared by DLI's management team, along with revisions to tax
computations as a result of changes in the Indian infrastructure
tax regime. For valuation purposes, the funding date was 1 April
2019.
As at 30 September 2019, the net present value of future IIP
cash flows for DLI using updated assumptions in respect of the
above mentioned items, is GBP222.8 million. The bulk of the impact
relates to the positive impact of period roll-over, lower risk-free
rate and appreciation of INR against GBP. Some of the gains were
offset by revised income tax computations, moderation in margin
assumptions, and delayed projected commissioning for the terminal
and Free Trade Warehousing Zone at Chennai.
India Hydropower Development Company LLC ("IHDC")
Description IHDC develops, owns and operates small
hydropower projects with seven fully operational
plants (74 MW of installed capacity),
and a further 18 MW of capacity under
development or construction.
Promoter Dodson-Lindblom International Inc. ("DLZ")
Date of investment Mar 2011 Jan 2012 May 2012
Investment amount GBP25.7 million GBP0.3 million GBP1.1 million
Aggregate % interest 50% 50% 50%
Investment during the Nil
period
Valuation as at 30 GBP24.1 million
Sep 2019
Project debt outstanding GBP5.9 million
as at 30 Sep 2019
Key developments
* Overall generation from IHDC's projects was lower
than the corresponding period last year, largely as a
result of inconsistent monsoon inflows, lower
production at the Bhandardara projects and an
upstream landslide at Panwi causing silt.
* The plant at Raura was commissioned in September 2019
and IHDC are currently selling the power into the
wholesale market whilst in discussions with various
offtakers.
* Upstream dams have been completed at Darna and it is
expected that generation will now improve in-line
with expected design energy.
Investment details
The IHDC portfolio has installed capacity of approximately 74 MW
across seven projects - Bhandardara Power House I ("BH-I"),
Bhandardara Power House II ("BH-II"), Darna in Maharashtra;
Birsinghpur in Madhya Pradesh; and Sechi, Panwi and Raura in
Himachal Pradesh. IHDC has an additional 18 MW of capacity under
development and construction with planned capacity at two sites
having been revised upwards.
Project update
Overall generation from IHDC's projects was 81.3 GWh during the
first 6 months of the fiscal year against 108 GWh in the same
period last year. Lower production was largely a result of
inconsistent monsoon inflows, lower production at the Bhandardara
projects and silting at Panwi following an upstream landslide.
The Raura plant was commissioned on 9 September 2019 and the
team are currently working through early production teething
issues. These are expected to be largely resolved by the year end.
IHDC are currently selling Raura's power into the wholesale market
and are exploring options for a longer term PPA, but full
generation and a permanent tariff will not be achieved until the
Himachal Pradesh State Electricity Board completes the transmission
line and substation. This is expected in the first half of
2020.
In June 2018, following new legislation, additional charges were
imposed at Birsinghpur, impacting the net billable tariff. IHDC has
filed an appeal with the Madhya Pradesh Electricity Regulatory
Commission and will also approach the Appellate Tribunal of
Electricity. IHDC is closely monitoring the proceedings and
evaluating alternatives, but the overall impact is not
material.
Valuation
The IHDC portfolio was valued in accordance with the Company's
stated valuation methodology by using a composite risk premium of
2% over the risk free rate of 6.68%. The composite risk premium is
computed using a MW-based weighted average of risk premia of
individual assets related to their stage of operation. Adjustments
were made to tariff estimates to account for current market data.
The value for the IHDC investment as at 30 September 2019 is
GBP24.1 million (GBP21.0 million 31 March 2019; GBP21.1 million 30
September 2018).
Indian Energy Limited ("IEL")
Description An independent power producer with 41.3
MW installed capacity over two operating
wind farms.
