TIDMECAP
RNS Number : 2141Q
Elephant Capital PLC
26 February 2016
For Immediate Release 26 February 2016
Elephant Capital PLC
Audited results for the year ended 31 August 2015
Key Points:
-- Net asset value per share 36p (28 February 2015: 36p; 31 August 2014: 35p)
-- GBP1.0 million returned to shareholders via share buy-back programme in March 2015
-- Seeking Shareholders' approval for the cancellation of the
admission of Ordinary Shares to trading on AIM.
Commenting, Chairman Vikram Lall, said:
"Our strategy remains unchanged - that is to realise the
remaining investments in the interests of shareholders and to
return cash to shareholders. Implementing this strategy has been
difficult and efforts by the Investment Manager to dispose of the
three remaining active investments have not yet been
successful.
Following consultation with the Company's advisers, the Board
has concluded that the cost savings resulting from delisting
outweigh the potential benefits of maintaining the admission of the
Company's ordinary shares to trading on AIM and, therefore, it is
no longer in the interests of the Company or its shareholders as a
whole for the ordinary shares to remain traded on AIM. A resolution
seeking shareholders' approval for the proposed delisting will be
proposed at this year's annual general meeting, which will be held
on 1 April 2016."
Details of the delisting proposal and the notice convening the
annual general meeting are set out in a separate circular which
will be sent to shareholders with this year's annual report on 29
February 2016. Copies of the circular and the annual report will be
available for download from the Company's website at
www.elephantcapital.com shortly.
For further information please contact:
Vikram Lall, Chairman +1 473 533 2513
Gaurav Burman +44 (0) 20 7389
Elephant Capital plc 1770
Sue Inglis
Cantor Fitzgerald Europe (Nominated +44 (0) 20 7894
Adviser & Broker) 8016
THE FOLLOWING SECTIONS HAVE BEEN EXTRACTED FROM THE ANNUAL
REPORT AND ACCOUNTS OF THE COMPANY IN RESPECT OF THE FINANCIAL YEAR
ENDED 31 AUGUST 2015
Chairman's Statement
Results and portfolio changes
As at 31 August 2015, Net Asset Value ("NAV") was GBP5.44
million or 36p per share, compared to GBP7.10 million or 35p per
share as at 31 August 2014. The decrease in the Company's NAV
reflects the purchase of the Company's shares for cancellation of
GBP1.0 million, a GBP 0.32 million fall in the valuation of the
unlisted investment portfolio (including an exchange loss of
GBP0.03 million), a GBP0.06 million gain on the sale of the listed
investment portfolio (including an exchange loss of GBP0.01million)
and the excess of expenses over income of GBP0.40 million. The
increase in NAV per share reflects the fact that the purchase of
the Company's share referred to above was made at a discount to NAV
per share.
No new investments were made during the period. Since the period
end there was no disposal of any of the unlisted investments.
Unlisted investment portfolio
Air Works India (Engineering) Private Limited ("Air Works") has
been performing satisfactorily and exhibited operational strength
during the period. It has been valued at GBP3.10 million based on
an independent third party valuation, compared to GBP3.05 million
at 31 August 2014.
Amar Chitra Katha Private Limited ("ACK") has not performed in
line with its budget. Accordingly, its valuation, based on an
independent third party opinion, has been reduced to GBP0.66
million at 31 August 2015, compared to GBP1.2 million at 31 August
2014.
The investment in Global Cricket Venture Limited ("GCV") has
been valued at GBP0.64 million based on the estimated net asset
value of GCV attributable to Elephant Capital's shareholding as at
31 August 2015, compared to GBP0.47 million as at 31 August
2014.
Full details of the Company's unlisted investments are included
in the Investment Manager's review.
Return of capital
In March 2015, 5,000,000 ordinary shares were bought back
through the market for cancellation at a price of 20p per share.
Following the cancellation of these shares, 15,117,057 ordinary
shares remain in issue.
Strategy and proposed delisting from AIM
Our strategy remains unchanged -- that is to realise the
remaining investments in the interests of shareholders and to
return cash to shareholders. Implementing this strategy has been
difficult and efforts by the Investment Manager to dispose of the
three remaining active investments have not yet been
successful.
Following consultation with the Company's advisers, the Board
has concluded that the cost savings resulting from delisting
outweigh the potential benefits of maintaining the admission of the
Company's ordinary shares to trading on AIM and, therefore, it is
no longer in the interests of the Company or its shareholders as a
whole for the ordinary shares to remain traded on AIM.
A resolution seeking shareholder approval for the proposed
delisting will be proposed at this year's annual general meeting,
which will be held on 1 April 2016. Further details of the
delisting proposal and the notice convening the annual general
meeting are set out in a separate circular which will be sent to
shareholders with this year's annual report.
It is my intention to retire from the Board on delisting and
Vincent Campbell has agreed to take over as Chairman, with Francis
Anthony Hancock remaining as the second Director. Shareholders
should also be aware that the Investment Manager has already agreed
to manage the Company on a nil fee basis from February 2017,
thereby reducing future operating costs by a further GBP0.16
million per annum.
Vikram Lall
25 February 2016
Investment Manager's Review
Introduction
Elephant Capital plc ("Elephant Capital" or the "Company") holds
its investments in businesses that are established or operating
primarily in India through its Mauritian-based special purpose
vehicles ("SPVs") Tusk Investments 1 Limited ("Tusk 1") and Tusk
Investments 2 Limited ("Tusk 2") (individually the "SPV",
collectively the "SPVs").
The SPVs are managed by Elephant Capital LLP (the "Investment
Manager"), a limited liability partnership, which in turn is
advised by Elephant India Advisors Private Limited, of which the
senior executives in India are all members.
Investment strategy
The Company was established to execute a value-based strategy in
both public and private businesses. As previously announced,
Elephant Capital will not make any new investments and has adopted
a policy of actively managing and realising its current portfolio
and returning surplus cash to its shareholders.
Investment activity
During the year ended 31 August 2015, the Investment Manager
made no new investments. The focus was on managing the existing
portfolio and trying to create liquidity to return cash to
shareholders.
Elephant Capital now holds only four unlisted investments
through Tusk 1: Air Works, ACK, GCV and Obopay, the last of which
has no value. No further investments in any of these companies are
envisaged.
The Investment Manager is focused on finding ways to realise Air
Works and ACK over the medium term as these businesses mature.
GCV continues to be plagued by various legal actions and is
involved in litigation with those parties in the UK and the US.
While this litigation continues there is no visibility on an
exit.
Portfolio review
Air Works India (Engineering) Private Limited ("Air Works")
Air Works is one of the leading independent providers of
Aviation Maintenance, Repair and Overhaul (MRO) services in India,
Aircraft Paint and Refinishing in Europe and Aircraft Management
Services in Dubai. Founded in 1951, Air Works has successfully
transformed itself from a family-run business focused on providing
maintenance services to business aircraft into a professionally
managed organisation providing a full suite of services to
customers across Aircraft Management, Business and General Aviation
MRO, Aircraft Paint and Refinishing, Commercial Aviation MRO,
Avionics and Parts Distribution. It is India's largest EASA
Certified Business Aviation MRO company.
The company has been performing satisfactorily. Air Works has
had a steady year so far with the revenue and EBITDA largely in
line with estimates. On a consolidated basis the revenue of Air
Works has been at US$41.1 million for H1 FY2016, approximately 11%
lower than forecast primarily due to slow merger and acquisition
activity in the airlines sector and low rebranding activity due to
a slowdown in the European economy coupled with competitive price
pressures and depreciating Euro. Some impact has also resulted due
to deferment of deals to the next quarter. The management expects
to close the year with an EBITDA of US$11 - 12 million on the back
of pick-up of business expected in the second half of FY2016 with
the painting business witnessing hangar slots filled up to March
2016 and signing up of multiple new deals in the Air Line MRO space
in India.
Air Works has made strategic investments into Argus and Acumen
which operate in the Aviation Auditing, Valuation, and Advisory
services. It will require an additional funding of up to US$8
million to take its stake to 50% in the two companies respectively
and that has been arranged in the form of debt from banks.
Amar Chitra Katha Private Limited ("ACK")
ACK is one of the leading children's media companies in India,
with a catalogue of over 750 print and digital products and 25
major (and 50+ minor) proprietary characters with India-wide
recognition. ACK's origins are in children's books and comics,
including "Amar Chitra Katha", the number one children's comic book
series dating back to 1967. Other key brands include Tinkle, the
number one English magazine for children. ACK has also entered into
a licensing arrangement with the National Geographic Society, US
for publishing their magazines in India.
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February 26, 2016 02:00 ET (07:00 GMT)
ACK missed its revenue target in FY2015 by about 33%, with full
year revenue of IN 599 million vs. the management target of IN 889
million, and FY2014 revenue of IN 694 million. Overall gross margin
of the business improved by 400 bps over FY2014 to 45%, but this
increase was more than offset by 14% year on year revenue decline
and 6.3% decrease in other costs, resulting in an increase in
EBITDA loss to IN 38.32 million, vs. previous year loss of IN 8.9
million and budget forecast of EBITA profit of IN 50.6 million.
