TIDMKUBC
RNS Number : 8217N
Kubera Cross-Border Fund Limited
26 September 2019
This announcement contains inside information
26 September 2019
Kubera Cross-Border Fund Limited
Interim Results for the six-month period ended 30 June 2019
Kubera Cross-Border Fund Limited ("KUBC" or the "Fund")
(LSE/AIM: KUBC) has today published its un-audited interim results
for the six-month period ended 30 June 2019.
Electronic copies of the interim results will be available at
the Company's website www.kuberacrossborderfund.com
For more information, contact:
Grant Thornton UK LLP (Nominated Adviser)
Philip Secrett/ Jamie Barklem/ Niall McDonald
Tel.: +44 (0) 20 7383 5100
Email: philip.j.secrett@uk.gt.com
Numis Securities Limited (Broker)
David Benda, Managing Director
Tel.: +44 (0) 20 7260 1275
Email: d.benda@numis.com
FIM Capital Limited (Administrator, Registrar &
Secretary)
Philip Scales, Director
Tel.: +44 (0) 1624 681250
Email: pscales@fim.co.im
Chairman's Statement
On behalf of the Board of Directors ("Board"), I am pleased to
present the audited financial statements of Kubera Cross-Border
Fund Limited (the "Fund") or together with its subsidiaries (the
"Group") for the year ended 30 June 2019.
NAV and Discount
Following the capital distribution of USD 19,752,178 or USD 0.18
per ordinary share to all shareholders of the Fund announced on 27
June 2019 and paid on 19 July 2019, the Fund's net assets were USD
12.67 million or USD 0.12 per share at 30 June 2019 (31 December
2018: USD 0.31 per share).
Portfolio Valuations
The Fund's annual financial statements are prepared in
accordance with US GAAP. The valuations of investments are reviewed
and approved by the Board on a quarterly basis. All investments are
recorded at estimated fair value, in accordance with ASC 820, which
defines and establishes a framework for measuring fair value. The
methodology underlying the Fund's investment valuations is
consistent with previous periods.
Liquidity and Going Concern
The Directors have reviewed the Group's ongoing activities and
have a reasonable expectation that the Group has adequate resources
to continue operating for the foreseeable future. The current
working capital balances are sufficient to finance normal
operations for the foreseeable future without relying on funding
from asset sales or operational cash flows.
Shareholder Consultation
Following the completion of the disposal of the entire
investment in Planetcast Media Services Limited announced on 14
June 2019, the Board is now evaluating a range of cost-reduction
measures and intends to consult with Shareholders on the matter.
One option involves cancellation of the Company's shares from
admission to trading on AIM. The Board invites any shareholder who
would like to provide feedback to contact Numis Securities Limited
by telephone on +44 (0) 20 7260 1275 in the first instance.
Corporate Governance
As required by the AIM Rules for Companies, the Fund was
required to adopt an officially recognised corporate governance
code and provide the required disclosures pursuant to AIM Rule 26,
by 28 September 2018. The Board decided that the Fund should
formally adopt the Quoted Companies Alliance Code (the "QCA Code").
This is a practical, outcome-oriented approach to corporate
governance that is tailored for small and mid-size quoted companies
in the UK and which provides the Fund with the framework to help
ensure that a strong level of governance is maintained.
As Chairman, I am responsible for leading an effective Board,
fostering a good corporate governance culture, maintaining open
communications with the Shareholders and ensuring appropriate
strategic focus and direction for the Group. The Board believes
strongly in the importance of good corporate governance to assist
in achieving objectives and in accountability to stakeholders.
The Board notes the QCA Code requirement to provide certain
disclosures set out under principles 1 - 10 of the QCA Code as well
as the requirement under principle 10 which requires the Fund to
identify the omitted disclosures and explain the reason for their
omission. As noted, the Fund is currently in realisation mode and
on the basis the necessary disclosures around how the Fund
approaches corporate governance in line with each of the 10
principles of the QCA Code is contained within its corporate
governance statement, it opted not to include the specific QCA Code
disclosures in its annual report and accounts.
