TIDMISH
RNS Number : 3124J
Ishaan Real Estate PLC
29 June 2011
Ishaan Real Estate plc
The Directors of Ishaan Real Estate plc announce the Company's
audited results for the year ended 31 March 2011.
Overview for the year ended 31 March 2011
Net Asset Value 31 Mar 11 31 Mar 10 Change
===================================== ========= ========= ======
Adjusted NAV per share (pence) (1)
(2) 95.4 106.9 -10.8%
===================================== ========= ========= ======
Reported NAV per share (pence) (1)
(2) 75.9 82.3 -7.8%
===================================== ========= ========= ======
-- Portfolio value of GBP627 million, up 3.5 per cent. from
GBP605 million at 31 March 2010. After adjusting for construction
expenditure capitalised during the period and exchange translation
losses, underlying portfolio declined in value by 8.4 per cent.,
with these items having a similar impact on adjusted net asset
value per share over the period.
-- Since the interim results announcement on 10 December 2010,
net additions of c.481,000 sq. ft. (including c.32,000 sq. ft.
previously under option) have been made to the aggregate area let
or under terms agreed.
-- Construction commenced on a further c.0.7 million sq. ft. at
Mindspace, Airoli, Navi Mumbai, following agreements to let
substantially all of the space currently under construction.
-- Inorbit Pune commenced trading in March 2011, the third of
the nine projects in the portfolio to become operational.
-- As at 31 March 2011, revenue is being received on c.4.4
million sq. ft. of the portfolio, with an equivalent annualised
rental income of c.GBP26 million.
-- Financing of c.INR 32.4 billion (c.GBP450 million) in place,
including debt facilities of c.INR 26.3 billion (c.GBP365 million)
secured by Indian SPVs to fund the c.INR 34.3 billion (c.GBP476
million) cost of the areas constructed or currently under
construction.
-- With an increase in interest rates over the last year, the
borrowing cost of the Indian SPVs has increased by c.200-300 bps to
12-13 per cent.
-- Cash of GBP13.6 million at 31 March 2011 (GBP16.6 million at
31 March 2010).
Since the year end:
-- Since 31 March 2011, additional area of c.265,000 sq. ft. let
or under terms agreed at Mindspace, Airoli, Navi Mumbai; Mindspace,
Madhapur, Hyderabad (SEZ) and Inorbit Malls - Pune and Bangalore.
With this an aggregate area of c.746,000 sq. ft. has been let or
under terms agreed since the interim results announcement on 10
December 2010.
-- In total c.6.9 million sq. ft., representing c.66 per cent of
the lettable area constructed or currently under construction, is
now let or under terms agreed.
Ian Henderson, Chairman of Ishaan, commented:
"We are pleased with the progress made on the development of our
projects in the current market conditions. Opening of the second
mall in the portfolio at Pune strengthens our presence in the
retail market. In our commercial projects, we have made sustained
letting progress, despite the slowdown in the pace of economic
activity in India and the political uncertainty in one of the key
states where we operate. We expect occupier demand for our
commercial developments to strengthen further once economic
activity regains momentum.
However, portfolio value has not reflected the operational
performance, primarily due to the extension of project schedules
caused by the economic slowdown, decline in rental values which are
yet to fully recover and project cost escalations driven by high
inflation. With the progress achieved in development of the
portfolio, we hope to benefit once global and domestic economic
environment improves and market conditions stabilize.
With one IT park and two malls in the portfolio now operational,
the Board is focused on its plan for realising value from its
assets and returning capital to shareholders. Given current global
market conditions and a relatively nascent investment market for
yielding assets in India, opportunities to exit investments are
challenging. However we are actively exploring options for the
potential disposal of assets and are committed to the realisation
of value from the portfolio. We reiterate our confidence in the
relative strength of the long-term fundamentals of the Indian
economy and in our ability to complete these projects successfully
and deliver cash returns to shareholders."
( )
(1) Reported NAV per share is not considered the best method of
evaluating performance as it excludes valuation surpluses
attributable to development properties intended for sale and
includes the impact of deferred tax liability on valuation
surpluses. Adjusted NAV per share at 31 March 2011 and at 31 March
2010 includes all investments at current valuations in proportion
to the Group's shareholdings and a provision for a potential income
tax liability in respect of the Vivarea project, but excludes the
impact of the deferred tax provision arising on valuation
surpluses, on the net assets of the Company and is considered by
the Board to be a more appropriate method of evaluating the
performance of the Company than Reported NAV per share.
(2) Exchange rate used for the purpose of this statement is 1GBP
= 71.93 INR, the Reserve Bank of India reference rate at 31 March
2011. Exchange rate at 31 March 2010 was 1GBP = 68.03 INR.
Contacts:
College Hill Deutsche Bank AG London (NOMAD)
Gareth David Ben Lawrence
Direct : +44 207 457 2002 Tel: +44 20 7545 8000
Mobile : +44 777 444 4162 Email: ben.lawrence@db.com
Email: Gareth.David@collegehill.com
Chairman's Statement
I am pleased to report the Company's results for the year ended
31 March 2011.
Results for the year ended 31 March 2011
The Company made a loss before tax for the year of GBP4.9
million (GBP7.3 million for the year ended 31 March 2010), arising
from the cost of investment advisory fees and the write-down of
investments in the Company's portfolio partially offset by our
share of post tax profits of associates as rental income
accrues.
Valuation
The 100 per cent. interests in the properties in the portfolio
have been valued by Cushman & Wakefield (India) Pvt. Limited
('Cushman & Wakefield') at 31 March 2011 at a total of INR 45.1
billion. This represents an increase of 9.4 per cent. against a
valuation of INR 41.2 billion reported at 31 March 2010. If
construction expenditure of INR 5.3 billion capitalised during the
year, which broadly reflects physical progress in construction, is
adjusted for, the portfolio's value showed a decline of 3.1 per
cent over the year, which is disappointing.
After conversion to pound Sterling, the 100 per cent. interests
in the properties in the portfolio were valued at GBP627 million at
31 March 2011, with Ishaan's 40 per cent. interest valued at GBP251
million, compared to GBP242 million at 31 March 2010, an increase
of 3.5 per cent (a decline of 8.4 per cent. after adjusting for
construction expenditure capitalised during the year). This
decrease in pound Sterling valuation in part reflects a decline in
the underlying portfolio value in rupee terms and a 5.3 per cent.
decrease in value on account of exchange translation loss (the
exchange rate moved from INR 68.03 on 31 March 2010 to INR 71.93 on
31 March 2011).
Since the global financial crisis, the value of the portfolio
has not reflected operational performance. A major part of the fall
in value can be attributed to the severe setback and softening of
demand in the global and Indian economy including Indian real
estate markets reported in the Annual Report and Accounts for the
year ended 31 March 2009, from which recovery is ongoing. The
Company responded to this setback by reviewing its programme of
development and delaying completion of some projects. Rental values
have not fully recovered and in order to achieve a steady programme
of lettings, concessions have had to be made against original
target rents. This has had a compounding effect on valuation when
original assumptions included an expectation of growth which was
modest relative to the longer term performance of the Indian
economy as a whole. Together, these have resulted in the total net
current income of the portfolio being lower than had been expected
by this time. Delay to phasing of completions has meant that
contruction cost inflation, and additional finance costs, have also
had an impact on the value and timing of the development programme.
It should be noted that the valuation reflects rising investment
yields and this is attributed in large measure to the lack of
liquid and transparent investment market in India.
Net Asset Value
Reported net asset value per share was 75.9p at 31 March 2011
against 82.3p at 31 March 2010. Reported net asset value per share
is calculated based on the Group's reported net assets at year end
divided by the number of shares in issue and excludes valuation
surpluses attributable to development properties intended for
sale.
Adjusted net asset value per share was 95.4p at 31 March 2011 a
decrease of 10.8 per cent against 106.9p at 31 March 2010. The fall
in adjusted net asset value per share reflects the decline in the
underlying value of the portfolio and the exchange translation
loss.
Adjusted NAV per share is considered by the Board to be a more
appropriate method of evaluating the performance of the Company
than Reported NAV per share. Adjusted NAV per share includes all
investments at current valuations in proportion to the Group's
shareholdings in each project and a provision for a potential
income tax liability on the Vivarea project and excludes deferred
tax provisions arising on valuation surpluses for all investment
properties.
The Board considers it appropriate to exclude deferred tax
provisions arising on valuation surpluses for all investment
properties in determining Adjusted NAV per share as the Group's
exit from its investment in the Indian SPVs holding the Company's
projects is not expected to entail the sale of development
properties, which would trigger the crystallisation of the deferred
tax provision. There have been judicial rulings in India that have
upheld the requirement that acquirers of controlling stakes in
Indian companies should withhold Indian tax from consideration
payable to overseas sellers. These judicial developments are
considered inconclusive about the ultimate Indian tax liability of
the overseas sellers on gains from the divestment of controlling
stakes in Indian companies, and also about their applicability to
the divestment by overseas sellers of minority stakes in Indian
companies. Given these uncertainties, the Board considered it
premature to include any provision in respect of deferred tax
provisions arising on valuation surpluses, in determining Adjusted
NAV per share.
Project Progress
The Company continued the steady development of projects
currently under construction. Having pre-let a substantial portion
of the area under construction at its Mindspace project in Airoli,
Navi Mumbai, the Company has commenced construction of a further
c.0.7 million sq. ft. Of the c.21.4 million sq. ft. of aggregate
planned development, c.6 million sq. ft. is now completed and c.5
million sq. ft. is under construction.
In March 2011, the Company launched its second mall at Pune.
Inorbit, Pune is now operational with 345,000 sq. ft. of space
trading, representing c.63 per cent. of the retail space at this
project. With this, the Company has c.1.3 million sq. ft. of
operational retail space in the portfolio.