ACK's management has been working on measures to optimise costs,
improving the sales mix to improve margins, and on the divestment
of non-core businesses. At the end of December 2015, the company
had total borrowings of IN 183.37 million including IN 98.07
million in bank loans and IN 85.3 million in inter-corporate
deposits.
Elephant Capital invested GBP3.2 million in ACK in a primary
transaction in June 2010. In April 2011, it announced a further
investment of GBP0.9 million in a second funding round, led by
Future Consumer Enterprise Limited ("FCEL") (previously known as
Future Ventures India Limited). Elephant Capital's stake in ACK was
22% post this investment. ACK subsequently bought back 70,457 of
its own shares representing 15% of existing paid up capital of the
company, at the purchase price FCEL and Elephant Capital paid in
the second round. Neither Elephant Capital nor its co-investors
participated in this buy-back and hence Elephant Capital's
shareholding in the business increased to 26%. In the rights issue
conducted in ACK during FY 2014, Elephant Capital declined the
opportunity to invest because the Company is in the process of
returning capital to its shareholders. Its holding in ACK therefore
was diluted to 20%.
Global Cricket Ventures Limited, Mauritius ("GCV")
In November 2009, Elephant Capital announced an investment of
GBP5.95 million in a primary transaction in GCV, a cricket-focused,
digital media and broadcasting company. At the time of its
investment, GCV was the exclusive licensee of key internet and
mobile rights to the Indian Premier League ("IPL") and key internet
rights to the Champion's League Twenty20 ("CLT20") cricket
tournaments.
In mid-2010, the Board of Control for Cricket in India announced
that it would be rescinding its global media contracts with World
Sports Group ("WSG") from whom GCV sub-licensed many of its own
cricket-related rights. Further, WSG terminated GCV's contractual
rights relating to the IPL. This obviously dealt a fatal blow to
the business prospects of GCV, as GCV lost its key rights (which
were re-awarded to other parties). As a result of WSG's
termination, GCV entered into active discussions to settle
liabilities towards its own sub-licensees and has made significant
progress on such settlements.
GCV has been plagued by litigation on several fronts. This
unfortunately continues with GCV embroiled in litigation in both
the US and the UK. The Investment Manager has been working through
this and aiding GCV, and hopes that these matters can be brought to
a resolution over the next 12 months.
The investment has been valued at GBP0.64 million based on the
Investment Manager's best estimate of the net asset value of GCV
attributable to the Company's shareholding in GCV.
As at 31 August 2015, the unlisted portfolio was as follows:
Valuation Gain/(loss)
Cost 31 August 2015 over cost
Company Sector GBP'000 GBP'000 GBP'000
---------------------------------------------- ----------------------- -------- --------------- -----------
Air Works India (Engineering) Private Limited Aviation 2,922 3,096 174
Amar Chitra Katha Private Limited Media 4,085 665 (3,420)
Global Cricket Ventures Limited Media 5,949 639 (5,310)
Obopay Inc. Mobile banking service 1,239 - (1,239)
---------------------------------------------- ----------------------- -------- --------------- -----------
Total 14,195 4,400 (9,795)
----------------------------------------------------------------------- -------- --------------- -----------
The valuations of the above are in accordance with International
Financial Reporting Standards and International Private Equity and
Venture Capital Association guidelines. All investments are held at
fair value through profit or loss and are recognised at the
transaction date on initial recognition.
Realisations
Post year end, there is no realisation of any of the unlisted
investments.
Principles of valuations of investments
Principles of valuation of unlisted investments
Investments are stated at amounts considered by the Directors to
be a reasonable assessment of their fair value, where fair value is
the amount at which an asset could be exchanged between
knowledgeable, willing parties in an arm's length transaction.
All investments are valued according to one of the following
bases:
-- Cost (less any provision required)
-- Earnings multiple
-- Price of recent transaction
-- Discounted cash flows or earnings (of underlying businesses)
-- Net assets
-- Sale price
Investments are valued at cost for a limited period after the
date of acquisition. Thereafter, investments are valued on one of
the other bases described above and the earnings multiple basis of
valuation will be used unless this is inappropriate, as in the case
of certain asset-based businesses.
Under the discounted cash flow technique the projected cash
flows from business operations are discounted at the "Weighted
Average Cost of Capital" to the providers of capital to the
business. The sum of the discounted value of such free cash flows
is the value of the business.
When valuing on an earnings multiple basis, EBITDA or net profit
of the current year will normally be used. Such profits will be
multiplied by an appropriate and reasonable earnings multiple
(EBITDA multiple or net profit multiple, as the case may be). This
is normally related to comparable quoted companies, with
adjustments made for points of difference between the comparator
and the company being valued, in particular for risks, size,
illiquidity, earnings growth prospects and surplus assets or excess
liabilities.
Where a company has incurred losses, or if comparable quoted
companies are not primarily valued on an earnings basis, then the
valuation may be calculated with regard to the underlying net
assets and any other relevant information, such as the pricing for
subsequent recent investments by a third party in a new financing
round that is actively being sought, then any offers from potential
purchasers would be relevant in assessing the valuation of an
investment and are taken into account in arriving at the
valuation.
Where appropriate, a marketability discount (as reflected in the
earnings multiple) may be applied to the investment valuation,
based on the likely timing of an exit, the influence over that
exit, the risk of achieving conditions precedent to that exit and
general market conditions.
In arriving at the value of an investment, the percentage
ownership is calculated after taking into account any dilution
through outstanding warrants, options and performance-related
mechanisms.
Principles of valuation of listed investments
Investments are valued at bid-market price or the conventions of
the market on which they are quoted.
Valuation review procedures
Valuations are initially prepared by the Investment Manager with
the help of an independent third party valuer. These valuations are
then reviewed and approved by the Directors.
Gaurav Burman
On behalf of Elephant Capital LLP
25 February 2016
Directors' responsibilities
The Directors are responsible for preparing the annual report
and financial statements in accordance with Isle of Man Law and
International Financial Reporting Standards ("IFRSs") as adopted by
the European Union.
Company law requires the Directors to prepare financial
statements for each financial period which give a true and fair
view of the state of affairs of the Company and the Group and of
the profit or loss of the Company and the Group for that period. In
preparing those financial statements, the Directors are required
to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
In so far as the Directors are aware:
-- there is no relevant audit information of which the Group's auditors are unaware; and
-- the Directors have taken all the steps that they ought to
have taken as Directors in order to make themselves aware of any
relevant audit information and to establish that the Group's
auditors are aware of that information.
The Directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and to enable them to ensure that
the financial statements comply with the Companies Acts 1931 to
2004. They are also responsible for safeguarding the assets of the
Company and the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
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The Directors are also responsible for the maintenance and
integrity of the corporate and financial information included on
the Company's website. Legislation in the Isle of Man governing the
preparation and dissemination of financial statements may differ
from the legislation in other jurisdictions.
Audited financial information
The consolidated and parent company financial statements of the
Company for the year ended 31 August 2015, which comprise the
consolidated statement of profit or loss and other comprehensive
income, the consolidated and parent company statements of financial
position, the consolidated and parent company statements of cash
flows, the consolidated and parent company statements of changes in
equity and notes 1 to 25, have been audited by the Company's
auditors by Grant Thornton Limited (Isle of Man). Their unqualified
audit report is included in full in the annual report and audited
financial statements of the Company for the year ended 31 August
2015, which will be available for download from the Company's
website at www.elephantcapital.com shortly.
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
For the year ended For the year ended
31 August 2015 31 August 2014
Notes GBP'000 GBP'000
Revenue
Investment and other income 7 67 117
Net (losses)/gains on financial assets at fair value through profit or
loss 8 (256) 508
Other income
Net foreign exchange gain/(loss) 32 (23)
------------------ ------------------
(157) 602
Expenses
Management fees 9 (225) (212)
Other expenses 10 (273) (409)
------------------ ------------------
Loss before finance costs and tax (655) (19)
------------------ ------------------
Finance costs (3) (3)
------------------ ------------------
Loss before tax (658) (22)
------------------ ------------------
Income tax expense 11 - -
------------------ ------------------
Loss after tax (658) (22)
Other comprehensive income for the year - -
------------------ ------------------
Total comprehensive loss for the year (658) (22)
------------------ ------------------
Total comprehensive loss attributable to:
Owners of the parent (658) (22)
Loss per share (basic and diluted) 19 (3.7p) (0.1p)
(The accompanying notes are an integral part of the consolidated
financial statements.)