Promoter IIP
Date of investment Sep 2011 Oct 2011 - Dec 2012
Investment amount GBP10.6 million GBP0.9 million
Aggregate % interest 100% 100%
Investment during the Nil
period
Valuation as at 30 Sep GBP6.1 million
2019
Project debt outstanding GBP7.9 million
as at 30 Sep 2019
Key developments
* Overall generation from IEL's two projects was
marginally lower than the previous period.
* Both projects have been impacted by issues with O&M
contractors and timely maintenance and replacement of
parts.
* The offtake at Theni - which has a Group Captive
Scheme with commercial customers - has been affected
by lower customer demand in automotive and textile
sectors.
* There was some grid curtailment during the period
which resulted in generation loss at both projects.
Investment details
IEL is an independent power producer that owns and operates wind
farms, with 41.3 MW of installed capacity across two wind farms -
Gadag and Theni - in the states of Karnataka and Tamil Nadu
respectively.
Project update
Overall generation from IEL's two projects was 50.6 GWh during
the period ending 30 September 2019 against 52 GWh last year. Asset
aging and delays in generator maintenance at both projects caused
by O&M service providers had an impact on production during the
period. At Theni, the failure of a critical component resulted in
loss of generation whilst awaiting repairs. Also at Theni, there
was lower demand from offtakers in the automotive and textile
sectors. Theni sells power under a Group Captive Scheme to
commercial industrial customers.
Valuation
Adjustments were made to operating expenses and tariffs to
account for changes observed in the last reporting period. The net
present value of future cash flows for IIP, after accounting for
these adjustments, was GBP6.1 million as at 30 September 2019
(GBP5.4 million 31 March 2019; GBP4.7 million 30 September 2018).
There was a positive impact from a lower risk-free rate and
appreciation of INR against GBP.
Shree Maheshwar Hydel Power Corporation Limited ("SMH")
Description 400MW hydropower project on the Narmada
River near Maheshwar in Madhya Pradesh.
Promoter Entegra Limited
Date of investment Jun 2008 Sep 2011
Investment amount GBP13.2 million GBP16.5 million
Direct and indirect
% interest 20.5% 31.2%
Investment during the Nil
period
Valuation as at 30 Sep GBP6.1 million
2019
Project Debt Outstanding GBP263.6 million
as at 31 Sep 2019
Key developments * In July 2019, SMH approved entry into an MOU with the
promoter and lead lender which opens up a potential
path to completion.
Investment details
SMH is constructing a 400MW hydropower project (ten turbines of
40MW each) situated on the Narmada River near Maheshwar, in the
southwestern region of Madhya Pradesh. The project is intended to
produce peaking power and to supply drinking water to the city of
Indore. Civil works are largely complete with 27 gates and three of
the ten turbines installed, although the site and equipment have
suffered from a lack of maintenance for several years.
Current status of the project and financing update
Since entry into the MOU in July 2019, IIP has not been
appraised of any progress on behalf of the promoter, Entegra, in
relation to securing completion finance. The promoter has appointed
a new Chairman and several executives at SMH having been
provisionally handed back equity acquired by the lenders and given
management control of the company. The promoter must provide
funding to meet the most immediate needs of SMH and will have 12
months from July 20129 to raise finance to complete the project as
well as conclude a settlement with the lenders.
Valuation
Forecast assumptions were again adjusted to account for the
continuing uncertainty on the terms and timing of project
completion and the higher risk premium of 8% was retained. The
value of IIP's investment in SMH as at 30 September 2019 was GBP6.1
million (GBP5.6 million 30 September 2018; GBP5.1 million 31 March
2019), with a positive impact from a lower risk-free rate and
appreciation of INR against GBP. The value of IIP's stake in the
project remains largely dictated by the actions and timelines
associated in reaching a viable plan to complete the project and
there remains the risk that the investment could be reduced to
zero.