Details of the area constructed or under construction:
Area Total
constructed Area for planned
Area Area under and under future development
constructed construction construction development (sq. ft.)
(sq. ft.) (sq. ft.) (sq. ft.) (c (sq. ft.) (e = c +
Project (a) (b) = a + b) (d) d)
============= ============ ============= ============= ============ ============
Mindspace,
Airoli,
Navi
Mumbai 1,654,000 2,203,000 3,857,000 559,000 4,416,000
============= ============ ============= ============= ============ ============
Mindspace,
Pocharam 336,000 - 336,000 1,734,000 2,070,000
============= ============ ============= ============= ============ ============
Mindspace,
Madhapur
(SEZ) 1,113,000 1,704,000 2,817,000 1,998,000 4,815,000
============= ============ ============= ============= ============ ============
Mindspace,
Madhapur
(non-SEZ) 1,700,000 - 1,700,000 - 1,700,000
============= ============ ============= ============= ============ ============
Mindspace,
Juinagar,
Navi
Mumbai - - - 4,500,000 4,500,000
============= ============ ============= ============= ============ ============
Inorbit,
Hyderabad 780,000 - 780,000 322,000 1,102,000
============= ============ ============= ============= ============ ============
Inorbit,
Pune 546,000 - 546,000 195,000 741,000
============= ============ ============= ============= ============ ============
Commerzone,
Bangalore
** - 369,000 369,000 195,000 564,000
============= ============ ============= ============= ============ ============
Total
lettable
area 6,129,000 4,276,000 10,405,000 9,503,000 19,908,000
============= ============ ============= ============= ============ ============
Commerzone,
Bangalore
*** - 360,000 360,000 287,000 647,000
============= ============ ============= ============= ============ ============
Vivarea,
Mumbai - 620,000 620,000 240,000 860,000
============= ============ ============= ============= ============ ============
Total
planned
development 6,129,000 5,256,000 11,385,000 10,030,000 21,415,000
============= ============ ============= ============= ============ ============
Areas reported above are chargeable / saleable areas.
**Area under construction comprises retail space and future
development comprises commercial space.
*** Area under construction comprises hotel development and
future development comprises serviced apartments.
Demand pick-up for commercial space has continued in selective
locations. Rentals are stabilising in most markets although have
not fully recovered. In the residential market, sales volumes
remain under pressure in the Mumbai market following the surge in
property prices and rise in interest rates.
Since the interim results announcement on 10 December 2010,
additional space of c.975,000 sq. ft. (including c.32,000 sq. ft.
previously under option) has been let or had terms agreed across
the following projects in the portfolio:
-- c.434,000 sq. ft. at Mindspace, Airoli, Navi Mumbai
-- c.443,000 sq. ft. at Mindspace, Madhapur, Hyderabad SEZ and
non-SEZ
-- c.98,000 sq. ft. at Inorbit Malls, Pune and Bangalore
Separately, c.65,000 sq. ft. which was under offer at Mindspace,
Airoli, Navi Mumbai; Mindspace, Madhapur, Hyderabad (non-SEZ) and
Inorbit Malls, Hyderabad & Bangalore has been given up and
c.164,000 sq. ft. of space which was under offer at Mindspace,
Madhapur, Hyderabad (SEZ) has now been converted to space under
option.
With this, a net addition of c.746,000 sq. ft. has been made to
the area let or under terms agreed since the interim results
announcement on 10 December 2010. Consequently, the total area let
or under terms agreed in the portfolio has increased to c.6.9
million sq. ft., representing c.66 per cent. of the lettable area
currently under construction and c.35 per cent. of the aggregate
lettable area of the portfolio.
At 31 March 2011, revenue is being received on c.4.4 million sq.
ft. of the portfolio. Annualised rent from this area is estimated
at c.GBP26 million (being used primarily to repay principal and
interest on borrowings), and a further c.1 million sq. ft. is
expected to become income producing during the financial year
2011-12.
Updated levels of letting activity in the Company's
portfolio:
Aggregate
area Lettable % of Area
(Area let area lettable yielding
and Terms constructed area rent as
Terms Agreed) or under constructed at 31
Area let agreed (sq. ft.) construction or under March
(sq. ft.) (sq. ft.) (c)= (sq. ft.) construction 2011 (sq.
Project (a) (b) (a+b) (d) (c)/(d) ft.)
============= ========== ========== ========== ============= ============= ==========
Mindspace,
Airoli,
Navi
Mumbai 811,000 2,009,000 2,820,000 3,857,000 73% 1,515,000
============= ========== ========== ========== ============= ============= ==========
Mindspace,
Pocharam 26,000 - 26,000 336,000 8% 26,000
============= ========== ========== ========== ============= ============= ==========
Mindspace,
Madhapur
(SEZ) 665,000 417,000 1,082,000 2,817,000 38% 650,000
============= ========== ========== ========== ============= ============= ==========
Mindspace,
Madhapur
(non-SEZ) 1,657,000 2,000 1,659,000 1,700,000 98% 1,610,000
============= ========== ========== ========== ============= ============= ==========
Inorbit,
Hyderabad 687,000 - 687,000 780,000 88% 619,000
============= ========== ========== ========== ============= ============= ==========
Inorbit,
Pune 450,000 40,000 490,000 546,000 90% -
============= ========== ========== ========== ============= ============= ==========
Commerzone,
Bangalore - 148,000 148,000 369,000 40% -
============= ========== ========== ========== ============= ============= ==========
Total 4,296,000 2,616,000 6,912,000 10,405,000 66% 4,420,000
============= ========== ========== ========== ============= ============= ==========
In addition to the above area let or with terms agreed,
c.1,479,000 sq. ft. is under option / ROFRs. These options / ROFRs
are due to be exercised over the next 1-2 years.
Area under
option / ROFR
Project (sq. ft.)
=========================== ===============
Mindspace, Airoli, Navi
Mumbai 857,000
=========================== ===============
Mindspace, Madhapur (SEZ) 622,000
=========================== ===============
Total 1,479,000
=========================== ===============
In the residential market, a rise in prices and interest rates
has led to a slowdown in volumes in the Mumbai market. Sales at
Vivarea, the premium residential project in Central Mumbai, have
moderated with only an additional c.14,000 sq. ft. being pre-sold
since December 2010. As a result, an aggregate of c.483,000 sq. ft.
has been pre-sold at this project, representing c.78 per cent. of
the saleable residential area currently under construction.
To optimise the development at Juinagar, Navi Mumbai and the
commercial space at Inorbit, Pune, the Company is contemplating
revision to the developments which could entail reduction of the
development area at these projects by half. This is expected to
reduce disproportionately the overall development cost and bring
forward the estimated project completion.
Impact of levy of MAT on SEZs
In the Union Budget of 2011, the finance minister proposed to
levy Minimum Alternate Tax (MAT) on Special Economic Zones (SEZs)
with effect from 1 April 2012. The Budget has also proposed to
impose Dividend Distribution Tax (DDT) on SEZ developers. Further,
the Software Technology Parks of India (STPI) scheme which provided
tax concessions to tenants under the scheme has not been
extended.
Impact: Removal of tax concessions available to the SEZs, by
imposition of MAT and DDT on SEZs, will dilute the benefits of
SEZs. While the levy of MAT on IT/ITES SEZs reduces the tax
concessions available to tenants, with the budget not extending the
STPI scheme benefits beyond March 2011, the IT/ITES SEZs still
offer tenants income tax and indirect tax advantage over STPI
units.
The Company's SEZ projects in Navi Mumbai and Madhapur,
Hyderabad have seen demand increase over the last year. Levy of MAT
on SEZs could however impact the demand for commercial space at
those projects.
Cost & Financing
The Indian SPVs remain well funded to meet the development
requirements of the area currently under construction. Against the
estimated cost of c.INR 34.3 billion (c.GBP476 million) for the
area currently under development (excluding Vivarea, which will be
self-funded), the SPVs have secured funding of c.INR 32.4 billion
(c.GBP450 million) comprising:
-- shareholders equity of c.INR 4.2 billion (c.GBP59
million),
-- debt facilities of c.INR 26.3 billion (c.GBP365 million)
and
-- security deposits received/receivable on the lettable area
constructed or currently under construction of c.INR 1.9 billion
(c.GBP26 million).
Of this estimated project cost of c. INR 34.3 billion (c.GBP476
million), c.INR 24.2 billion (c.GBP 337 million) has been incurred
up to 31 March 2011. The Indian SPVs had drawndown debt of c.INR
17.1 billion (c.GBP238 million) at 31 March 2011. Unutilised
facilities stand at c.INR 9.2 billion (c.GBP127 million). In
addition, c.78 per cent. of the saleable residentail area under
construction at Vivarea is pre-sold, which will fund the cost of
construction of this project.
Debt facilities of c.INR 26.3 billion (c.GBP365 million) include
long term amortizing loans of c.INR 19.0 billion (c.GBP264
million). The balance of the debt facililities of c.INR 7.3 billion
(c.GBP101 million) is construction debt. It should be noted that
all borrowings are at variable interest rates.
Debt Maturity Profile :
INR bn GBP Mn
================================================ ======== ========
Long term amortizing loans 19.0 264
================================================ ======== ========
Other Construction debt (All repayable beyond
March 2012) 7.3 101
================================================ ======== ========
TOTAL 26.3 365
================================================ ======== ========
Having largely secured funding for the area currently under
development, the Company is confident of meeting its future
development requirements through further debt financing.
With the Reserve Bank of India tightening policy rates (repo
rates), the interest rates on the funding secured by the Indian
SPVs have increased by c.200-300 bps. The current cost of borrowing
of the Indian SPVs is c.12-13 per cent. p.a. Banks continue to
observe caution in lending to the real estate sector.