Consolidated Statement of Financial Position
As at As at
31 August 31 August
2015 2014
Notes GBP'000 GBP'000
ASSETS
Non-current
Financial assets at fair
value through profit or loss 14 4,400 4,718
---------- ----------
4,400 4,718
Current
Financial assets at fair
value through profit or loss 14 - 354
Prepayments 25 27
Cash and cash equivalents 16 1,103 2,100
---------- ----------
1,128 2,481
---------- ----------
Total assets 5,528 7,199
---------- ----------
LIABILITIES
Current
Payables 17 82 95
---------- ----------
82 95
---------- ----------
Net assets 5,446 7,104
---------- ----------
EQUITY
Share capital 18 151 201
Share premium 20,752 20,752
Distributable capital reserve 15,557 16,507
Unrealised investment revaluation
reserve (8,556) (9,205)
Accumulated losses (22,458) (21,151)
---------- ----------
Total attributable to the
owners of the parent 5,446 7,104
---------- ----------
Total equity 5,446 7,104
---------- ----------
Net asset value per share 19 GBP0.36 GBP0.35
(The accompanying notes are an integral part of the consolidated
financial statements.)
The audited consolidated financial statements were approved and
authorised for issue by the Board of Directors on 25 February 2016
and signed on its behalf by
Vikram Lall Vincent Campbell
Director Director
Company Statement of Financial Position
Notes As at As at
31 August 31 August
2015 2014
GBP'000 GBP'000
ASSETS
Non-current
Investments in subsidiaries 12 161 771
Loans to subsidiary 13 4,724 5,150
---------- ----------
4,885 5,921
Current
Loan to subsidiary 13 - -
Receivables 15 - 1
Prepayments 21 21
Cash and cash equivalents 16 590 1,205
---------- ----------
611 1,227
---------- ----------
Total assets 5,496 7,148
---------- ----------
LIABILITIES
Current
Payables 17 50 51
---------- ----------
50 51
---------- ----------
Net assets 5,446 7,097
---------- ----------
EQUITY
Share capital 18 151 201
Share premium 20,752 20,752
Distributable capital reserve 15,557 16,507
Accumulated losses (31,014) (30,363)
---------- ----------
Equity attributable to owners
of the Company 5,446 7,097
---------- ----------
Total equity 5,446 7,097
---------- ----------
(The accompanying notes are an integral part of the financial
statements.)
The audited financial statements were approved and authorised
for issue by the Board of Directors on 25 February 2016 and signed
on its behalf by
Vikram Lall Vincent Campbell
Director Director
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Statement of Cash Flows
Consolidated Company
For the year ended For the year ended For the year ended For the year ended
31 August 2015 31 August 2014 31 August 2015 31 August 2014
GBP'000 GBP'000 GBP'000 GBP'000
(a) Operating activities:
Loss before tax (658) (22) (651) (24)
Adjustments for:
Interest income (4) (4) (4) (4)
Net unrealised losses on investments 318 10 - -
Profit on sale of investments (62) (518) - -
Impairment loss/(reversal) on loans
to subsidiaries - - 426 (103)
Impairment loss/(reversal) of
investments in subsidiaries - - 10 (156)
Net changes in working capital:
Decrease/(increase) in receivables
and prepayments 2 - 1 (1)
Decrease in payables (13) (28) (1) (26)
------------------ ------------------ ------------------ ------------------
Net cash used in operating activities (417) (562) (219) (314)
(b) Investing activities:
Proceeds from buyback of shares in a
subsidiary - - 600 1,700
Proceeds from sale of investments 416 2,186 - -
Interest received 4 4 4 4
------------------ ------------------ ------------------ ------------------
Net cash generated from investing
activities 420 2,190 604 1,704
(c) Financing activities:
Shares bought back for cancellation (1,000) (1,000) (1,000) (1,000)
------------------ ------------------ ------------------ ------------------
Net cash used in financing activities (1,000) (1,000) (1,000) (1,000)
------------------ ------------------ ------------------ ------------------
Net (decrease)/increase in cash and
cash equivalents (997) 628 (615) 390
------------------ ------------------ ------------------ ------------------
Cash and cash equivalents at
beginning of year 2,100 1,472 1,205 815
------------------ ------------------ ------------------ ------------------
Cash and cash equivalents at end of
year 1,103 2,100 590 1,205
------------------ ------------------ ------------------ ------------------
(The accompanying notes are an integral part of the consolidated
financial statements.)
Consolidated Statement of Changes in Equity
Unrealised
Distributable investment
Share Share capital revaluation Accumulated Total
capital premium reserve reserve losses equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as
at 1 September
2014 201 20,752 16,507 (9,205) (21,151) 7,104
Shares bought
back for cancellation (50) - (950) - - (1,000)
-------- -------- ------------- ------------ ----------- --------
Transactions
with owners (50) - (950) - - (1,000)
-------- -------- ------------- ------------ ----------- --------
Net unrealised
loss reserve
transfer - - - (318) 318 -
Transfer of
accumulated
realised loss
on investments
sold - - - 967 (967) -
Loss for the
year - - - - (658) (658)
-------- -------- ------------- ------------ ----------- --------
Total comprehensive
loss for the
year - - - 649 (1,307) (658)
-------- -------- ------------- ------------ ----------- --------
Balance as
at 31 August
2015 151 20,752 15,557 (8,556) (22,458) 5,446
-------- -------- ------------- ------------ ----------- --------
Balance as
at 1 September
2013 246 20,752 17,462 (12,408) (17,926) 8,126
Shares bought
back for cancellation (45) - (955) - - (1,000)
-------- -------- ------------- ------------ ----------- --------
Transactions
with owners (45) - (955) - - (1,000)
-------- -------- ------------- ------------ ----------- --------
Net unrealised
loss reserve
transfer - - - (10) 10 -
Transfer of
accumulated
realised loss
on investments
sold - - - 3,213 (3,213) -
Loss for the
year - - - - (22) (22)
-------- -------- ------------- ------------ ----------- --------
Total comprehensive
loss for the
year - - - 3,203 (3,225) (22)
-------- -------- ------------- ------------ ----------- --------
Balance as
at 31 August
2014 201 20,752 16,507 (9,205) (21,151) 7,104
-------- -------- ------------- ------------ ----------- --------
(The accompanying notes are an integral part of the consolidated
financial statements).
Company Statement of Changes in Equity
Distributable
Share Share capital Accumulated
capital premium reserve losses Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1
September 2014 201 20,752 16,507 (30,363) 7,097
Shares bought back
for cancellation (50) - (950) - (1,000)
-------- -------- ------------- ----------- --------
Transactions with
owners (50) - (950) - (1,000)
-------- -------- ------------- ----------- --------
Loss for the year - - - (651) (651)
-------- -------- ------------- ----------- --------
Total comprehensive
loss for the year - - - (651) (651)
-------- -------- ------------- ----------- --------
Balance as at 31
August 2015 151 20,752 15,557 (31,014) 5,446
-------- -------- ------------- ----------- --------
Balance as at 1
September 2013 246 20,752 17,462 (30,339) 8,121
Shares bought back
for cancellation (45) - (955) - (1,000)
-------- -------- ------------- ----------- --------
Transactions with
owners (45) - (955) - (1,000)
-------- -------- ------------- ----------- --------
Loss for the year - - - (24) (24)
-------- -------- ------------- ----------- --------
Total comprehensive
loss for the year - - - (24) (24)
-------- -------- ------------- ----------- --------
Balance as at 31
August 2014 201 20,752 16,507 (30,363) 7,097
-------- -------- ------------- ----------- --------
(The accompanying notes are an integral part of the financial
statements.)
Notes to Consolidated Financial Statements
1. General information and statement of compliance with IFRSs
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Elephant Capital plc (the "Company" or "Elephant Capital") is a
public limited company, incorporated in the Isle of Man on 16 May
2006 and listed on AIM, a market of the London Stock Exchange, with
its registered office at Clinch's House, Lord Street, Douglas, Isle
of Man, IM99 1RZ.
The Group represents the Company and its subsidiaries. The
financial statements comprise the Group's consolidated statement of
profit or loss and other comprehensive income, consolidated
statement of financial position, consolidated statement of cash
flows and consolidated statement of changes in equity. The
financial statements also include the Company statement of
financial position, the Company statement of cash flows and the
Company statement of changes in equity to comply with the Isle of
Man Companies Act 1982. Under section 3(5)(b)(ii) of the Isle of
Man Companies Act 1982, the Company is exempt from the requirement
to present its own statement of comprehensive income. The
accounting policies for the preparation of the Company statement of
financial position, statement of cash flow and statement of changes
in equity to the extent they differ from accounting policies used
for the preparation of the consolidated financial statements have
been separately disclosed in the following notes.
Under Protocol 3 of the UK's Treaty of Accession, the Isle of
Man is part of the customs territory of the European Union. The
financial statements have been prepared in accordance with the
applicable International Financial Reporting Standards ("IFRSs") as
adopted by the European Union.
The consolidated financial statements for the year ended 31
August 2015 (including comparatives) were approved and authorised
for issue by the Board of Directors on 25 February 2016.
2. Nature of operations
The Company's business consists of investing through the Group
in businesses that have operations primarily in India and
generating returns for its shareholders.