Consolidated Statement of Comprehensive Income
for the period ended 30 September 2019
(Unaudited) (Unaudited) (Audited)
Year ended
6 months 6 months 31 March
ended 30 ended 30
September September
2019 2018 2019
Note GBP'000 GBP'000 GBP'000
Movement in fair value on
investments at fair value
through profit or loss 10 57,163 (34,333) (65,061)
Foreign exchange (loss)/gain (3,214) (2,927) (2,939)
Asset management and valuation
services 8 (2,790) (2,766) (5,531)
Other administration fees
and expenses 7 (1,757) (1,127) (3,960)
Operating profit/(loss) 49,402 (41,153) (77,491)
------------ ------------ ------------
Finance costs 14 (6,335) (2,283) (5,249)
Profit/(loss) before taxation 43,067 (43,436) (82,740)
------------ ------------ ------------
Taxation - - -
------------ ------------ ------------
Profit/(loss) for the period 43,067 (43,436) (82,740)
============ ============ ============
Other comprehensive income - -
------------ ------------ ------------
Total comprehensive income 43,067 (43,436) (82,740)
============ ============ ============
Basic and diluted loss per
share (pence) 9 6.32p (6.38)p (12.16)p
============ ============ ============
The Directors consider that all results derive from continuing
activities.
The accompanying notes form an integral part of the financial
statements.
Consolidated Statement of Financial Position
as at 30 September 2019
(Unaudited) (Unaudited) (Audited)
Year ended
6 months 6 months 31 March
ended 30 ended 30
September September
2019 2018 2019
Note GBP'000 GBP'000 GBP'000
Non-current assets
Investments at fair value
through profit or loss 10 259,233 200,032 179,376
Total non-current assets 259,233 200,032 179,376
------------ ------------ ------------
Current assets
Debtors and prepayments 64 49 98
Cash and cash equivalents 28,328 1,650 1,652
------------ ------------ ------------
Total current assets 28,392 1,699 1,750
Total assets 287,625 201,731 181,126
------------ ------------ ------------
Current liabilities
Trade and other payables (1,658) (334) (1,751)
Current loans and borrowings 14 - (56,064) (73,347)
------------ ------------ ------------
Total current liabilities (1,658) (56,398) (75,098)
Long term liabilities
Loans and borrowings 14 (136,832) - -
------------ ------------ ------------
Total long term liabilities (136,832) - -
------------ ------------ ------------
Total liabilities (138,490) (56,398) (75,098)
------------ ------------ ------------
Net assets 149,135 145,333 106,028
============ ============ ============
Equity
Ordinary shares 11 6,821 6,803 6,803
Share premium 11 282,808 282,787 282,787
Retained earnings (140,494) (144,257) (183,562)
------------ ------------ ------------
Total equity 149,135 145,333 106,028
============ ============ ============
The accompanying notes form an integral part of the financial
statements.
These financial statements were approved by the Board on 11
December 2019 and signed on their behalf by
Sonny Lulla Tim Walker
Chief Executive Director
Consolidated Statement of Changes in Equity
for the period ended 30 September 2019
Share Share Retained
capital premium profit Total
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2018 6,803 282,787 (100,822) 188,768
Total comprehensive income for
the period
Loss for the period - - (43,436) (42,436)
------------------------------------------ --------- --------- ---------- ---------
Total comprehensive loss for the
period - - (43,436) (42,436)
------------------------------------------ --------- --------- ---------- ---------
Balance at 30 September 2018 6,803 282,787 (144,258) 145,332
========================================== ========= ========= ========== =========
Balance at 1 April 2018 6,803 282,787 (100,822) 188,768
Total comprehensive income for
the year
Loss for the year - - (82,740) (82,740)
------------------------------------------ --------- --------- ---------- ---------
Total comprehensive loss for the
year - - (82,740) (82,740)
------------------------------------------ --------- --------- ---------- ---------
Balance at 31 March 2019 6,803 282,787 (183,562) 106,028
------------------------------------------ --------- --------- ---------- ---------
Balance at 1 April 2019 6,803 282,787 (183,562) 106,028
------------------------------------------ --------- --------- ---------- ---------
Contributions by and distributions
to owners
Issued of ordinary shares 18 21 - 39
------------------------------------------ --------- --------- ---------- ---------
Total contributions by and distributions
to owners of the Company 18 21 - 39
------------------------------------------
Total comprehensive income for
the period
Profit for the period - - 43,067 43,067
Total comprehensive income for
the period - - 43,067 43,067
------------------------------------------ --------- --------- ---------- ---------
Balance at 30 September 2019 6,821 282,808 (140,494) 149,135
========================================== ========= ========= ========== =========
The accompanying notes form an integral part of the financial
statements.