Dividend
In accordance with the dividend policy set out in the IPO
document, which stated that it was not anticipated that dividends
would be paid in the foreseeable future while projects remain in a
highly capital intensive stage, the Board is not declaring a
dividend for the year ended 31 March 2011. The Board will consider
payment of dividends when it becomes commercially prudent to do
so.
The Hyderabad Market
The state of Andhra Pradesh witnessed social and political
unrest over the last year as a result of the Telangana movement
which is aimed at the creation of a separate state for the
Telangana region (currently a part of the state of Andhra Pradesh
and which includes the Hyderabad district). While the demand for a
separate state has been long standing, it has gathered momentum
since December 2009. The Central Government appointed a judicial
Commission last year to look into the merits and demerits of a
separate state. The Commission has submitted its report to the
Central Government suggesting various options including maintaining
status quo or splitting.
The prevailing political uncertainty has made corporates and
investors cautious about their investments and business plans in
the state. While Hyderabad continues to be an important IT hub, the
political events have tempered the scale of investments. Despite
this, during last the 12-18 months, the Company has witnessed a
good pickup in the commercial leasing at its Mindspace, Madhapur,
Hyderabad SEZ and Non-SEZ projects. Since December 2009, c.1.4
million sq. ft. has been let at these projects with tenants like
Facebook, United Health Group and JP Morgan. The Company remains
cautiously optimistic that demand will be sustained going
forward.
Outlook
In India, the Reserve Bank of India has continued with policy
measures to contain the continuing problem of inflation. Since
March 2010, the Reserve Bank of India has increased the repo rates
from 5.25 per cent. to 7.5 per cent. and reverse repo rates from
3.75 per cent. to 6.5 per cent. The increase in rates has led to
hardening of interest costs. The Reserve Bank of India is expected
to pursue further monetary tightening in the near term.
Further in India, monetary tightening, rising borrowing rates
and high global commodity prices have kept investment activity
across sectors including real estate subdued. Political issues at
the national and state level that have surfaced recently have
slowed down the grant of approvals process for investment by
government agencies, which in turn has discouraged the level of
investment activity. Consumption, however, remains robust and has
aided the strong Indian GDP growth.
The real estate sector in India has witnessed improvement in
demand for commercial space in selective locations. Supply however
continues to outstrip demand although the gap is expected to narrow
in the medium term. The retail market has now gathered momentum
driven by consumption led economic growth. Retailers are expanding
and with more international retailers planning to expand into
India, demand for high quality retail space looks positive. The
residential market is expected to remain under pressure in the
Mumbai market for the time being. Economic growth and rapid
urbanisation are however expected to drive residential growth in
the long run.
Our strategy now is focused on returning capital to shareholders
albeit a little later than envisaged at the time of the IPO on
account of the uncertain market conditions and relatively nascent
market for yielding assets in India. The Company, however, remains
confident in its ability to continue the progress made on the
development of its high quality assets and when market conditions
allow, to realise cash for shareholders through the disposal of
assets.
Ian Henderson
Chairman
Our Portfolio
Ishaan's portfolio comprises nine projects across commercial,
residential, hospitality and retail markets located primarily in or
around the Indian cities of Mumbai, Hyderabad, Bangalore and Pune.
The nine projects in the portfolio have an aggregate planned area
of c.21 million sq. ft.
Area
mn sq.
ft. Estimated
Projects Type SPV ** completion
------------------------- ------------- ---------- -------- --------------
Mindspace, Airoli, Navi
Mumbai IT SEZ Serene 4.42 Q3 2013
------------------------- ------------- ---------- -------- --------------
Mindspace, Pocharam, Q3 2016
Hyderabad IT SEZ Serene 2.07 ^
------------------------- ------------- ---------- -------- --------------
Mindspace, Madhapur, IT SEZ
Hyderabad (SEZ) / IT Park Sundew 4.81 Q3 2014
------------------------- ------------- ---------- -------- --------------
Mindspace, Madhapur,
Hyderabad (Non-SEZ) IT Park Intime 1.70 Completed
------------------------- ------------- ---------- -------- --------------
Primarily
Inorbit, Hyderabad Retail Trion
------------------------- ------------- ---------- -------- --------------
- Mall 0.78 Completed
------------------------- ------------- ---------- -------- --------------
- Commercial 0.32 On Hold
------------------------- ------------- ---------- -------- --------------
Primarily
Inorbit, Pune Retail Trion
------------------------- ------------- ---------- -------- --------------
Substantially
- Mall 0.55 Complete
------------------------- ------------- ---------- -------- --------------
- Commercial 0.19 On Hold
------------------------- ------------- ---------- -------- --------------
Vivarea, Mumbai Residential Genext
------------------------- ------------- ---------- -------- --------------
- Residential 0.62 Q1 2012
------------------------- ------------- ---------- -------- --------------
- Commercial (Planned
for conversion to
Residential) 0.24 Q3 2014
------------------------- ------------- ---------- -------- --------------
Mixed
Commerzone, Bangalore Use Magna
------------------------- ------------- ---------- -------- --------------
- Hotel 0.36 Q1 2012
------------------------- ------------- ---------- -------- --------------
- Retail 0.37 Q3 2011
------------------------- ------------- ---------- -------- --------------
- Commercial 0.19 On Hold
------------------------- ------------- ---------- -------- --------------
- Serviced Apartments 0.29 On Hold
------------------------- ------------- ---------- -------- --------------
Mindspace, Juinagar, Q1 2015
Navi Mumbai IT SEZ Newfound 4.50 ^
------------------------- ------------- ---------- -------- --------------
TOTAL 21.41
-------------------------------------------------- -------- --------------
^ Currently on hold.
** Areas reported above are chargeable / saleable areas.
Project details:
Mindspace, Airoli, Navi Mumbai
This IT SEZ project is located in a satellite city of Mumbai,
approximately 35 kilometres from central Mumbai. It benefits from
well-planned modern infrastructure, good connectivity and a large
pool of educated manpower. The project is strategically located to
become the commercial hub of the rapidly growing city of Navi
Mumbai with close proximity to residential areas and is situated
opposite Airoli Railway station and easily accessible from
catchment areas like Vashi, Panvel, Chembur and Vikhroli. With the
increasing presence of IT/ITES companies, Airoli has become one of
a number of rapidly growing destinations in Navi Mumbai.
The project involves development of 4.4 million sq. ft. and is
due for completion in Q3 2013. Five buildings with aggregate area
of c.1.7 million sq. ft. are operational. Construction work is
ongoing on another five buildings with area of c.2.2 million sq.
ft.
Since the announcement of interim results on 10 December 2010,
terms have been agreed with multinational and IT/ITES companies for
a net area of c.402,000 sq. ft. (including 17,000 sq. ft.
previously under option). As a result, the total area let or terms
agreed at this project is c.2.8 million sq. ft., representing c.73
per cent. of the area currently under development. As at 31 March
2011 rent has commenced from c.1.5 million sq. ft. In addition,
c.857,000 sq. ft. is under option / ROFR at this project.
Area sq. ft.
---------------------------------------------- -----------------
Area let 811,000
---------------------------------------------- -----------------
Terms agreed 2,009,000
---------------------------------------------- -----------------
Aggregate area let / terms agreed (a) 2,820,000
---------------------------------------------- -----------------
Area constructed or under construction (b) 3,857,000
---------------------------------------------- -----------------
Letting as a % of area constructed or under
construction (a/b) 73%
---------------------------------------------- -----------------
Area under option /ROFR 857,000
---------------------------------------------- -----------------
Area generating rent as at 31 March 2011 1,515,000
---------------------------------------------- -----------------
Area for future development 559,000
---------------------------------------------- -----------------
Tenants include Capgemini, Wipro,
Syntel
---------------------------------------------- -----------------
Mindspace, Pocharam, Hyderabad
This IT SEZ is located in an upcoming nucleus of development
with infrastructure well-suited to IT/ITES industries. With an
existing residential catchment area and a number of colleges and
universities in the vicinity, this SEZ is expected to lead to the
geographical diversification of development to East Hyderabad in
the medium term. Pocharam is easily accessible by road and
increased transport infrastructure is being planned around this
site. The proposed metro rail is expected to run close by and the
proposed Hyderabad outer ring road is planned to pass 2 kilometres
from the project. The new international airport will be easily
accessible via the outer ring road.
The project entails development of c.2.07 million sq. ft. IT
SEZ. One building has been constructed and has been partially
occupied by a tenant. Super structure work is partly completed on
another building. The area let at this project stands at 26,000 sq.
ft.
Area sq. ft.
---------------------------------------------------- ------------
Area let (a) 26,000
-------------------------------------------- ------ ------------
Area under construction (b) 336,000
-------------------------------------------- ------ ------------
Letting as a % of area under construction (a/b) 8%
-------------------------------------------- ------ ------------
Area generating rent as at 31 March 2011 26,000
---------------------------------------------------- ------------
Area for future development 1,734,000
---------------------------------------------------- ------------
Tenant Inventurus
---------------------------------------------------- ------------
Mindspace, Madhapur, Hyderabad (SEZ Development)
This IT SEZ is located in the hub of the technology industry's
development in Hyderabad, one of the largest cities in India.
Equipped with excellent telecom infrastructure, well developed
civic infrastructure and huge potential for trained manpower,
Hyderabad has become an attractive choice for global IT/ITES
companies. The project involves the development of an IT SEZ next
to the existing Mindspace development. The project is well
connected by road and transportation networks and is strategically
located.
This project totals approximately 4.8 million sq. ft. of planned
development. Construction is completed on two of the buildings
aggregating c.1.1 million sq. ft., and two other buildings
aggregating c.1.7 million sq. ft. are currently under
construction.