The Fund's QCA Code corporate governance statement can be viewed
on the Fund's investor webpage at
http://www.kuberacrossborderfund.com/.
Closing Remarks
The Investment Report provides information on progress regarding
the implementation of the Fund's realisation policy and performance
of each of the Fund's investments. Further detailed information on
investments, quarterly net asset values and other material events
relating to the Fund are available through news releases made to
the London Stock Exchange available on
www.londonstockexchange.co.uk under ticker KUBC and through the
Fund's website at www.kuberacrossborderfund.com.
Martin M. Adams
Chairman
Investment Report
Synergies Castings Limited
Company Overview
Synergies Castings Limited ("SCL") manufactures alloy and chrome
plated wheels for OEMs. SCL has one of the few integrated chrome
plating facilities for wheels in the world, and the only one in
India with the capability to manufacture large diameter wheels.
Investment Summary
-- Investment amount by KUBC(1) : USD 26.45 million
-- Investment Date: December 2007
-- KUBC Holding: 35.42%
-- Current value of KUBC's remaining investment(1) : USD 7.84 million
-- NAV/Share: USD 0.07
-- Type of security: Equity and preference shares in India entity
-- Realisation:
On 11 August 2017, Kubera Cross-Border Fund (Mauritius) Limited
("Kubera Mauritius") entered into a share purchase and loan
assignment agreement with Jamy LLC, a private buyer, for the
disposal of its entire equity and debt interests in SCL for an
aggregate consideration band of USD 14.00 to 16.00 million,
contingent on the timing of the payments from the buyer. Kubera
Mauritius has used the lower amount, USD 14.00 million (USD 12.76
million excluding former Manager's co-investment) in order to
determine the fair value of the investment.
The consideration is payable to Kubera Mauritius in four
tranches. As at 30 June 2019 and the date of this report, USD 6.39
million of the total proceeds had been received. The original
Kubera Mauritius shareholding in SCL was 52.53% which has since
reduced to 35.42% after the first and second tranche sales.
The Board continues to work with the buyer to complete the sale
of Kubera Mauritius' entire interest as soon as practicable.
(1) The above figures exclude amounts attributable to the former
Manager's co-investment, which is 9% of each investment.
NeoPath Limited
Company Overview
NeoPath Limited ("Neopath") is a holding company which is
expected, in due course, to receive a withholding tax refund
following the sale of a credit and debit card transactions
processing business in India in 2010. Kubera Mauritius' 46.95%
interest in NeoPath is ultimately held through a wholly owned
subsidiary, New Wave Holdings Limited.
Investment Summary
-- NAV/Share: USD 0.04
-- Current value of KUBC's remaining investment(1) : USD 4.07
million(1) which is the realisation value discounted to reflect the
time value of money, lack of liquidity and credit risks.
-- Realisation:
The pending estimated tax receipt attributable to the Fund is
USD 4.85 million. The timing of the finalisation and receipt of the
tax refund remains uncertain. Kubera Mauritius exited from the
business in 2010 and distributed USD 0.33 per share to investors
from realised cash flows.
The acquirer of the business deducted withholding tax of INR
748.36 million (equivalent to USD 15.96 million at the transaction
date rate) of which 46.95% is attributable to Kubera Mauritius,
which was deposited with the tax authority in India. NeoPath is in
the process of claiming a refund of the withholding tax based on
its position that the capital gain realised on the sale is exempt
from tax in India under the relevant provisions of the
India-Mauritius double taxation treaty. Consequently, based on the
opinion of tax counsel, the entire amount of INR 748.36 million
(equivalent to USD 10.85 million at the current exchange rate) is
considered to be fully recoverable by Neopath. The present value of
the estimated tax refund has been included in the fair value of the
Kubera Mauritius' investment in NeoPath as at 30 June 2019. As the
timing of the finalisation and receipt of the tax refund remains
uncertain, in 2018 NeoPath directly approached the tax authority
requesting an early resolution of the case.