Consolidated Statement of Cash Flows
for the period ended 30 September 2019
(Audited)
(Unaudited) Year
(Unaudited) ended
6 months 6 months
ended ended
30 Sep 30 Sep 31 Mar
2019 2018 2019
Note GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Profit/(loss for the period 43,067 (43,436) (82,740)
Adjustments:
Finance costs 6,371 2,283 5,249
Movement in fair value on investments
at fair value through profit
or loss 10 (57,163) 34,333 65,061
Accrued share expense 39 - -
Foreign exchange loss/(gain) 3,214 2,927 2,939
(4,472) (3,893) (9,491)
(Decrease)/increase in creditors
and accruals (92) (1,251) 166
Decrease/(increase) in debtors
and prepayments 33 (34) (83)
------------ ------------ ------------------------
Net cash utilised by operating
activities (4,531) (5,178) (9,408)
------------ ------------ ------------------------
Cash flows from investing activities
Funding of investment companies 10 (22,694) (11,331) (21,403)
------------ ------------ ------------------------
Cash utilised by investing activities (22,694) (11,331) (21,403)
------------ ------------ ------------------------
Cash flows from financing activities
Loans received 59,625 14,634 28,959
Loans repaid (5,781) - -
Interest paid (36) - -
Net cash generated from financing
activities 53,808 14,634 28,959
------------ ------------ ------------------------
Increase/(decrease) in cash
and cash equivalents 26,583 (1,875) (1,852)
Cash and cash equivalents at
the beginning of the period 1,652 3,431 3,431
Effect of exchange rate fluctuations
on cash held 93 94 73
Cash and cash equivalents at
the end of the period 28,328 1650 1,652
------------ ------------ ------------------------
The accompanying notes form an integral part of the financial
statements.
Selected notes to the interim consolidated financial
statements
for the six months ended 30 September 2019
1. General information
The Company is a closed-end investment company incorporated on
18 March 2008 in the Isle of Man as a public limited company. The
address of its registered office is IOMA House, Hope Street,
Douglas, Isle of Man. The Company is quoted on the AIM market of
the London Stock Exchange.
The Company and its subsidiaries (together the "Group") invest
in assets in the Indian infrastructure sector, with particular
focus on assets and projects related to energy and transport.
The Company has no employees.
2. Statement of Compliance
These interim consolidated financial statements have been
prepared in accordance with IAS 34 Interim Financial Reporting.
They do not include all of the information required for full annual
financial statements, and should be read in conjunction with the
consolidated financial statements of the Group as at and for the
year ended 31 March 2019.
These interim consolidated financial statements were approved by
the Board of Directors on 11 December 2019.
3. Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries and subsidiary undertakings). Control is achieved
where the Company has power over an investee, exposure or rights to
variable returns and the ability to exert power to affect those
returns.
The results of subsidiaries acquired or disposed of during the
period are included in the consolidated Statement of Comprehensive
Income from the effective date of acquisition or up to the
effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group. All intra-group
transactions, balances, income and expenses are eliminated on
consolidation.
As an investment entity under the terms of the amendments to
IFRS 10 the Company is not permitted to consolidate its controlled
portfolio entities. The consolidated financial statements
incorporate the financial statements of the Company and the
financial statements of the intermediate investment holding
companies. Control is achieved where the Company has the power to
govern the financial and operating policies of an entity company so
as to obtain benefits from its activities.