Since the interim results announcement on 10 December 2010, net
additional area of c.267,000 sq. ft. has been let or terms agreed.
The aggregate area let or terms agreed at this project is now c.1.1
million sq. ft. representing c.38 per cent of the area constructed
or currently under construction. As at 31 March 2011 rent has
commenced from an area of c.650,000 sq. ft. In addition, c.622,000
sq. ft. is under option at this project.
Area sq. ft.
------------------------------------------------- --------------------------
Area let 665,000
------------------------------------------------- --------------------------
Terms agreed 417,000
------------------------------------------------- --------------------------
Aggregate area let / terms agreed (a) 1,082,000
----------------------------------------- ------ --------------------------
Area constructed or under construction (b) 2,817,000
----------------------------------------- ------ --------------------------
Letting as a % of area constructed or
under construction (a/b) 38%
----------------------------------------- ------ --------------------------
Area under option /ROFR 622,000
------------------------------------------------- --------------------------
Area generating rent as at 31 March 2011 650,000
------------------------------------------------- --------------------------
Area for future development 1,998,000
------------------------------------------------- --------------------------
Tenants include JP Morgan, Vignette,Verity
------------------------------------------------- --------------------------
Mindspace, Madhapur, Hyderabad (Non-SEZ Development)
This IT Park (Non-SEZ) is located within the existing Mindspace
development. The completed development of c.1.7 million sq. ft.
comprises three office buildings which are complete and
operational. The area let or terms agreed at this project is
c.1,659,000 sq. ft. representing c.98 per cent. of the project
area. As at 31 March 2011, rent has commenced from an area of c.1.6
million sq. ft. at this project.
Area sq. ft.
---------------------------------------------- ------------------
Area let 1,657,000
---------------------------------------------- ------------------
Terms agreed 2,000
---------------------------------------------- ------------------
Aggregate area let / terms agreed (a) 1,659,000
-------------------------------------- ------ ------------------
Project area (b) 1,700,000
-------------------------------------- ------ ------------------
Letting as a % of project area (a/b) 98%
-------------------------------------- ------ ------------------
Area generating rent as at 31 March 2011 1,610,000
---------------------------------------------- ------------------
Tenants include Bank of America,
Novartis, Amazon,
HSBC
---------------------------------------------- ------------------
Inorbit, Madhapur, Hyderabad
The project is primarily a retail development adjacent to the
existing Mindspace development in Madhapur, Hyderabad. Designed by
the world's largest retail design firm "Callison", USA, it is a
part of the IT city, situated approximately 15-20 kilometres from
the city centre.
The project consists of the development of a c.780,000 sq. ft.
shopping centre (launched in October 2009), c.322,000 sq. ft. of
commercial space and 1,000 car parking spaces, aggregating c.1.1
million sq. ft. of planned development.
Aggregate area let and terms agreed at this project is c.687,000
sq. ft. representing c.88 per cent. of the retail space. c.83 per
cent. of the retail area is trading.
Service work at the multiplex and entertainment area is in
progress. Super structure work at the IT space which is partially
complete is currently on hold. Further development will commence
only when the Company is confident of achieving a satisfactory
level of pre-letting.
Area sq. ft.
---------------------------------------------- -------------------
Area let 687,000
---------------------------------------------- -------------------
Terms agreed -
---------------------------------------------- -------------------
Aggregate area let / terms agreed (a) 687,000
-------------------------------------- ------ -------------------
Project Area (Retail space) (b) 780,000
-------------------------------------- ------ -------------------
Letting as a % of project area (a/b) 88%
-------------------------------------- ------ -------------------
Area generating rent as at 31 March 2011 619,000
---------------------------------------------- -------------------
Area for future development (Commercial
space) 322,000
---------------------------------------------- -------------------
Tenants include Hypercity, Shoppers
Stop, Lifestyle,
Marks & Spencer
---------------------------------------------- -------------------
Inorbit, Pune
The city's well-developed infrastructure, expressway connection
to Mumbai (located just two hours away), and large industrial areas
situated in the vicinity, make Pune an attractive location for a
range of companies including IT, ITES, BPO companies. This mixed
use development consists of plans to develop a c.546,000 sq. ft.
shopping centre which was opened in March 2011 and c.195,000 sq.
ft. commercial space, currently on hold.
The mall is now open with most anchor tenants and few retailers
trading, representing c.63 per cent. of the retail space.
Since the last results announcement, terms have been agreed for
an additional c.97,000 sq. ft. The aggregate area let or terms
agreed now stands at c.490,000 sq. ft. representing c.90 per cent.
of retail space at the project.
Area sq. ft.
--------------------------------------------- --------------------
Area let 450,000
--------------------------------------------- --------------------
Terms agreed 40,000
--------------------------------------------- --------------------
Aggregate area let / terms
agreed (a) 490,000
------------------------------------ ------- --------------------
Project Area (Retail space) (b) 546,000
------------------------------------ ------- --------------------
Letting as a % of project
area (a/b) 90%
------------------------------------ ------- --------------------
Area for future development (Commercial
space) 195,000
--------------------------------------------- --------------------
Tenants include Spar, Shoppers Stop,
Lifestyle
--------------------------------------------- --------------------
Vivarea, Mumbai
The project is located in Mahalaxmi, Central Mumbai. The
buildings under construction will overlook Mahalaxmi Race Course
and the sea. This premium residential development of approximately
1.5 million sq. ft. comprises four residential towers.
The civil structure is complete at three of the residential
towers, with finishes and interior work in progress. Work on the
three towers is estimated to complete by Q1 2012 as against Q3 2011
announced previously. Certain approvals for the fourth tower are
awaited. Construction will commence after the approvals are
received.
Since the interim results announcement on 10 December 2010,
c.14,000 sq. ft. of residential space has been pre-sold at Vivarea,
Mumbai. With this, a total of c.483,000 sq. ft. has been pre-sold
at this project, representing c. 78 per cent. of the residential
space currently available for sale, at prices higher than those
estimated at the time of IPO.
Commerzone Bangalore
This project is located in Whitefield, Bangalore, known as the
Silicon Valley of India. Bangalore is one of the fastest growing
cities of India and a key location for the IT industry.
The project is designed by Smallwood, Reynolds, Stewart &
Stewart, and involves the development of a hotel, retail, serviced
apartments and an IT Park with an aggregate planned development of
c.1.2 million sq. ft.
Super-structure work is nearing completion at the Hotel and
Retail site and internal masonry work is in progress. Agreement has
been signed with Marriott International for the management of the
hotel. Development of the serviced apartments and commercial space
is currently on hold and will be considered only when the Company
is convinced there is sufficient potential demand.
Terms have been agreed for c.148,000 sq. ft. of retail space,
representing c.40 per cent. of the retail space of this
project.
Area sq. ft.
---------------------------------------------- ------------
Terms agreed (a) 148,000
-------------------------------------- ------ ------------
Area under construction
---------------------------------------------- ------------
- Retail (b) 369,000
-------------------------------------- ------ ------------
- Hotel 360,000
---------------------------------------------- ------------
Letting as a % of retail area under
construction (a/b) 40%
-------------------------------------- ------ ------------
Area for future development * 482,000
---------------------------------------------- ------------
* Comprises development of commercial and serviced
apartments.
Sustainable Development
Mindspace, Juinagar, Navi Mumbai
This IT SEZ is located in an area undergoing significant
regeneration, and is close to existing and planned transport
systems, the city centre of Navi Mumbai and large residential
areas. The project is also in close proximity to the proposed Navi
Mumbai International airport.
The project is a c.4.5 million sq. ft. SEZ development.
Provisionally scheduled for completion in the first quarter of
2015, foundation work has been completed on three buildings.
To optimise the development at this project, the Company is
contemplating revision to the current development which could
entail reduction of the existing development area by half. This is
expected to reduce disproportionately the overall development cost
and advance project completion.
Report of the Directors
The Directors hereby submit their annual report together with
the audited financial statements of Ishaan Real Estate Plc (the
"Company") and the financial statements of the Company and its
subsidiaries (together the "Group") for the financial year ended 31
March 2011.
The Company
The Company was incorporated in the Isle of Man and its
principal activity is that of a holding company. It is the ultimate
parent company of the Group, comprising the Company and the
subsidiaries listed in note 12. The Company was established to
acquire interests in foreign direct investment eligible Indian real
estate development projects, with a focus on IT park development
and Special Economic Zones located in southern and western India.
The Company will also invest in other real estate asset types
including, but not limited to commercial, hospitality, retail and
residential development projects.
Business Review and Future Developments
A review of the business is presented in the Chairman's
Statement on pages 4 to 9. Consideration is also given in the
Chairman's Statement to the future developments of the Company.
Results and Dividends
The results and financial position of the Group and the Company
at the year-end are set out on pages 22 to 27 of the financial
statements. The Group made a loss for the year after taxation
amounting to GBP4.936 million (2010: loss of GBP7.294 million) and
this amount has been taken to reserves.
The Directors do not intend to pay dividends unless the Group
has generated profits and such profits have been remitted to and
realised by the Company. The Directors do not therefore intend to
declare a dividend at this time.
Directors
The Directors who held office during the year and up to the date
of this Report were:
Names Date appointed
Ian James Henderson (Chairman) 31-Oct-06
Rajendra Prabhakar Chitale 31-Oct-06
Neel Chandru Raheja 31-Oct-06
Timothy Graham Walker 31-Oct-06
Vittorio Radice 31-Oct-06
Stephen John Roland Vernon 01-Aug-07
Anne Elizabeth Couper Woods 28-Oct-10
At each annual general meeting one third of the Directors for
the time being (or, if their number is not a multiple of three, the
number nearest to but not greater than one third) shall retire from
office by rotation. The retiring Directors shall be eligible for
re-election. No Director shall be required to retire and no person
shall be incapable of being appointed or re-appointed a Director by
reason of having attained the age of seventy or any other age.