(1) The above figures exclude amounts attributable to the former
Manager's co-investment, which is 9% of each investment.
Minor Portfolio Holdings: Investments holdings < 5%
-- Ocimum Biosolutions: There is no change in status from the prior period.
Consolidated Statement of Assets and Liabilities
as at 30 June 2019
(Stated in USD)
Notes 30 June
2019 30 June 2018
(unaudited) (unaudited)
Assets
Investments in securities, at
fair value 2(e) 13,071,962 36,780,337
Cash and cash equivalents 5 23,480,518 7,430,555
Prepaid expenses 4,923 40,177
-------------------------------- ------ ------------- -------------
Total assets 36,557,403 44,251,069
Liabilities
Accounts payable 2(e) (1,115,835) (1,141,812)
Capital distributions payable (19,752,178) -
------------------------------- ------ ------------- -------------
Total liabilities (20,868,013) (1,141,812)
Net assets 15,689,390 43,109,257
-------------------------------- ------ ------------- -------------
Analysis of net assets
Capital and reserves
Share capital 6 1,097,344 1,097,344
Additional paid-in capital 6 86,647,499 111,886,393
Accumulated deficit (75,076,763) (73,519,204)
-------------------------------- ------ ------------- -------------
12,668,081 39,464,533
Non-controlling interest 8 3,021,309 3,644,724
-------------------------------- ------ ------------- -------------
3,021,309 3,644,724
Total shareholders' interests 15,689,390 43,109,257
-------------------------------- ------ ------------- -------------
The accompanying notes form an integral part of these
consolidated financial statements.
Consolidated Schedule of Investments
as at 30 June 2019
(Stated in United States Dollars)
30 June 2019 30 June 2018
(unaudited) (unaudited)
Name of Industry Country Instrument Number Fair % of Number Fair % of
the entity
of shares Cost Value net of shares Cost Value net
assets assets
Equity shares
and
NeoPath Holding Preferred
Limited company Mauritius shares 27,928,224 4,466,961 28.48% 27,928,224 - 4,403,689 10.21%
- - -
Compulsorily
convertible
PlanetCast preference
Media shares and
Services Equity
Limited Media services India shares - - - 6,680,371 14,682,134 23,171,620 53.75%
Compulsorily
convertible
cumulative
preference
shares,
Synergies Equity
Castings Automotive shares and
Limited components India loans 15,876,948 13,382,765 8,605,000 54.86% 11,119,589 20,424,547 9,205,028 21.35%
Others Life sciences, India Compulsorily - - - - - - -
Financial convertible
services, preference
IT shares,
infrastructure Equity
shares and
loans
Total investments in securities
and loans to portfolio
companies 13,382,765 13,071,962 83.34% 35,106,681 36,780,337 85.31%
----------- ----------- ------- ----------- -----------
Consolidated Statement of Operations
for the six-month period ended 30 June 2019
(Stated in USD)
-------------------------------------------------- ------ --------------- --------------
Six months Six months
Notes ended ended
30 June 2019 30 June 2018
(unaudited) (unaudited)
------------------------------------------------- ------ --------------- --------------
Investment income
Interest 13,777 11,074
Foreign exchange loss (276) (566)
Other Income - 31,727
13,501 42,235
Expenses
Administration fees 54,250 55,500
Audit fees 3,547 19,423
Directors' fees 4 33,585 35,369
Insurance 10,487 5,772
Professional fees 200,541 141,799
License fees 7,175 4,400
Custodian fees 5,410 15,664
Other expenses 16,739 23,752
------------------------------------------------- ------ --------------- --------------
331,734 301,679
------------------------------------------------- ------ --------------- --------------
Net investment loss before tax (259,444)
Taxation 7 - -
------------------------------------------------- ------ --------------- --------------
Net investment loss after tax (318,233) (259,444)
Realised and unrealised (loss)/gain on investment
transactions
Net realised gain/(loss) on investment
in securities 2(e) 7,321,783 (2,437,538)
Net unrealised (loss)/gain on
investments in securities 2(e) (8,392,506) 912,846
------------------------------------------------- ------ --------------- --------------
(1,070,723) (1,784,136)
Net (decrease)/increase in net assets resulting
from operations (1,388,956) (1,784,136)
---------------------------------------------------------- --------------- --------------
Non-controlling interest (101,382) (138,330)
Equity holding of parent (1,287,574) (1,645,806)
(1,388,956) (1,784,136)
------------------------------------------------- ------ --------------- --------------
The accompanying notes form an integral part of these consolidated
financial statements.