3. a) New standards/amendments adopted
Amendments to IAS 32, 'Financial Instruments: Presentation',
offsetting financial assets and financial liabilities
The amendments clarify that rights of set-off must not only be
legally enforceable in the normal course of business, but must also
be enforceable in the event of default and the event of bankruptcy
or insolvency of all of the counterparties to the contract,
including the reporting entity itself. The amendments also clarify
that rights of set-off must not be contingent on a future
event.
As the Group does not currently present any of its financial
assets and financial liabilities on a net basis using the
provisions of IAS 32, these amendments had no material effect.
Amendment to IAS 36, 'Impairment of Assets', recoverable amount
disclosures for non-financial assets
These amendments clarify that an entity is required to disclose
the recoverable amount of an asset (or cash generating unit)
whenever an impairment loss has been recognised or reversed in the
period. In addition, they introduce several new disclosures
required to be made when the recoverable amount of impaired assets
is based on fair value less costs of disposal, including:
-- additional information about fair value measurement including
the applicable level of the fair value hierarchy, and a description
of any valuation techniques used and key assumptions made; and
-- the discount rates used if fair value less costs of disposal
is measured using a present value technique.
Management has noted that, in the current year, no impairment
loss has been recognised or reversed on any non-financial asset in
terms of IAS 36, hence this amendment does not have any impact on
these financial statements.
Amendment to IAS 39, 'Financial Instruments: Recognition and
Measurement' novation of derivatives
These amendments clarify that an entity is not required to
discontinue hedge accounting if a hedging derivative was novated,
provided certain criteria are met in the case of novation of a
hedging instrument to a central counterparty.
The Company has not entered into any hedge contracts, hence this
amendment does not have any impact on these financial
statements.
Amendment to IFRS 8, 'Operating Segments'
Amendment to IFRS 8 requires disclosure of the judgments made by
management in aggregating operating segments and clarifies that a
reconciliation of segment assets must only be disclosed if segment
assets are reported.
Management has noted that the Company is within the scope of
IFRS 8 but has only one operating segment, hence this amendment
does not have any impact on these financial statements.
b) Standards, amendments and interpretations to existing
standards that are not yet effective and have not been adopted
early by the Group
At the date of authorisation of these consolidated financial
statements, certain new standards, interpretations and amendments
to existing standards that are likely to be applicable to the Group
have been published but are not yet effective and have not been
adopted early by the Group.
IFRS 9, 'Financial Instruments (2014)'
Not yet adopted by European Union
The IASB released IFRS 9 'Financial Instruments (2014)'
representing the completion of its project to replace IAS 39
'Financial Instruments: Recognition and Measurement'. The new
standard introduces extensive changes to IAS 39's guidance on the
classification and measurement of financial assets and introduces a
new expected credit loss model for the impairment of financial
assets. IFRS 9 also provides new guidance on the application of
hedge accounting and introduces an impairment model.
The Group's management has yet to assess the impact of IFRS 9 on
these consolidated financial statements.
IFRS 15, 'Revenue from Contracts with Customers'
Not yet adopted by European Union
IFRS 15 presents new requirements for the recognition of
revenue, replacing IAS 18 'Revenue', IAS 11 'Construction
Contracts', and several revenue-related interpretations. The new
standard establishes a control-based revenue recognition model and
provides additional guidance in many areas not covered in detail
under existing IFRSs, including how to account for arrangements
with multiple performance obligations, variable pricing, customer
refund rights, supplier repurchase options, and other common
complexities.
The Group's management has not yet assessed the impact of IFRS
15 on these consolidated financial statements.
Amendments to IFRS 10, IFRS 12 and IAS 27, 'Investment
Entities'
Not yet adopted by European Union
Amendments made to IFRS 10 'Consolidated Financial Statements'
and IAS 28 'Investments in Associates and Joint Ventures' clarify
that:
-- The exception from preparing consolidated financial
statements is also available to intermediate parent entities which
are subsidiaries of investment entities.
-- An investment entity should consolidate a subsidiary which is
not an investment entity and whose main purpose and activity is to
provide services in support of the investment entity's investment
activities.
-- Entities which are not investment entities but have an
interest in an associate or joint venture which is an investment
entity have a policy choice when applying the equity method of
accounting. The fair value measurement applied by the investment
entity associate or joint venture can either be retained, or a
consolidation may be performed at the level of the associate or
joint venture, which would then unwind the fair value
measurement.
The Group's management has not yet assessed the impact of the
amendment on these consolidated financial statements.
Amendments to IAS 27, 'Separate Financial Statements'
Not yet adopted by European Union
The IASB has made amendments to IAS 27 'Separate Financial
Statements' which will allow entities to use the equity method in
their separate financial statements to measure investments in
subsidiaries, joint ventures and associates.
IAS 27 currently allows entities to measure their investments in
subsidiaries, joint ventures and associates either at cost or as a
financial asset in their separate financial statements. The
amendments introduce the equity method as a third option. The
election can be made independently for each category of investment
(subsidiaries, joint ventures and associates). Change for the
equity method is to be done retrospectively.
The Group's management has not yet assessed the impact of the
amendment on these consolidated financial statements.
Amendment to IFRS 7, 'Financial Instruments: Disclosures'
Applicable for the annual reporting periods beginning on or
after 1 January 2016
Amendment provides guidance for servicing contracts that include
a fee can constitute continuing involvement in a financial asset.
An entity must assess the nature of the fee and arrangement against
the guidance for continuing involvement as per Standard in order to
assess whether the disclosures are required.
Management does not anticipate a material impact on the Group's
consolidated financial statements from application of this
amendment.
Amendment to IFRS 13, 'Fair Value Measurement'
Applicable for the annual reporting periods beginning on or
after 1 January 2015
IFRS 13 clarifies that the portfolio exception in IFRS 13
(measuring the fair value of a group of financial assets and
financial liabilities on a net basis) applies to all contracts
within the scope of IAS 39 or IFRS 9.
The Group's management has not yet assessed the impact of the
amendment on these consolidated financial statements.
Amendment to IAS 24, 'Related Party Disclosures'
Applicable for the annual reporting periods beginning on or
after 1 February 2015
IAS 24 clarifies that, where an entity receives management
personnel services from a third party (a management entity), the
fees paid for those services must be disclosed by the reporting
entity, but not the compensation paid by the management entity to
its employees or directors.
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The Group's management has not yet assessed the impact of the
amendment on these consolidated financial statements.
Amendments to IAS 1, 'Presentation of Financial Statements'
disclosure requirements
Applicable for the annual reporting periods beginning on or
after 1 January 2016
The amendments to IAS 1 include narrow-focus improvements in the
following five areas:
-- Materiality - The amendments re-emphasise that, when a
standard requires a specific disclosure, the information must be
assessed to determine whether it is material and, consequently,
whether presentation or disclosure of that information is
warranted.
-- Disaggregation and subtotals - The amendments clarify that
specific line items in the statement(s) of profit or loss and other
comprehensive income and the statement of financial position may be
disaggregated. For additional subtotals presented in the
statement(s) of profit or loss and other comprehensive income, an
entity must also present the line items that reconcile any such
subtotals with the subtotals or totals currently required in IFRS
for such statement(s).
-- Notes structure - The amendments clarify that entities have
flexibility as to the order in which they present the notes to
financial statements, but also emphasise that understandability and
comparability should be considered by an entity when deciding on
that order.
-- Disclosure of accounting policies - The amendments remove the
examples of significant accounting policies in the Standard, i.e.,
the income taxes accounting policy and the foreign currency
accounting policy, as these were considered unhelpful in
illustrating what significant accounting policies could be.
-- Presentation of items of other comprehensive income arising
from equity accounted investments - The amendments also clarify
that the share of other comprehensive income of associates and
joint ventures accounted for using the equity method must be
presented in aggregate as a single line item, classified between
those items that will or will not be subsequently reclassified to
profit or loss.
The Group's management does not anticipate a material impact on
the Group's consolidated financial statements from application of
this amendment.
4. Summary of significant accounting policies
4.1 Overall considerations
The significant accounting policies that have been used in the
preparation of the Group's financial statements are summarised
below. The consolidated and Company financial statements have been
prepared using the measurement bases specified by IFRSs as adopted
by the European Union for each type of asset, liability, income and
expense. The consolidated and Company financial statements have
been prepared on the historical cost basis except that certain
financial assets and liabilities are stated at fair value. The
measurement bases are more fully described in the accounting
policies below.
4.2 Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and its subsidiaries drawn up to 31
August each year. Control is achieved where the Company has the
power to govern the financial and operating policies of an investee
enterprise so as to obtain benefits from its activities. The
Company obtains and exercises control through more than half of the
voting rights. All subsidiaries have a reporting date of 31
August.
On acquisition, the identifiable assets, liabilities and
contingent liabilities of a subsidiary are measured at their fair
values at the date of acquisition. All significant inter-company
transactions and balances between Group entities are eliminated on
consolidation. Amounts reported in the financial statements of
subsidiaries are adjusted where necessary to ensure consistency
with the accounting policies adopted by the Company.
The results of the subsidiaries acquired or disposed of during
the year 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.