Details of Interests
Neel Raheja is a shareholder and director of various K. Raheja
Corp entities. These include Trion Properties Private Limited,
Serene Properties Private Limited, Genext Hardware and Parks
Private Limited, Sundew Properties Private Limited, Intime
Properties Private Limited and Newfound Properties and Leasing
Private Limited ("the Indian Investment Vehicles") which have
issued shares to the Mauritian Subsidiaries and K Raheja Corporate
Services Private Limited which is contracted to provide services to
the Indian Investment Vehicles.
The amount charged to the Indian Investment Vehicles by K Raheja
Corporate Services Private Limited during the year was GBP2.881
million (2010: GBP2.132million) and other amounts paid to other K
Raheja Corp entities were GBP0.037 million (2010: GBP0.119
million). As at 31 March 2011, the amounts of loan receivable by
associate companies from K Raheja Corp entities totaled GBP90.585
million. The loans were interest bearing and as at 31 March 2011
interest owing totaled GBP9.916 million. In addition, the associate
companies had loan balances owing to K Raheja Corp entities as at
31 March 2011 of GBP36.446 million and interest payable in relation
to these loans of GBP3.355 million.
The amount paid to K Raheja Corp Private Limited during the year
was GBP8.513 million (2010: GBP8.722 million) towards deferred
consideration for transfer of development rights for a project
developed by one of the Indian Investment Vehicles.
Neel Raheja indirectly co-owns the Investment Adviser - Neerav
Investment Advisory Services (Dubai) Limited. As at 31 March 2011,
Neerav Investment Advisory Services (Cyprus) Private Limited, the
parent company of the investment adviser, held 6,643,811 shares of
the Company (2010: 6,643,811 shares).
During the year Chitale & Associates, in which Rajendra
Chitale is a Partner, received fees of GBP 13,319 for providing
professional services to the Company (2010: Nil).
Options have been granted for nil consideration over Ordinary
Shares of GBP0.01 each as follows:-
No of Ordinary
Shares under Exercise
Name Option Grant date Exercise Period Price
7 years from
Ian Henderson 300,000 20/11/2006 20/11/09 GBP1
7 years from
Vittorio Radice 90,000 20/11/2006 20/11/09 GBP1
In addition, the following Directors, on each anniversary date
of their effective date of appointment, are entitled to share
options over the number of ordinary shares calculated in accordance
with the formula stated in their letters of appointment. The value
of the share options to be granted is stated against their names
below:-
Name Value of options Effective date
GBP of appointment
Ian Henderson* 40,000 7 November 2006
Vittorio Radice 30,000 7 November 2006
Stephen Vernon 30,000 1 August 2007
*From 7 November 2009, Ian Henderson had opted to receive 60% of
his annual remuneration of GBP100,000 in cash and the balance 40%
in share options, instead of the earlier 100% in share options.
Ian Henderson, Vittorio Radice and Stephen Vernon are entitled
to the grant of share options for the financial year ended 31 March
2011. The value of the share options has been provided for in the
financial statements. The grants of options to the directors are as
follows:
31 March 2011 31 March 2010
Average
No. of price per No. of Average price
ordinary share ordinary per share
Name shares (pence) shares (pence)
Ian Henderson 64,381 62.13 283,849 35.23
Vittorio
Radice 48,285 62.13 85,155 35.23
Stephen Vernon 53,629 55.94 73,891 40.60
The Board at its meetings held on 10 September 2010, 23 February
2011 and 23 March 2011 approved the grant of share options for the
year 2010 and the shares were issued on 16 September 2010, 11 March
2011 and 31 March 2011 to the directors.
Details of the terms attaching to the share options are set out
in note 23.
The interests of the Directors in the share capital of the
Company as at 31 March 2011 are set out below:-
No. of Ordinary
Name Shares
Ian Henderson 780,655
Vittorio Radice 447,180
Tim Walker 25,000
Stephen Vernon 457,884
In addition to the above, Neel Raheja indirectly co-owns Neerav
Investment Advisory Services (Cyprus) Private Limited, the parent
company of the investment adviser, which held 6,643,811 shares of
the Company (2010: 6,643,811 shares).
The mid market price of each ordinary share as at 31 March 2011
was GBP0.5838 (2010: GBP0.6425) and the range during the year was
GBP0.5838 to GBP0.700 (2010: GBP0.225 to GBP0.685).
Save as disclosed above, none of the Directors had any interest
during the year in any material contract for the provision of
services which was significant to the business of the Company.
Substantial Shareholdings
As at 29 April 2011, the Board had been notified, or was
otherwise aware of, the following shareholdings exceeding 3% and
over of the issued share capital:
No. of Ordinary % of Issued Share
Name Shares Capital
Lone Pine Capital, L.L.C. 56,632,342 38.87
QVT Financial LP 13,985,309 9.60
Franklin Resources, Inc. 13,277,799 9.11
J.P. Morgan (Suisse) S.A 12,196,150 8.37
Morgan Stanley (Market Maker) 7,329,885 5.03
Neerav Investment Advisory
Services (Cyprus) Private Limited 6,643,811 4.56
Credit Suisse Group 5,174,000 3.55
Lombard Odier Darier Hentsch
& Cie 4,854,621 3.33
Independent Auditors
KPMG Audit LLC have expressed their willingness to continue in
office in accordance with Section 12 (2) of the IOM Companies Act,
1982.
Corporate Governance
Whilst the combined code issued by the Financial Reporting
Council does not apply to AIM companies, the directors consider
corporate governance to be an important area and accordingly have
provided the disclosure below to outline how the governance of the
Group is conducted.
Board of Directors
The Company has an experienced Board which currently comprises a
non-executive Chairman and six other non-executive Directors.
The Board meets regularly and is provided with relevant
information on financial, business and corporate matters prior to
meetings. The Directors are responsible for the determination and
implementation of the Group's investment strategy and have overall
responsibility for the Group's activities, including the review of
the Group's investment activities and performance.
Audit Committee
The Board appointed an Audit Committee on 16 February 2010. The
Audit Committee reports to the Board. The Audit Committee has
primary responsibility for the integrity of the financial
statements and related matters, the performance of the external
auditors and audit process, assessing the effectiveness of the
internal control environment, compliance with the applicable legal
and regulatory requirements and any matters where there is a
conflict of interest with the Investment Adviser. The Audit
Committee makes recommendations to the Board. Where necessary the
Audit Committee will obtain specialist advice from either its
auditors or other advisors.
The terms of reference of the Audit Committee covers the
following:
-- The composition of the Committee, quorum and frequency of
meetings.
-- Reporting responsibility of the Committee to the Board and
its authority.
-- Duties in relation to financial reporting, including related
compliance with statutory and Stock Exchange requirements and other
announcements.
-- Duties in relation to the external auditors and
-- Duties in relation to internal controls, conflict of interest
and compliance to legal and statutory requirements.
Remuneration and Nomination Committees
The Company does not intend to establish Remuneration and
Nomination Committees as such committees would not be appropriate
given the nature of the Company's operations. The Board will review
annually the remuneration of the Directors and agree the level of
non-executive fees. Consideration will be given by the Board to
future succession plans for Board members as well as consideration
as to whether the Board has the skills required to effectively
manage the Company. The Company will take all reasonable steps to
ensure compliance by the Directors and any employees with the
provisions of the AIM Rules relating to dealings in securities of
the Company and has adopted a share dealing code for this
purpose.
Investment Committee
The Company has an Investment Committee consisting of the
Directors of the Company's intermediate holding company, I Holding
Company (Mauritius) Ltd, which will review any recommendations for
acquisitions or divestments received from the Investment
Adviser.
Internal Control
The Audit Committee undertakes the review of the internal
controls of the Company, which includes assessing the effectiveness
of the audit and internal control environment. Where necessary the
Audit Committee obtains specialist advice from either its auditors
or other advisers. On 1 December 2006 Morefield Financial
Consultants Limited were appointed as consultants to provide the
Company with non-binding advice and services on financial issues,
such as accounting procedures, management accounts, cash flow in
relation to the Company's property portfolio and to perform such
other similar services. In addition Simcocks Trust Limited were
appointed to provide administration, registrar and accounting
services to the Company, such services being controlled by their
own internal procedures.
There are inherent limitations in any system of internal control
and such a system can provide only reasonable, but not absolute,
assurances against material misstatement or loss. The Company does
not have its own internal audit function but places reliance on
compliance and other control functions of its service
providers.
By Order of the Board
Ian Henderson
Chairman Date: 28 June 2011
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Directors'
Report and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year, which meet the requirements of
Isle of Man company law. In addition, the Directors have elected to
prepare the financial statements in accordance with International
Financial Reporting Standards.
The financial statements are required by law to give a true and
fair view of the state of affairs of the Group and the Parent
Company and of the profit or loss for that period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply them
consistently;
-- make judgments and estimates that are reasonable and
prudent;
-- state whether they have been prepared in accordance with
International Financial Reporting Standards; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Parent
Company will continue in business.
The Directors are responsible for keeping proper accounting
records that are sufficient to show and explain the Parent
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Parent Company and to enable
them to ensure that its financial statements comply with the
Companies Acts 1931 to 2004. They have general responsibility for
taking such steps as are reasonably open to them to safeguard the
assets of the Group and to prevent and detect fraud and other
irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation governing the preparation and
dissemination of financial statements may differ from one
jurisdiction to another.