Consolidated Statement of Changes in Net Assets
as at 30 June 2019
(Stated in United States
Dollars)
-------------------------- ---------- ------------- ------------- ---------------- --------------
Share Additional Accumulated Non-controlling Total
capital paid-in deficit interest
capital
-------------------------- ---------- ------------- ------------- ---------------- --------------
As at 1 January 2018 1,097,344 111,886,393 (57,656,985) 5,198,426 60,525,178
Net decrease in net
assets resulting from
operations - - (1,645,806) (138,329) (1,784,136)
-------------------------- ---------- ------------- ------------- ---------------- --------------
As at 30 June 2018 1,097,344 111,886,393 (59,302,791) 5,060,097 58,741,042
-------------------------- ---------- ------------- ------------- ---------------- --------------
As at 1 January 2019 1,097,344 106,399,677 (73,789,188) 3,122,691 36,830,524
Capital distribution - (19,752,178) - - (19,752,178)
Net decrease in net
assets resulting from
operations - - (1,287,574) (101,382) (1,388,957)
-------------------------- ---------- ------------- ------------- ---------------- --------------
As at 30 June 2019 1,097,344 86,647,499 (75,076,762) 3,021,309 15,689,389
-------------------------- ---------- ------------- ------------- ---------------- --------------
The accompanying notes form an integral part of these consolidated
financial statements.
Consolidated Statement of Cash Flows
for the six-month period ended 30 June 2019
Stated in United States Dollars)
-----------------------------------------------------------------
Six months Six months
ended ended
30 June 30 June
2019 2018
-------------------------------------------------- ------------ ------------
Cash flow from operating activities
Net decrease in net assets resulting from
operations (1,388,956) (1,784,136)
Adjustments to reconcile net change in net
assets resulting
from operations to net cash used in operating
activities:
Net unrealised loss/(gain) on investments
in securities 8,392,506 (912,846)
Realised (gain)/loss on investment in securities (7,321,783) 2,437,538
Proceeds from sale of investment in securities 22,003,652 2,925,000
Change in operating assets and liabilities: -
Decrease/(increase) in prepaid expenses 17,653 (17,601)
Increase in accounts payables 28,042 52,990
Net change in cash and cash equivalents during
the period 21,731,114 2,700,945
Cash and cash equivalents at beginning of period 1,749,404 4,729,610
Cash and cash equivalents at end of period 23,480,518 7,430,555
--------------------------------------------------- ------------ ------------
The accompanying notes form an integral part of these
consolidated financial statements.
Notes to the Consolidated Financial Statements
for the six-month period ended 30 June 2019
(Stated in United States Dollars)
1. Organization and principal activity
The Kubera Cross-Border Fund Limited (the "Company" or the
"Fund") was incorporated in the Cayman Islands on 23 November 2006
as an exempted company with limited liability.
The Fund is a closed-end investment company trading on AIM, part
of London Stock Exchange. The Fund makes private equity investments
in cross-border companies, primarily in businesses that operate in
the US-India corridor.
The Fund is a Limited Partner in Kubera Cross-Border Fund LP
(the "Partnership"), an exempted limited partnership formed on 28
November 2006 under the laws of Cayman Islands. The primary
business of the Partnership is to purchase and sell investments for
the purpose of carrying out an investment strategy that is
consistent with the strategy described in the Admission Document of
the Fund.