Inter-company transactions, balances and unrealised gains on
transactions between Group companies are eliminated. Unrealised
losses are also eliminated.
4.3 Investment in associates
Associates are those entities over which the Group is able to
exercise significant influence but which are neither subsidiaries
nor joint ventures. By way of exemption under IAS 28 for venture
capital organisations, the Group has designated its investments at
fair value through profit or loss and accounted for in accordance
with IAS 39 'Financial Instruments: Recognition and Measurement at
Fair Value'. The changes in fair value are recognised in profit or
loss in the period of change.
4.4 Foreign currency translation
The consolidated financial statements are presented in pounds
sterling (GBP), which is also the functional currency of the
Company.
Foreign currency transactions are translated into the functional
currency of the respective Group entity, using the exchange rates
prevailing at the dates of the transactions (spot exchange rate).
Foreign exchange gains and losses resulting from the settlement of
such transactions and from the remeasurement of monetary items at
year-end exchange rates are recognised in profit or loss.
Non-monetary items measured at historical cost are translated using
the exchange rates at the date of the transaction (not
retranslated). Non-monetary items measured at fair value are
translated using the exchange rates at the date when fair value was
determined.
In the Group's consolidated financial statements all assets,
liabilities and transactions of the Group entities are presented in
pounds sterling which is the functional currency of all entities
within the Group. The functional currency of the entities in the
Group has remained unchanged during the reporting period.
4.5 Revenue recognition
Revenue comprises income from investments, interest, dividend
and management fees. Revenue is recognised to the extent it is
probable that the economic benefits will flow to the Group, the
revenue can be reliably measured and when the criteria mentioned
below have been met:
Interest income
Interest income comprises income from treasury deposits and
loans recoverable. Interest income is recognised on an accrual
basis using the effective interest method.
Dividend income
Dividend income from investments is recognised when the entity's
right to receive payment has been established.
Management fees
Fees earned from the co-investment vehicle from the ongoing
management of the equity funds are recognised to the extent that it
is probable that there will be economic benefits and the income can
be reliably measured.
Service fees
Fees earned from the provision of support services are
recognised on an accrual basis in accordance with the relevant
terms of the agreement in respect thereof.
4.6 Expenses
All expenses are recognised on an accrual basis through profit
or loss.
4.7 Impairment of non-financial assets
For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are largely independent cash
inflows (cash-generating units). As a result, some assets are
tested individually for impairment and some are tested at
cash-generating unit level.
All individual assets or cash-generating units are reviewed at
each reporting date to determine whether there is any indication
that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated
in order to determine the extent of the impairment loss, if
any.
An impairment loss is recognised for the amount by which the
asset's or cash-generating unit's carrying amount exceeds its
recoverable amount. Recoverable amount is the higher of fair value
less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to
the asset for which the estimates of future cash flows have not
been adjusted.
An impairment loss is recognised as an expense and disclosed as
a separate line item in the statement of comprehensive income.
Where an impairment loss subsequently reverses, the carrying amount
of the asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset in prior
years.
4.8 Income taxes
Tax expense recognised in profit or loss comprises the sum of
deferred tax and current tax. Tax is recognised in the income
statement, except to the extent that it relates to items recognised
in other comprehensive income or directly in equity. In this case,
the tax is also recognised in other comprehensive income or
directly in equity, respectively.
Current income tax assets and/or liabilities comprise those
obligations to, or claims from, fiscal authorities relating to the
current or prior reporting periods, that are unpaid at the
reporting date. Current tax is payable on taxable profit, which
differs from profit or loss in the financial statements.
Calculation of current tax is based on tax rates and tax laws
applicable in each jurisdiction and that have been enacted or
substantively enacted by the end of the reporting period.
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Deferred income taxes are calculated using the balance sheet
liability method on temporary differences between the carrying
amounts of assets and liabilities and their tax bases. Deferred tax
assets and liabilities are calculated, without discounting, at tax
rates that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted by
the end of the reporting period. Deferred tax liabilities are
always provided for in full. Deferred tax assets are recognised to
the extent that it is probable that they will be able to be
utilised against future taxable income. Deferred tax assets and
liabilities are offset only when the Group has a right and
intention to set off current tax assets and liabilities from the
same taxation authority.
Changes in deferred tax assets or liabilities are recognised as
a component of tax income or expense in profit or loss, except
where they relate to items that are recognised in other
comprehensive income or directly in equity, in which case the
related deferred tax is also recognised in other comprehensive
income or directly in equity, respectively.
4.9 Investment in subsidiaries
Investments in subsidiaries are valued at cost less provision
for impairment in the financial statements of the Company. In the
case of buy-backs of shares, the carrying value of the investment
is proportionally credited for the number of shares bought back and
any difference between the buy-back price and carrying value is
recorded in the profit or loss.
4.10 Financial instruments
Financial assets and financial liabilities are recognised when
the Group becomes a party to the contractual provisions of the
financial instrument. Financial assets are de-recognised when the
contractual rights to the cash flows from the financial asset
expire, or when the financial asset and all substantial risks and
rewards are transferred. A financial liability is de-recognised
when it is extinguished, discharged, cancelled or it expires.
Financial assets and financial liabilities are measured
initially at fair value plus transactions costs except for
financial assets and financial liabilities carried at fair value
through profit or loss which are measured initially at fair value
and transaction costs are charged to profit or loss.
Subsequent measurement criteria of financial assets and
financial liabilities are described below:
Financial assets
For the purpose of subsequent measurement, the Group's financial
assets can be classified into the following categories upon initial
recognition:
-- loans and receivables; and
-- financial assets at fair value through profit or loss.
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. After initial recognition these are measured at amortised
cost using the effective interest method, less provision for
impairment. Discounting is omitted where the effect of discounting
is immaterial. The Group's cash and cash equivalents, trade and
other receivables fall into this category of financial
instruments.
All loans and receivables are subject to review for impairment
at least at each reporting date. Further, individually significant
loans and receivables are considered for impairment when they are
past due or when there is other objective evidence that a specific
counterparty will default. Impairment is evaluated by comparison of
the carrying value to expected cash flows discounted by original
effective interest rate (which is computed at the initial
recognition).
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include
financial assets that are either classified as held for trading or
that meet certain conditions and are designated at fair value
through profit or loss upon initial recognition. The Company's and
the Group's business is investing in financial assets with a view
to profiting from their total return in the form of income and
capital growth. This portfolio of financial assets is managed and
its performance evaluated on a fair value basis, in accordance with
the documented investment strategy, and information about the
portfolio is provided internally on that basis to the Company's
Board of Directors and other key management personnel. Accordingly,
upon initial recognition the investments are designated by the
Company and its subsidiaries as "at fair value through profit or
loss". They are included initially at fair value, which is taken to
be their cost (excluding expenses incidental to the acquisition
which are written off in the statement of comprehensive income).
Subsequently, the investments are valued at "fair value" with gains
or losses recognised in profit or loss. Fair value of such
investments is determined by reference to active market
transactions or using a valuation technique where no active market
exists which is done in accordance with IAS 39 and the
International Private Equity and Venture Capital Association
valuation guidelines.
For investments in associate undertakings, in accordance with
the limited exemption available under IAS 28 to private
equity/venture capitalist organisation for investments in
associates which upon initial recognition are designated at fair
value through profit or loss, the investments are accounted at fair
value through profit or loss.
All income and expenses relating to financial assets that are
recognised in profit or loss are presented within net losses/gains
on financial assets at fair value through profit or loss,
"Investment and other income" or "other financial items", except
for impairment of receivables, which is presented as a separate
line item on the face of the profit or loss account.
Financial liabilities
The Company's financial liabilities include trade and other
payables which are measured subsequently at amortised cost using
the effective interest method.
4.11 Cash and cash equivalents
Cash and cash equivalents comprise balance with banks and demand
deposits which are readily convertible to known amounts of cash and
are subject to insignificant risk of change in value.
4.12 Equity and reserves
Share capital represents the nominal value of shares that have
been issued. All shares are equally eligible to receive dividends
and the repayment of capital and represent one vote each at the
shareholders' meetings of the Company.
Share premium includes any premium received on issue of share
capital. Any transaction costs associated with the issuing of
shares are deducted from share premium, net of any related income
tax benefits.
Distributable capital reserve is a specified reserve created by
reclassifying the part of the Company's share premium account for a
reduction in the share capital of the Company through buy-back of
its own shares. The reserve has been created for the distribution
of capital to the equity shareholders.
Retained earnings/accumulated losses include all current and
prior period retained net profits or losses. All transactions with
owners of the parent are recorded separately within equity.
Gain or loss to the extent unrealised is transferred from
retained earnings to "Unrealised investment revaluation reserve"
and is transferred to retained earnings upon realisation.
4.13 Provisions, contingent liabilities and contingent assets
Provisions are recognised when there is a present obligation as
a result of a past event that probably will require an outflow of
resources and a reliable estimate of the amount of the obligation
can be made. A present obligation arises from the presence of a
legal or other constructive commitment that has resulted from past
events. Provisions are measured at the estimated expenditure
required to settle the present obligation, based on most reliable
evidence available at the reporting date.