Report of the Independent Auditors, KPMG Audit LLC, to the
members of Ishaan Real Estate Plc
We have audited the financial statements of Ishaan Real Estate
plc for the year ended 31 March 2011 which comprise the Group and
Parent Company Statements of Comprehensive Income, the Group and
Parent Company Statements of Financial Position, the Group and
Parent Company Statements of Cash Flows and the Group and Parent
Company Statements of Changes in Equity and the related notes. The
financial reporting framework that has been applied in their
preparation is applicable law and International Financial Reporting
Standards (IFRSs).
This report is made solely to the Company's members, as a body,
in accordance with section 15 of the Companies Act 1982. Our audit
work has been undertaken so that we might state to the Company's
members those matters we are required to state to them in an
auditor's report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
Respective responsibilities of Directors and Auditor
As explained more fully in the Directors' Responsibilities
Statement set out on page 20, the Directors are responsible for the
preparation of financial statements that give a true and fair view.
Our responsibility is to audit, and express an opinion on, the
financial statements in accordance with applicable law and
International Standards on Auditing (UK and Ireland). Those
standards require us to comply with the Auditing Practices Board's
(APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This
includes an assessment of: whether the accounting policies are
appropriate to the Group's circumstances and have been consistently
applied and adequately disclosed; the reasonableness of significant
accounting estimates made by the Directors; and the overall
presentation of the financial statements.
Opinion on the financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the Group's and
Parent Company's affairs as at 31 March 2011 and of the Group's and
Parent Company's loss for the year then ended;
-- have been properly prepared in accordance with IFRSs; and
-- have been properly prepared in accordance with the provisions
of the Companies Acts 1931 to 2004.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters
where the Companies Acts 1931 to 2004 requires us to report to you
if, in our opinion:
-- proper book of account have not been kept by the Parent
Company and proper returns adequate for our audit have not been
received from branches not visited by us; or
-- The Parent Company's statement of financial position and
statement of comprehensive income are not in agreement with the
books of account and returns; or
-- Certain disclosures of directors' remuneration specified by
law are not made; or
-- We have not received all the information and explanations we
require for our audit.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas, Isle of Man IM99 1HN Date: 28 June 2011
Ishaan Real Estate plc
Statements of Comprehensive Income
For the year ended 31 March 2011
Group Company Group Company
2011 2011 2010 2010
Notes GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
Administrative expenses 8 (3,976) (873) (3,936) (838)
Share of post tax profit
/(losses) of associates 11 2,459 - (1,438) -
Write-down of investments
in associates net of
investment adviser
performance fees 10 (3,526) - (2,072) -
Write-down of investments
in subsidiaries 12 - (8,043) - (1,551)
Group operating loss from
continuing operations (5,043) (8,916) (7,446) (2,389)
Net finance income 5 107 107 152 152
--------- --------- --------- ---------
Loss from continuing
operations before tax (4,936) (8,809) (7,294) (2,237)
Taxation 6 - - - -
--------- --------- --------- ---------
Loss for the year from
continuing operations (4,936) (8,809) (7,294) (2,237)
========= ========= ========= =========
Other comprehensive
income
Translation reserve -
associates (4,304) - 5,096 -
--------- --------- --------- ---------
Other comprehensive
(loss) / income for the
year (4,304) - 5,096 -
========= ========= ========= =========
Total comprehensive loss
for the year
attributable to equity
holders of parent (9,240) (8,809) (2,198) (2,237)
========= ========= ========= =========
Basic and diluted loss
per share attributable to
equity holders of the
parent for the year
(expressed as pence per
share)
Basic loss per share 17 (3.39) (4.86)
Diluted loss per share 17 (3.39) (4.86)
The attached notes 1 to 25 form an integral part of these
financial statements.
Ishaan Real Estate plc
Statements of Financial Position
As at 31 March 2011
Group Company Group Company
2011 2011 2010 2010
ASSETS Notes GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
Non-current assets
Investments in associates 11 100,727 - 106,497 -
Investments in
subsidiaries 12 - 86,766 - 94,809
Amounts due from
subsidiaries 13 - 12,002 - 9,646
--------- --------- --------- ---------
100,727 98,768 106,497 104,455
--------- --------- --------- ---------
Current assets
Trade and other
receivables 14 129 117 113 102
Cash and short term
deposits 15 13,595 13,471 16,641 16,529
--------- --------- --------- ---------
13,724 13,588 16,754 16,631
--------- --------- --------- ---------
TOTAL ASSETS 114,451 112,356 123,251 121,086
========= ========= ========= =========
EQUITY AND LIABILITIES
Equity attributable to shareholders of the parent
company
Share capital 16 1,457 1,457 1,455 1,455
Share capital redemption
reserve 16 622 622 622 622
Foreign currency
translation reserve 2,788 - 7,092 -
Retained profits 105,699 110,187 110,537 118,898
--------- --------- --------- ---------
Total equity 110,566 112,266 119,706 120,975
--------- --------- --------- ---------
Current liabilities
Trade and other payables 18 874 90 135 111
Non-current liabilities
Financial liabilities 19 3,011 - 3,410 -
TOTAL EQUITY AND
LIABILITIES 114,451 112,356 123,251 121,086
========= ========= ========= =========
Approved by the Board of Directors on 28 June 2011
and signed on its behalf by:
Ian Henderson Tim Walker
Director Director
The attached notes 1 to 25 form an integral part of these
financial statements.
Ishaan Real Estate plc
Statements of Cash Flows
For the year ended 31 March 2011
Group Company Group Company
2011 2011 2010 2010
GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
OPERATING ACTIVITIES
Loss before tax from continuing
operations (4,936) (8,809) (7,294) (2,237)
Adjustments for:
Interest income (107) (107) (152) (152)
Share of post tax
(profits)/losses of associates (2,459) - 1,438 -
Share based payment charge - - 20 20
Grant of directors' annual
share options 100 100 136 136
Write-down of investments in
associates net of investment
adviser performance fee/
subsidiaries 3,526 8,043 2,072 1,551
Operating loss before working
capital changes (3,876) (773) (3,780) (682)
(Increase) / decrease in trade
and other receivables (16) (15) 91 91
Increase / (decrease) in trade
and other payables 739 (21) (812) (52)
--------- --------- --------- ---------
Net cash flows from operating
activities (3,153) (809) (4,501) (643)
--------- --------- --------- ---------
INVESTING ACTIVITIES
Interest received 107 107 152 152
Increase in amounts due from
subsidiaries - (2,356) - (3,849)
Net cash flows generated from
/ (used in) investing activities 107 (2,249) 152 (3,697)
--------- --------- --------- ---------
FINANCING ACTIVITIES
Purchase of own share capital - - (18,600) (18,600)
--------- --------- --------- ---------
Net cash flows used in financing
activities - - (18,600) (18,600)
--------- --------- --------- ---------
Net movements in cash and
cash equivalents (3,046) (3,058) (22,949) (22,940)
Cash and cash equivalents
at the beginning of the year 16,641 16,529 39,590 39,469
--------- --------- --------- ---------
Cash and cash equivalents
at 31 March 13,595 13,471 16,641 16,529
========= ========= ========= =========
Represented by:
Cash and short term deposits 13,595 13,471 16,641 16,529
--------- --------- --------- ---------
13,595 13,471 16,641 16,529
========= ========= ========= =========
The attached notes 1 to 25 form an integral part of these
financial statements
Ishaan Real Estate plc
Statements of Changes in Equity
For the year ended 31 March 2011
Share Retained Foreign
Capital earnings currency
Share Redemption Share / translation Total
capital Reserve Premium (losses) reserve equity
GROUP GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
--------- ----------- ---------- --------- ------------ ---------
Balance at 1
April 2009 2,069 2 175,933 (39,652) 1,996 140,348
Total
comprehensive
loss for the
year
Loss for the
year - - - (7,294) - (7,294)
Other
comprehensive
income
Translation
reserve -
associates - - - - 5,096 5,096
--------- ----------- ---------- --------- ------------ ---------
Total other
comprehensive
income - - - - 5,096 5,096
--------- ----------- ---------- --------- ------------ ---------
Total
comprehensive
(loss) /
income for the
year - - - (7,294) 5,096 (2,198)
--------- ----------- ---------- --------- ------------ ---------
Transactions
with owners,
recorded
directly in
equity
(Contributions
by and
distributions
to owners)
Issue of shares
under
directors'
annual
options 6 - - (6) - -
Share based
payment
charge - - - 20 - 20
Grant of
directors'
annual share
options - - - 136 - 136
Own shares
acquired -
Tender Offer (620) 620 - (18,600) - (18,600)
Court approved
capital
reduction - - (175,933) 175,933 - -
--------- ----------- ---------- --------- ------------ ---------
Total
transaction
with owners (614) 620 (175,933) 157,483 - (18,444)
--------- ----------- ---------- --------- ------------ ---------
Balance at 31
March 2010 1,455 622 - 110,537 7,092 119,706
Total
comprehensive
loss for the
year
Loss for the
year - - - (4,936) - (4,936)
Other
comprehensive
loss
Translation
reserve -
associates (4,304) (4,304)
--------- ----------- ---------- --------- ------------ ---------
Total other
comprehensive
loss for the
year - - - - (4,304) (4,304)
--------- ----------- ---------- --------- ------------ ---------
The attached notes 1 to 25 form an integral part of these
financial statements
Ishaan Real Estate plc
Statements of Changes in Equity (continued)
For the year ended 31 March 2011
Share Retained Foreign
Capital earnings currency
Share Redemption Share / translation Total
capital Reserve Premium (losses) reserve equity
GROUP GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
--------- ----------- --------- --------- ------------ ---------
Total
comprehensive
loss for the
year - - - (4,936) (4,304) (9,240)
--------- ----------- --------- --------- ------------ ---------
Transactions
with owners,
recorded
directly in
equity
(Contributions
by and
distributions
to owners)
Issue of shares
under
directors'
annual
options 2 - - (2) - -
Grant of
directors'
annual share
options - - - 100 - 100
Total
transaction
with owners 2 - - 98 - 100
--------- ----------- --------- --------- ------------ ---------
Balance at 31
March 2011 1,457 622 - 105,699 2,788 110,566
The attached notes 1 to 25 form an integral part of these
financial statements
Ishaan Real Estate plc
Statements of Changes in Equity (continued)
For the year ended 31 March 2011
Share Retained
Capital earnings
Share Redemption Share / Total
capital Reserve Premium (losses) equity
COMPANY GBP000's GBP000's GBP000's GBP000's GBP000's
---------- ----------- ---------- ---------- -----------
Balance at 1
April 2009 2,069 2 175,933 (36,348) 141,656
Total
comprehensive
loss for the
year
Loss for the
year - - - (2,237) (2,237)
Total
comprehensive
loss for the
year - - - (2,237) (2,237)
---------- ----------- ---------- ---------- -----------
Transactions
with owners,
recorded
directly in
equity
(Contributions
by and
distributions
to owners)
Issue of shares
under
directors'
annual
options 6 - - (6) -
Share based
payment
charge - - - 20 20
Grant of
directors'
annual share
options - - - 136 136
Own shares
acquired -
Tender Offer (620) 620 - (18,600) (18,600)
Court approved
capital
reduction - - (175,933) 175,933 -
---------- ----------- ---------- ---------- -----------
Total
transaction
with owners (614) 620 (175,933) 157,483 (18,144)
---------- ----------- ---------- ---------- -----------
Balance at 31
March 2010 1,455 622 - 118,898 120,975
Total
comprehensive
loss for the
year
Loss for the
year - - - (8,809) (8,809)
---------- ----------- ---------- ---------- -----------
Total
comprehensive
loss for the
year - - - (8,809) (8,809)
---------- ----------- ---------- ---------- -----------
Transactions
with owners,
recorded
directly in
equity
(Contributions
by and
distributions
to owners)
Issue of shares
under
directors'
annual
options 2 - - (2) -
Grant of
directors'
annual share
options - - - 100 100
Total
transaction
with owners 2 - - 98 100
---------- ----------- ---------- ---------- -----------
Balance at 31
March 2011 1,457 622 - 110,187 112,266
========== =========== ========== ========== ===========
The attached notes 1 to 25 form an integral part of these
financial statements
Ishaan Real Estate plc
Notes to the Financial Statements
The Company
The Company was incorporated in the Isle of Man on 11 August
2006 as a public company under the Isle of Man Companies Acts 1931
to 2004 with registered number 117470C. The Company's Ordinary
Shares are traded on Alternative Investment Market ("AIM").