The Directors consider the Company to be an investment entity as
defined by IFRS 10 as it meets the following criteria as determined
by the accounting standard:
-- Obtains funds from one or more investors for the purpose of
providing those investors with investment management services;
-- Commits to its investors that its business purpose is to
invest funds solely for returns from capital appreciation,
investment income or both; and
-- Measures and evaluates the performance of substantially all
of its investments on a fair value basis.
4. Significant accounting policies
The accounting policies applied by the Group in these interim
consolidated financial statements are the same as those applied by
the Group in its consolidated financial statements as at and for
the year ended 31 March 2019.
5. Critical accounting estimates and assumptions
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates. In preparing
these interim consolidated financial statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those that applied to the consolidated financial statements
as at and for the year ended 31 March 2019.
During the six months ended 30 September 2019 management
reassessed its estimates in respect of:
(a) Estimate of fair value of unquoted investments
The Group holds partial ownership interests in unquoted Indian
infrastructure companies or groups of companies. The Directors'
valuations of these investments, as shown in note 10, are based on
a discounted cash flow methodology, prepared by the Company's
Valuation and Portfolio Services Adviser.
(b) Estimate of fair value of subsidiaries
The Company's investments in subsidiaries have been fair valued
in the Company Statement of Financial Position. Their valuation is
arrived at by applying the unquoted investment valuation referred
to above to their respective net assets.
The methodology is principally based on company-generated cash
flows and observable market data on interest rates and equity
returns. The discount rates are determined by market observable
risk free rates plus a risk premium which is based on the phase of
the project concerned.
6. Financial risk management policies
The Group's financial risk management objectives and policies
are consistent with those disclosed in the consolidated financial
statements as at and for the year ended 31 March 2019.
7. Other administration fees and expenses
6 months 6 months Year
ended ended ended
30 September 30 September 31 March
2019 2018 2019
GBP'000 GBP'000 GBP'000
Audit fees 23 38 69
Legal fees 43 260 180
Corporate advisory fees 53 87 201
Consultancy fees 275 95 59
Other professional costs 843 - 2,475
Administration fees 80 80 164
Directors' fees 90 90 180
Insurance costs 5 9 9
Loan arrangement related
fees 209 404 463
Travel and entertaining 55 64 109
Other costs 81 - 51
-------------- -------------- ----------
1,757 1,127 3,960
-------------- -------------- ----------
8. Investment management, advisory and valuation fees and
performance fees
On 14 September 2016, the Company entered into a revised and
restated management, valuation and portfolio services agreement
(the "New Management Agreement") with Franklin Park Management, LLC
("Franklin Park" or the "Asset Manager"), the Company's existing
asset manager, to effect a reduction in annual cash fees payable by
IIP to the Asset Manager as at that time. The other terms of the
New Management Agreement are unchanged from those of the prior
agreement between the parties.
Under the New Management Agreement, the Asset Manager is
entitled to a fixed annual management fee of GBP5.5 million per
annum (the "Annual Management Fee"), payable quarterly in arrears.
In addition to the Annual Management Fee, the Asset Manager will be
issued with 605,716 new ordinary shares in the Company annually
(the "Fee Shares"). The Fee Shares will be issued free of charge,
on 1 July of each calendar year for the duration of the New
Management Agreement (see note 11).
Fees including accrued Fee Shares for the period ended 30
September 2019 were GBP2,790,000 (30 September 2018:
GBP2,766,000).
There were no performance fees paid during the period (30
September 2018: nil).
The Company announced on 20 June 2019 that the asset management
agreement with Franklin Park had been extended. The extension
follows the debt facility agreement on 2 April 2019 (see note 14)
and aligns the minimum term of the Asset Manager's appointment with
the maturity of the Company's loans and provides for continuity of
the asset management whilst these loans remain outstanding.