Kubera Cross-Border Fund (GP) Limited (the "General Partner"), a
company incorporated under the laws of the Cayman Islands is a
wholly owned subsidiary of the Fund, and serves as the general
partner of the Partnership.
The Partnership holds 100% ownership in Kubera Cross-Border Fund
(Mauritius) Limited ('Kubera Mauritius'), a company incorporated in
Mauritius.
Kubera Partners LLC (the "former Manager"), a Delaware limited
liability company, managed the investment portfolio of the Fund and
had full discretionary investment management authority until the
expiry of the Investment Management Agreement on 22 December 2016.
Following the expiration of the Investment Management Agreement,
the Fund has been self-managed by the Board of Directors (the
"Board").
FIM Capital Limited, (the "Administrator") is the administrator
and also performs certain accounting services on behalf of the
Fund, the General Partner and the Partnership.
2. Significant accounting policies
The accompanying consolidated financial statements are prepared
in conformity with US generally accepted accounting principles ("US
GAAP"). The significant accounting policies adopted by the Fund are
as follows:
a. Use of estimates
US GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements, the results of operations during the
reporting period and the reported amounts of increases and
decreases in net assets from operations during the reporting
period.
Significant estimates and assumptions are used for, but not
limited to, accounting for the fair values of investments in
portfolio companies. Management believes that the estimates made in
the preparation of the financial statements are prudent and
reasonable. Actual results could differ from those estimates.
Changes in estimates are reflected in the financial statements in
the period in which the changes are made and if material, these
effects are disclosed in the notes to the financial statements.
b. Functional currency
The measurement and presentation currency of the financial
statements is the United States dollar ("USD").
c. Basis of consolidation
The consolidated financial statements include the accounts of
the Fund and its wholly owned subsidiary, the General Partner and
its majority owned entities, the Partnership, Kubera Mauritius and
New Wave Holdings Limited (together referred to as the "Group").
All inter-company balances and transactions have been
eliminated.
d. Investment transactions and related investment income and expenses
Realised gains and losses and movements in unrealised gains and
losses are recognized in the statement of operations and determined
on weighted average cost method basis. Movements in fair value are
recorded in the statement of operations at each valuation date.
Interest income and expense are recognized on an accruals basis
except for securities in default for which interest is recognized
on a cash basis.
e. Fair value
Definition and hierarchy
Investments are recorded at estimated fair value as at the
reporting date. The Group follows ASC 820 "Fair Value Measurements
and Disclosures" which defines fair value, establishes a framework
for measuring fair value and expands disclosures about fair value
measurements.
Fair value is defined as the price that would be received to
sell an asset or paid to transfer a liability (i.e. the "exit
price") in an orderly transaction between market participants at
the measurement date.
ASC 820 establishes a hierarchical disclosure framework which
prioritizes and ranks the level of market price observability used
in measuring investments at fair value. Market price observability
is impacted by a number of factors, including the type of
investment and the characteristics specific to the investment.
Investments with readily available active quoted prices or for
which fair value can be measured from actively quoted prices
generally will have a higher degree of market price observability
and a lesser degree of judgment used in measuring fair value.
Investments measured and reported at fair value as determined by
the Board are classified and disclosed in one of the following
categories:
Level I - Unadjusted quoted prices in active markets for
identical assets or liabilities that the Fund has the ability to
access.
Level II - Observable inputs other than quoted prices included
in Level I that are not observable for the asset or liability
either directly or indirectly. These inputs may include quoted
prices for the identical instrument on an inactive market, prices
for similar instruments, interest rates, prepayment speeds, credit
risk, yield curves, default rates, and similar data.
Level III - Unobservable inputs for the asset or liability to
the extent that relevant observable inputs are not available,
representing the Group's own assumptions about the assumptions that
a market participant would use in valuing the asset or liability,
and that would be based on the best information available.