A disclosure for a contingent liability is made when there is a
present obligation that may, but probably will not, require an
outflow of resources. Disclosure is also made in respect of a
present obligation as a result of a past event that probably
requires an outflow of resource, where it is not possible to make a
reliable estimate of the outflow. Where there is a present
obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Contingent assets are not recognised in the financial
statements. However, contingent assets are assessed continually and
if it is virtually certain that an inflow of economic benefits will
arise, the asset and related income are recognised in the period in
which the change occurs.
4.14 Earnings per share
Basic earnings per share are calculated by dividing the net
profit or loss (after deducting attributable taxes) for the period
attributable to equity shareholders by the weighted average number
of equity shares outstanding during the period. Partly paid equity
shares are treated as a fraction of an equity share to the extent
that they were entitled to participate in dividends relative to a
fully paid equity share during the reporting period.
5. Significant management judgments in applying accounting policies
Information about significant management judgements that have
the most significant effect on the financial statements is
summarised below. Critical estimation uncertainties are described
in note 6 to the financial statements.
Investments recognised at fair value through profit or loss
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The Group has recognised its investments at fair value through
profit or loss. In accordance with IAS 39, an entity may record an
item at fair value through profit or loss if they are either
classified as held for trading or if they meet certain conditions
and are designated at fair value through profit or loss upon
initial recognition. The management has designated all the
investments in listed as well as unlisted securities at fair value
through profit or loss, as they meet the requirements in IAS 39.
The facts considered in applying this judgement are included under
note 4.10.
Determination of functional currency of individual entities
Following the guidance under IAS 21 the Effects of Changes in
Foreign Exchange Rates the functional currency of each individual
entity is determined to be the currency of the primary economic
environment in which the entity operates. In the presence of mixed
indicators, the management applies judgement in determining the
functional currency of each individual entity within the Group
which most faithfully represents the economic effects of the
underlying transactions, events and conditions under which the
entity conducts its business. The consolidated financial statements
are presented in pounds sterling (GBP), which is also the
functional currency of the Company and each of the
subsidiaries.
6. Estimation uncertainty
When preparing the financial statements management undertakes a
number of judgements, estimates and assumptions about recognition
and measurement of assets, liabilities, income and expenses that
have a significant effect on the financial statements.
The actual results may differ from the judgements, estimates and
assumptions made by management, and will seldom equal the estimated
results.
Information about the significant estimates and assumptions that
have the most significant effect on recognition and measurement of
assets, liabilities, incomes and expenses is provided below:
Fair value of unquoted investments
Management uses valuation techniques in measuring the fair value
of financial instruments, where active market quotes are not
available. In applying the valuation techniques, management makes
maximum use of market inputs, and uses estimates and assumptions
that are, as far as possible, consistent with observable data that
market participants would use in pricing the instrument. Where
applicable data is not observable, management uses its best
estimate about the assumptions that other market participants would
make. These estimates may vary from the actual prices that would be
achieved in an arm's length transaction at the reporting date.
Details of the assumptions used and the levels of hierarchy for the
investments have been disclosed in note 23.
Impairment
An impairment loss is recognised for the amount by which an
asset's carrying amount exceeds its recoverable amount. To
determine the recoverable amount, individually significant assets
are considered for impairment when they are past due or when there
is other objective evidence that a specific counterparty will
default. These assumptions relate to future events and
circumstances. The actual results may vary and may cause
adjustments to the Group's assets in future financial periods.
Impairment loss on investment in subsidiaries and loan to
subsidiaries has been recorded in the standalone financial
statements of the Company and related information has been
disclosed in note 12 and 13 respectively.
7. Investment and other income
2015 2014
GBP'000 GBP'000
Interest income 4 4
Management fee* - 51
Service fee from investee company 63 62
-------- --------
67 117
-------- --------
* Represents fee from the co-investment vehicle.
8. Net (losses)/gains on financial assets at fair value through profit or loss
2015 2014
GBP'000 GBP'000
Financial assets designated as
fair value through profit or loss
Unrealised gains on investments 214 281
Unrealised losses on investments (532) (291)
Realised gain on investments 62 518
--------- --------
(256) 508
--------- --------
9. Management fee
Under the terms of the management agreement, the amount of
management fee payable from Tusk Investments 1 Limited and Tusk
Investments 2 Limited to Elephant 2 Limited (the "Manager") has
been fixed at GBP160 thousand per annum. In addition the Manager is
entitled to recover certain expenses.
The management fee of GBP225 thousand (31 August 2014: GBP212
thousand) included in the consolidated statement of profit and loss
and comprehensive income includes the management fee of GBP160
thousand (31 August 2014: GBP161 thousand) and GBP nil (31 August
2014: GBP51 thousand) in respect of a service fee of GBP63 thousand
(31 August 2014: GBP62 thousand) received by the Manager from an
investee company, which is included in "Investment and other
income".
10. Other expenses
2015 2014
GBP'000 GBP'000
Administration charges 176 276
Directors' fees* 62 81
Auditors' remuneration** 35 52
-------- --------
273 409
-------- --------
2015 2014
GBP'000 GBP'000
*Detail of Directors' fees are
as follows:
Vikram Lall 28 32
Gaurav Burman (resigned 26 February
2014) - 11
Francis Anthony Hancock 18 20
Elizabeth Tansell (resigned 7
May 2015) 11 18
Vincent Campbell (appointed 7
May 2015) 5 -
-------- --------
62 81
-------- --------
The Company has no other employees.
2015 2014
GBP'000 GBP'000
**Auditors' remuneration comprises:
Audit of Company's annual accounts 28 28
Audit of subsidiaries' annual
accounts 7 9
Review of Group's half yearly
accounts - 15
-------- --------
35 52
-------- --------
11. Taxation
The Company is a resident of the Isle of Man for income tax
purposes, being subject to the standard rate of income tax, which
is currently 0%. Therefore no provision for taxation has been
made.
The Mauritian entities consolidated in the Group are Global
Business License Category 1 companies in Mauritius and under the
current laws and regulations are liable to pay income tax on their
net income at a rate of 15%. However the entities are entitled to a
tax credit equivalent to the higher of actual foreign tax suffered
and 80% of the Mauritian tax payable in respect of their foreign
source income thus reducing their maximum effective tax rate to 3%.
No Mauritian capital gains tax is payable on profits arising from
the sales of securities, and any dividends and redemption proceeds
paid by the entities to their member will be exempt in Mauritius
from any withholding tax. At 31 August 2015, the entities had no
income tax liability due to tax losses carried forward.
Deferred taxation
No deferred tax asset has been recognised in respect of the tax
loss carried forward for GBP1,371 thousand and GBP1,020 thousand in
Tusk Investments 1 Limited and Tusk Investments 2 Limited
respectively as no taxable income is probable in the foreseeable
future.
A reconciliation of the income tax expense based on accounting
profit and the actual income tax expense is as follows:
2015 2014
GBP'000 GBP'000
Analysis of charge for the year
Income tax expense - -
-------- --------
Total tax expense - -
-------- --------
Loss before taxation (658) (22)
Less: Loss attributable to Elephant
Capital plc and other Group companies
except Mauritian entities (221) (282)
(Loss)/profit attributable to
Mauritian entities (437) 260
-------- --------
Enacted rate for Isle of Man 0% 0%
Enacted rate for Mauritius 15% 15%
Taxation at standard rate in Isle
of Man - -
Taxation at standard rate in Mauritius (65) 39
Tax effect of:
Exempt income (14) (95)
Non-taxable items 48 24
Unutilised tax loss for the year 6 6
Foreign tax credit 25 26
-------- --------
Income tax charge - -
-------- --------
12. Investments in subsidiaries (Company statement of financial position)
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Particulars 2015 2014
GBP'000 GBP'000
Company shares in Group undertakings:
Elephant Capital LP* - -
Tusk Investments 1 Limited 7,665 7,665
Tusk Investments 2 Limited 204 804
Elephant 2 Limited* - -
Elephant Investments (General
Partner) Limited* - -
Elephant Investments (Carry) Limited* - -
Less: Provision for impairment** (7,708) (7,698)
-------- --------
161 771
-------- --------
* Amounts have been rounded to the nearest thousand.
** As at 31 August 2015, in the Company financial statements, an
impairment analysis of the investment in subsidiaries was carried
out and, consequently, an additional impairment loss of GBP10
thousand was recorded on account of the decline in the value of
investments after adjusting the share buy-back of GBP600 thousand
made through Group subsidiaries.