The principal activity of the Company and its subsidiaries is
that of investment holding.
1 Statement of Compliance with IFRS
The Group and the Company's financial statements are prepared in
accordance with and comply with International Financial Reporting
Standards ("IFRS"). A summary of the principal accounting policies
which have been applied consistently, is set out in note 3. The
preparation of financial statements in accordance with
International Financial Reporting Standards requires the directors
to make estimates and assumptions that could affect the reported
amounts and disclosures in the financial statements. Actual results
may differ from those estimates.
2 Accounting Policies
(a) Basis of preparation
The Company and the Group's financial statements have been
prepared in accordance with International Financial Reporting
Standards ("IFRS"). The financial statements are presented in
pounds sterling. The financial statements have been prepared under
the historical cost convention except for investment properties
that have been measured at fair value.
At 31 March 2009 the Group early adopted the Amendment to IAS 40
Investment Property which amended the definition of Investment
Property to include property that is being constructed or developed
for future use as investment property. As a result of the adoption
of the above amendment, the investment properties under
construction held by associates have been accounted for at fair
value since 31 March 2009.
The Company and the Group applies revised IAS 1 Presentation of
Financial Statements (2007), which became effective as of 1 January
2009. As a result, the Company and the Group presents in the
statement of changes in equity all owner changes in equity, whereas
all non-owner changes in equity are presented in the statement of
comprehensive income. This presentation has been applied in these
financial statements as of and for the year ended on 31 March 2010.
Comparative information has been re-presented so that it also is in
conformity with the revised standard. Since the change in
accounting policy only impacts presentation aspects, there is no
impact on earnings per share.
(b) Standards and interpretations not yet effective
At the date of authorisation of the financial statements, the
following standards and interpretation were in issue, but not yet
effective. The impact of these statements on the Group's financial
statements in the period of initial application is not known at
this stage. These statements, where applicable, will be applied in
the year when they are effective.
International Accounting Standards Effective for accounting
(IAS/IFRS) periods beginning on
or after
IFRS 9 Financial instruments 1 January 2013
IFRS 10 Consolidation and amended 1 January 2013
standard on separate financial
statements (IAS 27)
IFRS 11 Joint arrangements and amended 1 January 2013
standards on associates and joint
ventures
IFRS 12 Disclosure of interests in other 1 January 2013
entities
IFRS 13 Fair value measurement 1 January 2013
IAS 24 Related party disclosures 1 January 2011
IFRIC Extinguishing Financial 1 July 2010
19 Liabilities with Equity
Instruments
IFRIC Prepayments of a Minimum Funding 1 January 2011
14 Requirement (Amendment)
Ishaan Real Estate plc
Notes to the Financial Statements (continued)
The Directors do not expect the adoption of the other standards
and interpretations to have a material impact on the Group's
financial statements in the period of initial application.
3 Accounting Policies (continued)
(c) Basis of consolidation
The Group financial statements incorporate the net assets and
liabilities of the Group at the balance sheet date and their
results for the year then ended.
Subsidiaries are consolidated from the date of their
acquisition, being the date on which the Group obtains control, and
continue to be consolidated until the date that such control
ceases. Control comprises the power to govern the financial and
operating policies of the investee so as to obtain benefit from its
activities and is achieved through direct or indirect ownership of
voting rights; currently exercisable or convertible potential
voting rights; or by way of contractual agreement. The financial
statements of subsidiaries are prepared for the same reporting year
as the Company, using consistent accounting policies. All
inter-company balances and transactions, including unrealised
profits arising from them are eliminated.
(d) Investment in subsidiaries
In the Company's financial statements, investments in
subsidiaries are shown at cost. Where an indication of impairment
exists, the recoverable amount of the investment is assessed. Where
the carrying amount is greater than the estimated recoverable
amount, the difference is charged to the statement of comprehensive
income. On disposal of the investment, the difference between the
net disposal proceeds and the carrying amount is charged or
credited to the statement of comprehensive income.
(e) Interests in associates
The Group's interests in its associates, being those entities
over which it has significant influence and which are neither
subsidiaries nor joint ventures, are accounted for using the equity
method of accounting. The accounting policies of associates are
adjusted where necessary to be consistent with those of the
Group.
Under the equity method, the investment in an associate is
carried in the balance sheet at cost plus post acquisition changes
in the Group's share of the net assets of the associate, less
distributions received and less any impairment in value of
individual investments. Cost includes fees directly attributable to
the acquisition of associates, including those payable to third
parties for finding and recommending the acquisition of the
investment measured at the date of acquisition (see "Adviser Fees"
below). The group statement of comprehensive income reflects the
share of the associate's results after tax, with any other changes
in the Group's share of an associate's net assets being included
within the statement of changes in equity. Any impairment
provisions are recognised in the Group's statement of comprehensive
income.
Provided that business activities are restricted to the holding
or the development of property, acquisitions of interests in
property via corporate entities (including interests held by
associates) are not treated as business combinations. Accordingly,
no goodwill arises on such acquisitions and the cost of the entity
is allocated between the individual identifiable assets and
liabilities acquired based on their relative fair values at the
date of acquisition.
(f) Revenue
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue can be
reliably measured. Revenue is measured at the fair value of the
consideration received, excluding sales taxes. In particular:
(a) Revenue from the disposal of properties is recognised on
legal completion of the contract.
(b) Where properties are under development and agreement has
been reached to sell such properties when construction is complete,
revenue is recognised when the significant risks and rewards of
ownership and effective control of the real estate have been
transferred to the buyer. In most cases the significant risks and
rewards of ownership and control over the existing incomplete real
estate are not transferred until the buyer obtains possession at
contractual completion. If the revenue recognition criteria have
been met before construction is complete, then:
(i) if remaining work is required to finish construction of real
estate already delivered into the possession of the buyer, then an
obligation is recognised for the costs to complete the construction
at the same time as the sale is recognised; or
3 Accounting Policies (continued)
(f) Revenue (continued)
(ii) if the remaining work represents goods or services that are
separately identifiable from the real estate already delivered to
the buyer, then part of sale proceeds are allocated, based on the
relative fair values of the completed and outstanding work, to the
outstanding work and is recognised when the outstanding work is
performed.
(c) Rental income represents amounts in respect of operating
leases where the Group is lessor. Rentals receivable under
operating leases, and incentives given for lessees to enter into
lease arrangements, are spread on a straight-line basis over the
term of the lease, even if payments are not made on that basis.
(d) Interest income is recognised on a time proportion
basis.
(g) Adviser fees
Adviser fees in respect of executory contracts, such as fees
payable under the Investment Advisory Agreement for ongoing
advisory services, are charged to the statement of comprehensive
income as they accrue.
Adviser fees payable in respect of other services, such as the
performance fees payable under the Investment Advisory Agreement
for finding and recommending investments to the Group, are
recognised when the service has been provided. Performance fees are
not payable until the Group exits from each investment or the
agreement is terminated other than for cause.