In determining fair value, the Board applies various valuation
approaches. Inputs that are used in determining fair value of an
instrument may include price information; quotations received from
market makers, brokers, dealers and/or counterparties (when
available and considered reliable); credit data; volatility
statistics and other factors. Inputs, including price information,
may be provided by independent pricing services or derived from
market data. Inputs can be either observable or unobservable.
The valuations of those investments subject to sales and
purchase agreements are based on the net sales proceeds contracted
to be received discounted to reflect the time value of money, lack
of liquidity and credit risks.
The availability of observable inputs can vary from security to
security and is affected by a wide variety of factors, including,
for example, the type of security, whether the security is new and
not yet established in the marketplace, the liquidity of markets,
and other characteristics particular to the security. To the extent
that valuation is based on models or inputs that are less
observable in the market, the determination of fair value requires
more judgment. Accordingly, the degree of judgment exercised in
determining fair value is greatest for instruments categorized in
Level III. The inputs used to measure fair value may fall into
different levels of the fair value hierarchy. In such cases, for
disclosure purposes, the level in the fair value hierarchy within
which the fair value measurement falls in its entirety is
determined based on the lowest level input that is significant to
the fair value measurement in its entirety.
Valuation
Private company
Investment in a private company consists of a direct ownership
of common and/or preferred stock of a privately held company. The
transaction price, excluding transaction costs, is typically the
Board's best estimate of fair value at inception. When evidence
supports a change to the carrying value from the transaction price,
adjustments are made to reflect expected exit values in the
investment's principal market under current market conditions.
The Board, with assistance from the Administrator and advisers,
performs ongoing valuation reviews based on an assessment of trends
in the performance of each underlying investment from the inception
date through the most recent valuation date.
Valuation process
The Board, with assistance from the Administrator and advisers,
establishes valuation processes and procedures to ensure that the
valuation techniques for investments that are categorized within
Level III of the fair value hierarchy are fair, consistent, and
verifiable.
The Board, with assistance from the Administrator and advisers,
is responsible for reviewing the Group's written valuation
processes and procedures, conducting periodic reviews of the
valuation policies, and evaluating the overall fairness and
consistent application of the valuation policies.
Valuations are required to be supported by market data,
third-party pricing sources; industry accepted pricing models, or
other methods the Board deems to be appropriate, including the use
of internal proprietary pricing models.
The following table summarizes the valuation of the Group's
investments based on ASC 820 fair value hierarchy levels as of 30
June 2019.
Total Level I Level II Level III
Investments in securities 13,071,962 - - 13,071,962
Total 13,071,962 - - 13,071,962
The changes in the investments classified as Level III are as
follows:
Balance at 1 January 2019 36,146,337
Proceeds from sale* (22,003,652)
Realised gain for the period 7,321,783
Change in net unrealised loss (8,392,506)
-------------
Balance at 30 June 2019 13,071,962
------------------------------- -------------
*On 14 June 2019 the Fund announced the completion of the
disposal of the investment in Planetcast Media Services Limited
("PMSL") for proceeds of USD 22.0 million (USD 20.0 million
excluding former Manager's co-investment). PMSL was originally
acquired at a cost of USD 14.7 million resulting in realised gain
of USD 7.3 million.
The following table summarizes the valuation of the Group's
investments based on the above ASC 820 fair value hierarchy levels
as of 30 June 2018.
Total Level I Level II Level III
Investments in securities 36,780,337 - - 36,780,337
Total 36,780,337 - - 36,780,337
Total realised and unrealised gains and losses, if any, recorded
for the Level III investment is reported in net realised gain
(loss) on investments in securities and net change in unrealised
gain (loss) on investments in securities respectively, in the
Consolidated statement of operations.
f. Foreign currency translation
Assets and liabilities denominated in a currency other than the
USD are translated into USD at the exchange rate as at the
reporting date. Purchases and sales of investments and income and
expenses denominated in currencies other than USD are translated at
the exchange rate on the respective dates of such transactions.