The Group comprises the following entities:
Incorporation Proportion Proportion
(or registration) of ownership of voting
Name of Subsidiary and operation Interest Power
Elephant Capital LP England 100% 100%
Tusk Investments 1 Limited Mauritius 100% 100%
Tusk Investments 2 Limited Mauritius 100% 100%
Elephant 2 Limited Guernsey 100% 100%
Elephant Investments (General Partner) Limited England 100% 100%
Elephant Investments (Carry) Limited British Virgin Islands 100% 100%
Elephant Capital 1 Limited Mauritius 100% 100%
13. Loans to subsidiary (Company statement of financial position)
Loans to subsidiary in the standalone financial statements of
the Company comprise the following:
2015 2014
Particulars GBP'000 GBP'000
Elephant Capital LP*
Non-current
Opening balance 14,000 14,000
---------- --------
14,000 14,000
Less: Provision for impairment** (9,276) (8,850)
---------- --------
A 4,724 5,150
---------- --------
Current
Opening balance 4,996 4,996
Add: Paid during the year - -
---------- --------
4,996 4,996
---------- --------
Less : Provision for impairment** (4,996) (4,996)
---------- --------
B - -
---------- --------
Total (A+B) 4,724 5,150
---------- --------
*Loan of GBP18,996 thousand was given by Elephant Capital plc to
Elephant Capital LP in order to provide further funds to Tusk
Investments 1 Limited and Tusk Investments 2 Limited for making
investments in certain investee companies in accordance with the
investment strategy of the Group. Further, the loan is classified
as non-current has not been discounted to its present value, as the
repayment period is not determinable.
**An impairment analysis of loan to subsidiary was carried out
by the Company as at 31 August 2015 and, consequently, an
impairment loss of GBP426 thousand was recorded on account of the
decline in the value of investments made through Group subsidiaries
since 31 August 2014.
14. Financial assets at fair value through profit or loss
The Group has invested in a portfolio of listed and unlisted
securities of businesses operating primarily in India.
Details of the Group's investments are as set out below:
2015 2014
Listed Non-current Current Total Non-current Current Total
investments GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance
brought
forward - 354 354 - 1,875 1,875
Disposal - (354) (354) - (1,668) (1,668)
----------- -------- -------- ----------- -------- --------
- - - - 207 207
----------- -------- -------- ----------- -------- --------
Unrealised
gain (net) - - - - 147 147
----------- -------- -------- ----------- -------- --------
A - - - - 354 354
----------- -------- -------- ----------- -------- --------
Unlisted
investments
Balance
brought
forward 4,718 - 4,718 4,875 - 4,875
Unrealised
loss (net) (318) - (318) (157) - (157)
----------- -------- -------- ----------- -------- --------
B 4,400 - 4,400 4,718 - 4,718
----------- -------- -------- ----------- -------- --------
Total investments
(A+B) 4,400 - 4,400 4,718 354 5,072
----------- -------- -------- ----------- -------- --------
15. Receivables
Group Company Group Company
2015 2015 2014 2014
GBP'000 GBP'000 GBP'000 GBP'000
Other receivable - - - 1
-------- -------- -------- --------
- - - 1
-------- -------- -------- --------
Other receivables are short-term and their carrying values are
considered to be a reasonable approximation of their fair
value.
16. Cash and cash equivalents
Group Company Group Company
2015 2015 2014 2014
GBP'000 GBP'000 GBP'000 GBP'000
Cash in current accounts 1,103 590 2,100 1,205
-------- -------- -------- --------
1,103 590 2,100 1,205
-------- -------- -------- --------
17. Payables
Group Company Group Company
2015 2015 2014 2014
GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables 82 50 95 51
-------- -------- -------- --------
82 50 95 51
-------- -------- -------- --------
All trade and other payables are short-term and their carrying
values are considered to be a reasonable approximation of their
fair value.
18. Share capital
2015 2014
Number Number
of shares GBP'000 of shares GBP'000
Authorised ordinary
shares of 1p each 300,000,000 3,000 300,000,000 3,000
----------- ------- ----------- -------
Issued and fully paid
ordinary
shares of 1p each
- beginning of year 20,117,057 201 24,662,511 246
Buy-back of ordinary
1p shares* (5,000,000) (50) (4,545,454) (45)
----------- ------- ----------- -------
15,117,057 151 20,117,057 201
----------- ------- ----------- -------
*On 9 March 2015, the Company bought back and cancelled a total
of 5,000,000 ordinary shares at a price of 20p per share (2014:
bought back and cancelled 4,545,454 ordinary shares at a price of
22p). The cancellation of share capital is reflected in the share
capital and distributable capital reserve accounts in the Company
and consolidated statement of change in equity.
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The Company's share capital comprises ordinary shares. Rights
attached to ordinary shares include the right to vote at the
Company's meetings of shareholders including the Annual General
Meeting and to receive future dividends.
19. Loss and net asset value per share
2015 2014
Loss attributable to ordinary
shareholders GBP(657,662) GBP(22,885)
------------ ------------
Issued ordinary shares at the
beginning of the year 20,117,057 24,662,511
Buy-back of shares (5,000,000) (4,545,454)
------------ ------------
Issued ordinary shares outstanding
at the end of the year 15,117,057 20,117,057
------------ ------------
Weighted average number of shares
outstanding 17,719,797 24,064,753
Loss per share (basic and diluted) (3.7p) (0.1p)
Net asset value per share GBP0.36 GBP0.35
Total net assets value as at year
end GBP5,446,360 GBP7,104,022
There were no options in issue to dilute the earnings per share
as at 31 August 2015.
20. Financial assets and liabilities
The carrying amounts presented in the consolidated statement of
financial position relate to the following categories of financial
assets and liabilities:
Financial assets
Group Company Group Company
2015 2015 2014 2014
Notes GBP'000 GBP'000 GBP'000 GBP'000
Investments at
fair value through
profit or loss
(designated as
fair value through
profit or loss) 14 4,400 - 5,072 -
Loans and receivables
Loan to subsidiary 13 - 4,724 - 5,150
Receivables 15 - - - 1
Cash and cash equivalents 16 1,103 590 2,100 1,205
-------- -------- -------- --------
5,503 5,314 7,172 6,356
-------- -------- -------- --------
The loan given to subsidiaries classified as non-current has not
been discounted to its present value, as the repayment period is
not determinable.
The above loans and receivables do not carry any interest income
and management considers the fair values to be not materially
different from the carrying amounts recognised in the statement of
financial position.
Financial liabilities
Group Company Group Company
2015 2015 2014 2014
Note GBP'000 GBP'000 GBP'000 GBP'000
Financial liabilities
measured at amortised
cost:
Payables 17 82 50 95 51
-------- -------- -------- --------
82 50 95 51
-------- -------- -------- --------
None of the financial liabilities are interest bearing.
Management considers the fair values to be not materially different
from the carrying amounts recognised in the statement of financial
position as they are expected to be settled within the next one
year.
The accounting policies for each category of financial
instruments are provided in note 4.10. Information relating to fair
values is presented in the related notes. The methods used to
determine the fair values are described in note 23. A description
of the Group's financial instruments risks, including risk
management objectives and policies is given in note 22.
21. Related party transactions
21.1 Related parties
(a) Key Management Personnel ("KMP")
Names of Directors
Vikram Lall
Francis Anthony Hancock
Elizabeth Tansell (Date of resignation 7 May 2015)
Vincent Campbell (Date of appointment 7 May 2015)
(b) Entities controlled by KMP with whom transactions have taken place during the year:
Elephant Capital LLP
Elephant India Limited
Elephant India Finance Private Limited
(c) Associates with whom transactions have taken place during the year:
Global Cricket Ventures Limited
21.2 The transactions with related parties and balances as at the year-end are summarised below:
(a) Key Management Personnel ("KMP")
Compensation paid to the Company's Board of Directors is
disclosed in note 10. It comprises of Director fees only and there
are no post-employment benefits payable to any of the Directors of
the Company.
The following amounts were paid on account of Director's fees
during each of the years reported:
Debit/(credit)
Nature of transaction balance (unsecured)
Year Year
ended ended As at As at
31 August 31 August 31 August 31 August
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
Directors' fees 62 81 (10) (10)
(b) Transactions made during the year with related parties other
than those with key managerial personnel are as follows:
Debit/(credit)
Nature of transaction balance (unsecured)
Year Year
ended ended As at As at
31 August 31 August 31 August 31 August
2015 2014 2015 2014
GBP'000 GBP'000 GBP'000 GBP'000
(i) Management
fees*:
Paid to Elephant
Capital LLP 225 82 - -
Paid to Elephant
India Limited - 130 - -
Received from Elephant
India Finance Private
Limited - 51 - -
(ii) Other transactions:
Registrar and administration
charges paid to
Chamberlain Fund
Services Limited - 3 - -
Service fee from
GCV 63 61 (11) (10)
Paid to Elephant
Capital LLP - 51 - -
* Payments to Elephant Capital LLP and Elephant India Limited
are paid out of the management fee referred in note 9.
The Directors are of the opinion that there is no ultimate
controlling party.
22. Risk management objectives and policies
The Group is exposed to various risks in relation to financial
instruments. The Group's financial assets and liabilities by
category are summarised in note 20. The main types of risks are
market risk, credit risk and liquidity risk.