9. Basic and diluted earnings per share
The basic and diluted earnings per share is calculated by
dividing the earnings for the period attributable to ordinary
shareholders by the weighted average number of shares outstanding
during the period.
There are no dilutive potential ordinary shares and therefore
diluted earnings per share is the same as basic loss per share.
Group Group Group
30 September 30 September 31 March
2019 2018 2019
Profit/(loss) for the period
(GBP thousands) 43,067 (43,436) (82,740)
Weighted average number of shares
(thousands) 681,630 680,267 680,267
------------- ------------- ---------
Basic and diluted earnings per
share (pence) 6.32 (6.38)p (12.16)p
============= ============= =========
10. Investments - designated at fair value through profit or
loss
Investments, consisting of unlisted equity securities, are
recorded at fair value as follows:
SMHPCL IHDC DLI IEL Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 April 2019 5,115 20,959 147,870 5,432 179,376
Additional capital injection - - 22,694 - 22,694
Fair value adjustment 1,032 3,117 52,272 742 57,163
-------- -------- -------- -------- --------
Balance as at 30 September
2019 6,147 24,076 222,836 6,174 259,233
-------- -------- -------- -------- --------
(i) Shree Maheshwar Hydel Power Corporation Ltd ("SMHPCL")
(ii) Distribution & Logistics Infrastructure (DLI)
(iii) India Hydropower Development Company LLC ("IHDC")
(iv) Indian Energy Limited ("IEL")
All investments have been fair valued by the Directors as at 30
September 2019 using discounted cash flow techniques, as described
in note 5. The discount rate adopted for the investments is the
risk free rate (based on the Indian government 9-10-year bond
yields) of 6.68% plus a risk premium of 8% for SMHPCL, 3.02% for
IHDC, 7% for DLI and 2% for IEL.
All investments particularly those in construction phase are
inherently difficult to value due to the individual nature of each
investment and as a result, valuations may be subject to
substantial uncertainty. There is no assurance that the estimates
resulting from the valuation process will reflect the actual sales
price even where such sales occur shortly after the valuation
date.
As at 30 September 2019, the Company had pledged 47.8% of the
shares in DLI, totalling 66,677,000 shares of INR 10 each, as part
of the terms of a term loan within the underlying investment
entity. In addition, the Company had provided a non-disposal
undertaking of 51% of the shares in IEL, totalling 25,508,980
shares of 1 penny each, as part of the terms of a loan agreement
within the underlying investment entity.
11. Share capital and share premium
No. of shares Share Share premium
capital
Ordinary shares
of GBP0.01 GBP'000 GBP'000
each
Balance at 1 April 2018 680,267,041 6,803 282,787
Issued during the period 1,817,148 18 21
Balance at 30 September
2019 682,084,189 6,821 282,808
================ ========= ==============
Company has authorised share capital of 682,084,189 ordinary
shares of GBP0.01 each.
As detailed in note 8, the Asset Manager is entitled 605,716 new
ordinary shares in the Company annually (the "Fee Shares"). The Fee
Shares will be issued free of charge, on 1 July of each calendar
year for the duration of the New Management Agreement. As at 1 July
2019, the accrued shares were 1,817,148 (including prior year
accrued Fee Shares not yet issued). On 10 July 2019, the Company
issued a total of 1,817,148 ordinary shares to the Asset Manager in
respect of shares that had accrued up to 1 July 2019.
As at 30 September 2019, the accrued shares from 1 July 2019 to
30 September 2019, were 151,429 and the accrued share based payment
expense for the period is GBP3,000.
12. Net asset value per share
The NAV per share is calculated by dividing the net assets
attributable to the equity holders at the end of the period by the
number of shares in issue.