The Board does not generally isolate that portion of the results
of operations arising as a result of changes in the foreign
currency exchange rates from the fluctuations arising from changes
in the market prices of securities. Accordingly, such foreign
currency gain (loss) is included in net realised and unrealised
gain (loss) on investments.
g. Cash and cash equivalents
Cash and cash equivalents includes highly liquid investments,
such as money market funds, that are readily convertible to known
amounts of cash within 90 days from the date of purchase. All cash
balances are held at major banking institutions.
h. Related parties
Parties are considered to be related if one party has the
ability, directly or indirectly, to control the other party or
exercise significant influence over the other party in making
financial and operating decisions.
i. Fair value of financial instruments other than investment in securities
The Group's investments are accounted as described in Note 2(e).
The Group's financial instruments include other current assets,
accounts payable and accrued expenses, which are realizable or to
be settled within a short period of time. The carrying amounts of
these financial instruments approximate their fair values.
j. Comprehensive income
The Group has no comprehensive income other than the net income
disclosed in the statement of operations. Therefore, a statement of
comprehensive income has not been prepared.
k. Recent accounting announcements
There are no recent accounting pronouncements that will have a
material impact on the Group's financial condition or results of
operations.
l. Net asset value per share
The net asset value per share is computed by dividing the net
assets attributable to the shareholders by the number of shares at
the end of the reporting period.
3. Carried interest
During the six-month period ended 30 June 2019, no carried
interest was paid / payable (30 June 2018: Nil).
4. Directors' fees and expenses
The Fund pays Robert Michael Tyler an annual fee of GBP 25,000
and Martin Michael Adams an annual fee of GBP 27,000, plus
reimbursement for out-of-pocket expenses incurred in the
performance of their duties. Mr. Raghavendran has waived his
Director's fees as he has interest in the former Manager. The fees
paid to the directors for the period amounted to USD 33,293 (six
months ended 30 June 2018: USD 35,369).
The Fund does not remunerate its Directors by way of share
options and other long term incentives or by way of contribution to
a pension scheme.
5. Cash and cash equivalents
30 June 30 June
2019 2018
Demand deposits 22,480,518 6,330,555
Time deposits 1,000,000 1,100,000
23,480,518 7,430,555
6. Share capital and additional paid-in capital
Number Share Additional Total
of Capital paid-in capital
Shares
As at 30 June
2019 109,734,323 1,097,344 106,399,677 107,497,021
As at 30 June
2018 109,734,323 1,097,344 111,886,393 112,983,737
--------------- ------------ ---------- ----------------- ------------
7. Income taxes
Under the laws of the Cayman Islands, the Fund, the General
Partner and the Partnership are not required to pay any tax on
profits, income and gains or appreciations. In addition, no tax is
to be levied on profits, income, gains, or appreciations or which
is in the nature of estate duty or inheritance tax on the shares,
debentures or other obligations of the Fund and its Cayman based
entities, or by way of withholding in whole or part of a payment of
dividend or other distribution of income or capital by the Fund and
its Cayman based entities, to its members or a payment of principal
or interest or other sums due under a debenture or other obligation
of the Fund and its Cayman based entities.
Under laws and regulations in Mauritius, the Fund's majority
owned subsidiaries, Kubera Mauritius and New Wave Holdings Limited,
are liable to pay income tax on their net income at a rate of 15%.
They are however entitled to a tax credit equivalent to the higher
of actual foreign tax suffered or 80% of Mauritius tax payable in
respect of their foreign source income tax thus reducing their
maximum effective tax rate to 3%. Both subsidiaries have received a
tax residence certificate from the Mauritian authorities certifying
that they are residents of Mauritius, which is renewable on an
annual basis subject to meeting certain conditions and which make
them eligible to obtain benefits under the Double Tax Avoidance
Treaty between Mauritius and India.