The Group's risk management is co-ordinated at its headquarters,
in close co-operation with the Board of Directors, and focuses
actively on minimising the volatility due to its exposure to
financial markets and managing long-term financial investments to
generate lasting returns.
The Group is exposed to market risk through its use of financial
instruments and specifically to currency risk, and certain other
price risks, which result from both its operating and investing
activities.
Market risk
Market risk embodies the potential for both losses and gains and
includes currency risk, and price risk. The Group's strategy on the
management of market risk is driven by its investment objective, as
outlined in the Investment Manager's review. The Group invests in a
range of investments, including quoted and unquoted equity
securities in a range of sectors. The Board monitors the Group's
investment exposure against internal guidelines specifying the
proportion of total assets that may be invested in various
sectors.
Currency risk
The Group's portfolio comprises predominantly Indian rupee ("IN
") denominated investments along with certain unquoted investments
denominated in US dollars ("US$") as well. But the reported net
asset value is denominated in sterling ("GBP"). Any depreciation in
IN or US$ could have an adverse impact on the performance of the
Group. The Group does not enter into any derivative contracts for
hedging of IN or US$ exposure.
For the Company's financial statements, all the assets and
liabilities are predominantly denominated in GBP which is the
functional currency of the Company and there are no significant
currency risks existing in the Company statement of financial
position.
For the Group net short-term exposure in GBP equivalents of
foreign currency denominated financial assets and liabilities at
each reporting date are as follows:
GBP'000 GBP'000
Foreign currency IN US$
31 August 2015
Financial assets 3,768 647
Financial liabilities - 20
------- -------
Net short -term exposure 3,768 627
------- -------
31 August 2014
Financial assets 4,620 855
Financial liabilities - 34
------- -------
Net short-term exposure 4,620 821
------- -------
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As at 31 August 2015, if IN or US$ had weakened by 1% (31 August
2014: 1%) against GBP with all other variables held constant, the
loss for the year would have been higher and equity would have been
lower as follows:
GBP'000 GBP'000 GBP'000
Foreign currency IN US$ Total
31 August 2015 38 6 44
31 August 2014 46 8 54
The volatility is mainly as a result of foreign exchange losses
on translation of IN and US$ denominated financial assets
designated at fair value through profit or loss.
If the functional currency had strengthened with respect to the
various foreign currencies, there would be an equal and opposite
impact on loss and equity for each year.
Price risk
Price risk is a risk that the value of an instrument will
fluctuate as a result of changes in market prices, whether caused
by factors specific to an individual investment or its issuer or
factors affecting all instruments traded in the market. As the
majority of the Company's financial instruments are carried at fair
value with fair value changes recognised through the profit or loss
account, all changes in the market conditions will directly affect
net investment income.
Price risk is mitigated by a diversified portfolio of
instruments and direct involvement in the management of the
investment portfolio. Further, the Company does not invest more
than 25% of its net asset value in any single investment at the
time of investment. During the year ended 31 August 2015, the
Company's exposure to various industry sectors was not more than
70% in any single industry.
For the listed equity securities, the volatility figure of 1% is
considered to be a suitable basis for estimating how profit or loss
and equity would have been affected by changes in market risk that
were reasonably possible at the reporting date. If the quoted stock
price for these securities increased or decreased by the percentage
of volatility, the investment value would have changed by GBPnil
(31 August 2014: GBP3 thousand). The listed securities are
classified as investments at fair value through profit or loss.
The Group's sensitivity to price risk with regards to its
investments in unlisted entities, including Global Cricket Ventures
Limited (Mauritius), Amar Chitra Katha Private Limited and Air
Works India (Engineering) Private Limited, cannot be determined
because the securities are not marketable. The fair values at the
reporting date have been determined in accordance with the guidance
provided in International Private Equity and Venture Capital
guidelines and IAS 39 (refer to note 23).
In the Company statement of financial position, there are no
financial assets whose value is dependent on movement in market
prices and thus, no price risk is seen in the Company's financial
statements.
Credit risk
Credit risk is the risk that the counterparty fails to discharge
an obligation to the Group. The Group's cash, cash equivalents and
receivables are actively monitored to avoid significant
concentrations of credit risk. The credit risk for cash and cash
equivalents is considered negligible, since the Group transacts
with reputable banks. The recoverability of debts from investee
companies is monitored by Directors during Board meetings and by
review of management accounts.
There was a loan given by Elephant Capital plc to Elephant
Capital LP, which was further given to Tusk Investments 1 Limited
and Tusk Investments 2 Limited for investing in unlisted/listed
entities. As at 31 August, 2015 the cumulative impairment of
GBP14,272 thousand (31 August 2014: GBP13,846 thousand) has been
recorded as a consequence of the decline in the value of
investments made by the Group subsidiaries. Apart from this, the
management considers the credit quality of all other financial
assets to be good in the Company's and consolidated financial
statements and, thus, these are not impaired.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due. The Group's
approach to managing liquidity risk is to ensure, as far as
possible, that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the
Company's reputation.
The responsibility for liquidity risk management rests with the
Board of Directors who also monitor the short, medium and long-term
funding and liquidity management requirements.
As at the reporting date, the Group's and Company's liabilities
having contractual maturities (including interest payments where
applicable), represented by way of "Trade and other payables", are
GBP82 thousand (31 August 2014: GBP95 thousand) and GBP50 thousand
(31 August 2014: GBP51 thousand) respectively. These are expected
to be settled within one year.
23. Levels of hierarchy
In accordance with the disclosure requirements of IFRS 13, the
following table presents financial assets and liabilities measured
at fair value in the statement of financial position in accordance
with the fair value hierarchy. This hierarchy groups financial
assets and liabilities into three levels based on the significance
of inputs used in measuring the fair value of the financial assets
and liabilities. The fair value hierarchy has the following
levels:
-- Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities.
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from
prices).
-- Level 3: inputs for the asset or liability that are not based
on observable market data (unobservable input).
The level within which the financial asset or liability is
classified is determined based on the lowest level of significant
input to the fair value measurement. The financial assets and
liabilities measured at fair value in the statement of financial
position are grouped into the fair value hierarchy as follows:
Level Level Level
1 2 3 Total
31 August 2015 Note GBP'000 GBP'000 GBP'000 GBP'000
Assets:
Listed securities 14 - - - -
Unlisted securities 14 - - 4,400 4,400
-------- -------- -------- --------
Total - - 4,400 4,400
Liabilities: - - - -
-------- -------- -------- --------
Net fair value - - 4,400 4,400
-------- -------- -------- --------
Level Level Level
1 2 3 Total
31 August 2014 Note GBP'000 GBP'000 GBP'000 GBP'000
Assets:
Listed securities 14 354 - - 354
Unlisted securities 14 - - 4,718 4,718
-------- -------- -------- --------
Total 354 - 4,718 5,072
Liabilities: - - - -
-------- -------- -------- --------
Net fair value 354 - 4,718 5,072
-------- -------- -------- --------
Measurement of fair value
The Group's Investment Manager performs valuations of financial
items for financial reporting purposes, including Level 3 fair
values, in consultation with third party valuation specialists for
complex valuations. The methods and valuation techniques used for
the purpose of measuring fair values are given below:
(a) Listed securities:
The quoted investments are denominated in Indian rupees and are
publicly traded on the NSE and BSE in India and the value of such
quoted investments have been determined using the closing bid
market prices on the NSE as at the reporting date.
(b) Unlisted securities:
The fair value of the unquoted investments has been determined
using appropriate methodology in accordance with International
Private Equity and Venture Capital Guidelines and guidance provided
in IAS 39.
(i) Global Cricket Ventures ("GCV") - As at 31 August 2015, the
Group held a 45.56% equity stake in Global Cricket Ventures Limited
(Mauritius) which had been acquired for GBP5,949 thousand. The
value of this investment as at 31 August 2015 has been determined
on the basis of best estimate of net assets of GCV attributable to
Elephant Capital's shareholding.
(ii) Obopay - Pursuant to the execution of an Agreement and Plan
of Merger of OBP Investments, OBP Investments, Inc., stakeholders
representative with Obopay Inc. (Obopay), the capital stock of
Obopay (except series G Preferred stock) issued and outstanding
immediately (including Elephant Capital's holding in series C and
Series D preferred stock) prior to the merger was cancelled and
extinguished without any conversion thereof and no payment or
distribution was made. Therefore the holding of Elephant Capital in
Series C and D preferred stock was valued at nil as at 31 August
2014 and the same basis of valuation has been followed for 31
August 2015.
(iii) Amar Chitra Katha ("ACK") - As at 31 August 2015, the
Group held a 20.06% equity stake in Amar Chitra Katha (P) Ltd. at a
total cost of GBP4,085 thousand. The investment has been valued
based on the "discounted cash flows of the projected future
earnings of underlying businesses". The key assumptions used in the
valuation of the investment as at 31 August 2015 are as
follows:
Weighted average cost of capital 15.11%
Long-term growth rate 5.00%
Discount for lack of marketability 15.00%
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Grafico Azioni Elephant Cap (LSE:ECAP)
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