Group Group Group
30 September 30 September 31 March
2019 2018 2019
Net assets (GBP'000) 149,135 145,332 106,028
Number of shares in issue 682,084,189 680,267,041 680,267,041
------------- ------------- ------------
NAV per share GBP0.22 GBP0.21 GBP0.16
============= ============= ============
13. Group entities
Since incorporation, for efficient portfolio management
purposes, the Company has established or acquired the following
subsidiary companies split by companies that are consolidated and
companies that are held at fair value through profit or loss in
line with the revised accounting standard IFRS 10 (see note 3):
Consolidated subsidiaries Country of Ownership
incorporation interest
Infrastructure India HoldCo Mauritius 100%
Power Infrastructure India Mauritius 100%
Power Infrastructure India (Two) Mauritius 100%
Distribution and Logistics Infrastructure
India Mauritius 100%
Hydropower Holdings India Mauritius 100%
India Hydro Investments Mauritius 100%
Non-consolidated subsidiaries held at fair value through profit
or loss
Distribution & Logistics Infrastructure sub group
(formerly VLMS):
Distribution Logistics Infrastructure
Private Limited India 99.9%
Freightstar Private Limited India 99.9%
Deshpal Realtors Private Limited India 99.8%
Bhim Singh Yadav Property Private India 99.9%
14. Loans and borrowings
Capital Interest Total
GBP'000 GBP'000 GBP'000
Balance as at 1 April 2019 65,668 7,679 73,347
Loans drawn-down 59,625 - 59,625
Interest charge for the period - 6,335 6,335
Capitalised loan interest 5,002 (5,002) -
Loans repaid (5,781) - (5,781)
Loan interest paid - (36) (36)
Foreign currency loss 3,182 160 3,342
Balance as at 30 September 2019 127,696 9,136 136,832
======== ========= ========
On 8 April 2013, the Company entered into a working capital loan
facility agreement with GGIC Ltd ("GGIC") for up to US$17.0
million. The loans increased to US$21.5 million in September 2017.
The working capital loan has an interest rate of 7.5% per annum,
payable semi-annually during the facility period. The Company's
ultimate controlling party during the year was GGIC and affiliated
parties.
In addition, and on 30 June 2017, the Company entered into an
US$8.0 million unsecured bridging loan facility with Cedar Valley
Financial ("Cedar Valley"), an affiliate of GGIC and the loan was
subsequently increased in multiple tranches to US$64.1 million. The
bridging loan has an interest rate of 12% per annum, payable
semi-annually during the facility period. Cedar Valley's ultimate
controlling party during the year was GGIC and affiliated
parties.
The Company arranged further debt facility of up to US$105
million (approximately GBP80.2 million) with IIP Bridge Facility
LLC (the "Lender"), an affiliate of GGIC on . The Loan is a secured
four-year term loan provided to the Company's wholly owned
Mauritian subsidiary, Infrastructure India Holdco, and matures on 1
April 2023. The loan carries an interest rate of 15% (increasing to
18% per annum in the event of default) and payable at maturity, and
is secured on all assets of Infrastructure India Holdco, including
100% of the issued share capital of Distribution Logistics
Infrastructure India ("DLII"), DLI's Mauritian parent company.
At 30 September 2019, US$75 million has been drawn to date and a
further US$30 million remains available to the Group under the
Facility. US$7.5 million of the drawn down proceeds was applied
towards the repayment the GGIC Loan.
In accordance with the requirements of the loan above maturity
of both the GGIC loan and the Cedar Valley loan have been extended
to 30 June 2023 and will carry an interest rate of 15% per annum
from 2 April 2019.
15. Related party transactions
Franklin Park Management LLC ("FPM") is beneficially owned by
certain Directors of the Company, namely Messrs Tribone, Lulla and
Venerus, and receives fees in its capacity as Asset Manager as
described in note 8.
16. Subsequent events
There were no significant subsequent events.
17. Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR DFLFFKLFBFBD
(END) Dow Jones Newswires
December 12, 2019 02:00 ET (07:00 GMT)
Infrastructure India (LSE:IIP)
Historical Stock Chart
From Mar 2024 to Apr 2024
Infrastructure India (LSE:IIP)
Historical Stock Chart
From Apr 2023 to Apr 2024