No Mauritian capital gains tax is payable on profits arising
from sale of securities, and any dividends and redemption proceeds
paid by Kubera Mauritius and New Wave Holdings Limited to its
shareholders will be exempt in Mauritius from any withholding
tax.
With the assistance of the Administrator and advisers, the Board
monitors proposed and issued tax law, regulations and cases to
determine the potential impact to uncertain income tax positions.
As at 30 June 2019, there are no potential subsequent events that
would have a material impact on unrecognized income tax benefits
within the next six months.
8. Non-controlling interest
30 June 2019 30 June
2018
Share capital 7,648,511 7,648,511
Accumulated share of loss (4,627,202) (4,003,787)
Total 3,021,309 3,644,724
Non-controlling interest is composed of the partnership
interests of Kubera Cross-Border Incentives SPC - Co-Investment
Segregated Portfolio, a Cayman Islands company and an affiliate of
the former Manager, in the consolidated affiliates.
9. Transactions with related parties
A. The following table lists the related parties of the Group:
Name Nature of relationship
Ramanan Raghavendran Independent Director
Martin Michael Adams Independent Director
Robert Michael Tyler Independent Director
Kubera Cross-Border Incentives Special Limited Partner of
SPC - Carried Interest SP the Partnership
------------------------------- ---------------------------
Directors' fees and expenses paid during the period are
disclosed in note 4.
10. Financial instruments and associated risks
The Group's investment activities expose it to various types of
risks, which are associated with the financial instruments and
markets in which it invests. The financial instruments expose the
Group in varying degrees to elements of liquidity, market and
credit risk. The following summary is not intended to be a
comprehensive summary of all risks inherent in investing in the
Fund and reference should be made to the Fund's admission document
for a more detailed discussion of risks.
a) Market risk
Market risk is the risk that the value of a financial instrument
will fluctuate as a result of changes in market variables such as
interest, foreign exchange rates and equity prices, whether those
changes are caused by factors specific to the particular security
or factors that affect all securities in the markets. Investments
are typically made with a specific focus on India and thus are
concentrated in that region. Political or economic conditions and
the possible imposition of adverse governmental laws or currency
exchange restrictions in that region could cause the Group's
investments and their markets to be less liquid and prices more
volatile. The Group is exposed to market risk on all of its
investments.
b) Industry risk
The Group's investments may have concentration in a particular
industry or sector and performance of that particular industry or
sector may have a significant impact on the Group. The Group's
investments may also be subject to the risk associated with
investing in private equity securities. Investments in private
equity securities may be illiquid and subject to various
restrictions on resale and there can be no assurance that the Group
will be able to realize the value of such investments in a timely
manner.
c) Credit risk
Credit risk is the risk that an issuer/counterparty will be
unable or unwilling to meet its commitments to the Group. Financial
assets that are potentially subject to significant credit risk
consist of cash and cash equivalents. The maximum credit risk
exposure of these items is their carrying value.
d) Currency risk
The Group has assets denominated in currencies other than the
USD the functional currency. The Group is therefore exposed to
currency risk as the value of assets denominated in other
currencies will fluctuate due to changes in exchange rates. The
Group's cash and cash equivalents are held in USD.
e) Liquidity risk
The Group is exposed to liquidity risk as a majority of the
Group's investments are largely illiquid. Illiquid investments
include any securities or instruments which are not actively traded
on any major securities market or for which no established
secondary market exists where the investments can be readily
converted into cash. Reduced liquidity resulting from the absence
of an established secondary market may have an adverse effect on
the prices of the Group's investments and the Group's ability to
dispose of them where necessary to meet liquidity requirements
f) Political, economic and social risk
Political, economic and social factors, mainly changes in Indian
laws or regulations and the status of India's relations with other
countries may adversely affect the value of the Group's
investments.
11. Subsequent events
There were no other significant subsequent events.
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 FQLFLKKFXBBX
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September 26, 2019 07:45 ET (11:45 GMT)
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