Where such fees are directly attributable to the acquisition by
the Group of an associate they are included in the cost of
investment in that associate. However, any subsequent changes in
the discounted estimates of the payments to be made are recognised
in the statement of comprehensive income (see "Other financial
liabilities-adviser fees" note 3(m)).
(h) Properties held as inventory
Properties intended for sale in the ordinary course of business
(including properties under development) are classified as
inventory on the date of their acquisition and carried at the lower
of cost and net realisable value in the accounts of the
associates.
Cost includes all costs of purchase, conversion and other costs
incurred in bringing the properties to their present location and
condition. Net realisable value is the estimated selling price in
the ordinary course of business, less estimated costs of completion
and the estimated costs necessary to make the sale.
Upon a change in use resulting in the transfer of a property
held for sale to investment property, the property is accounted for
at fair value and any difference between the fair value of the
property at the date of transfer and its previous carrying amount
is recognised in the statement of comprehensive income.
(i) Investment property
At 31 March 2009, the Group adopted Amendment to IAS 40
Investment property that amended the definition of investment
property to include property that is being constructed or developed
for future use as investment property.
Land and buildings owned by the Group for the purposes of
generating rental income or capital appreciation or both and
property that is being constructed or developed for future use as
investment property (which includes freehold/leasehold land) are
classified as investment properties.
Investment properties are initially measured at cost, including
related transaction costs. Subsequent to initial recognition,
investment properties are accounted for using the fair value model
under IAS 40. Any gain or loss arising from a change in value is
recognised in the statement of comprehensive income.
When an item of property, plant and equipment is transferred to
investment property following a change in its use, any differences
arising at the date of transfer between the carrying amount of the
item immediately prior to transfer and its fair value is recognised
directly in equity as revaluation surplus if it is a gain. Upon
disposal of the item, the gain is transferred directly to retained
earnings to the extent of the revaluation surplus recognised in
equity. Any loss arising in this manner is recognised in the
statement of comprehensive income immediately.
If the investment property becomes owner-occupied, it is
reclassified as property, plant and equipment and its fair value at
the date of reclassification becomes its deemed cost for subsequent
accounting.
3 Accounting Policies (continued)
(j) Borrowing costs
Borrowing costs are recognised as an expense in the period they
are incurred, except to the extent they are capitalised.
Borrowing costs that are directly attributable to the
development of properties are capitalised in the cost of those
properties. The interest capitalised is the gross interest incurred
on the specific borrowings less any investment income arising from
the temporary investment of those borrowings. Interest is
capitalised from the commencement of development work until the
date of practical completion when the asset becomes available for
occupation. The capitalisation of finance costs is suspended if
there are prolonged periods when development activity is
interrupted.
(k) Share based payments
The cost of equity-settled transactions with employees and
directors is measured by reference to the fair value at the date on
which the entitlement is granted and is recognised in the statement
of comprehensive income, together with a corresponding increase in
equity, over the vesting period.
Fair value is determined by reference to the equity instrument
issued using an appropriate option pricing model where necessary.
In valuing equity settled transactions, no account is taken of any
vesting conditions, other than conditions linked to the price of
the shares of the Company (market conditions). No expense is
recognised for awards that do not ultimately vest, except for
awards where vesting is conditional upon a market condition, which
are treated as vesting irrespective of whether or not the market
condition is satisfied, provided that all other performance
conditions are satisfied.
At each balance sheet date before vesting, the cumulative
expense is calculated, representing the extent to which the vesting
period has expired and management's best estimate of the
achievement or otherwise of non-market conditions and of the number
of equity instruments that will ultimately vest or in the case of
an instrument subject to a market condition, be treated as vesting
as described above. The movement in cumulative expense since the
previous balance sheet date is recognised in the statement of
comprehensive income, with a corresponding entry in equity.
Where the terms of an equity-settled award are modified or a new
award is designated as replacing a cancelled or settled award, the
cost based on the original award terms continues to be recognised
over the original vesting period. In addition, an expense is
recognised over the remainder of the new vesting period for the
incremental fair value of any modification, based on the difference
between the fair value of the original award and the fair value of
the modified award, both as measured on the date of the
modification. No reduction is recognised if this difference is
negative.
Where an equity-settled award is cancelled, it is treated as if
it had vested on the date of cancellation, and any cost not yet
recognised in the statement of comprehensive income for the award
is expensed immediately. Any compensation paid up to the fair value
of the award at the cancellation or settlement date is deducted
from equity, with any excess over fair value being treated as an
expense in the statement of comprehensive income.
(l) Foreign currency translation
Each subsidiary and associate of the Company determines its own
functional currency and items included in the financial statements
of each entity are measured using that functional currency.
Transactions in foreign currencies are initially recorded in the
functional currency at the rate ruling at the date of the
transaction.
Monetary assets and liabilities denominated in foreign
currencies are re-translated at the functional currency rate of
exchange ruling at the balance sheet date. All differences are
taken to the statement of comprehensive income. Non-monetary items
that are measured in terms of historical cost in a foreign currency
are translated using the exchange rates as at the dates of the
initial transactions. Non-monetary items measured at fair value in
a foreign currency are translated using the exchange rates at the
date when the fair value was determined.
The functional currency of the operations in India is the Indian
Rupee. The functional currency of the subsidiaries in Mauritius is
Sterling. At the reporting date, the assets and liabilities of the
Company's associates are translated into the presentation currency
of the Group at the rate of exchange ruling at the balance sheet
date and their statements of comprehensive income are translated at
the weighted average exchange rates for the year. The exchange
differences arising on the translation are taken directly to a
separate component of equity. On disposal of a foreign
3 Accounting Policies (continued)
(l) Foreign currency translation (continued)
entity, the deferred cumulative amount recognised in equity
relating to that particular foreign operation is recognised in the
statement of comprehensive income.
(m) Financial instruments
Financial assets and liabilities are recognised on the Group's
balance sheet when the Group becomes a party to the contractual
provisions of the instruments. Financial assets and liabilities are
initially measured at cost which includes transaction costs.
Subsequent to initial recognition, they are measured as set out
below:-
Trade and other payables
Trade and other payables are stated at their nominal value.
Loans to subsidiaries
Loans to subsidiaries are stated at amount disbursed net of any
capital repayments, and are interest free.
Interest-bearing loans and borrowings
Loans and borrowings are initially recognised at fair value net
of directly attributable issue costs.
After initial recognition, interest-bearing loans and borrowings
are measured at amortised cost using the effective interest method.
Amortised cost is calculated by taking into account any issue
costs, and any discount or premium on settlement.
Gains and losses are recognised in the statement of
comprehensive income when the liabilities are derecognised or
impaired, as well as through the amortisation process.
Other financial liabilities-Adviser fees
Liabilities arising from Adviser fees that are determined by
amounts realised on disposal of investments, or by the occurrence
of other events, are financial liabilities and are initially
recognised at fair value. Fair value is determined as the
Directors' estimate of the present value of the future cash flows
payable. Where no reliable indicators of future market conditions
exist, the Directors base their estimates of future cash flows on
conditions in the market at the date of approval of the financial
statements. The discount rate used represents the Directors'
estimate of the risk adjusted value of money.
After initial recognition the liability is measured at amortised
cost using the effective interest rate method. The estimates of the
payments to be made are reviewed at each balance sheet date and the
carrying value of the liability is adjusted to reflect actual and
revised estimated cash flows using the instrument's original
effective interest rate. The adjustment is recognised in the
statement of comprehensive income.
(n) Taxation
Current tax assets and liabilities are measured at the amounts
expected to be paid to or recovered from the taxation authorities,
based on tax rates and laws that are enacted or substantially
enacted by the balance sheet date.
Deferred tax is recognised on all temporary differences arising
between the tax bases of assets and liabilities and their carrying
amounts in the financial statements, with the following
exceptions:
(a) where the temporary difference arises from the initial
recognition of goodwill or of an asset or liability in a
transaction that is not a business combination that at the time of
the transaction affects neither accounting nor taxable profit or
loss
(b) in respect of taxable temporary differences associated with
investments in subsidiaries and associates, where the timing of the
reversal of the temporary differences can be controlled and it is
probable that the temporary differences will not reverse in the
foreseeable future; and
(c) deferred tax assets are recognised only to the extent that
it is probable that taxable profit will be available against which
the deductible temporary differences, carried forward tax credits
or tax losses can be utilized.
3 Accounting Policies (continued)
(n) Taxation (continued)
Deferred tax assets and liabilities are measured on an
undiscounted basis at the tax rates that are expected to apply when
the related asset is realised or liability is settled, based on tax
rates and laws enacted or substantively enacted at the balance
sheet date.
Income tax is charged or credited directly to equity if it
relates to items that are credited or charged to equity. Otherwise
income tax is recognised in the statement of comprehensive
income.
Deferred tax assets and deferred tax liabilities are offset if a
legally enforceable right exists to set off current tax assets
against current tax liabilities and the deferred taxes relate to
the same taxable entity and the same taxation authority.
(o) Impairment of assets
At each balance sheet date, the carrying amounts of assets are
assessed to determine whether there is any indication of
impairment. If such indication exists, the Group estimates the
recoverable amount of the asset, being the higher of the asset's
net selling price and its value in use. If the recoverable amount
of the asset is estimated to be less than its carrying amount, the
carrying amount is reduced to its recoverable amount. Impairment
losses are recognised as an expense in the statement of
comprehensive income.
(p) Related parties
Related parties are individuals and companies where the
individuals or companies have the ability, directly or indirectly,
to control or exercise significant influence over the other party
in making financial and operating decisions.
(q) Cash and cash equivalents
Cash and cash equivalents comprise cash deposited with
banks.
4. Critical accounting judgments and key sources of estimation
uncertainty
Critical accounting judgments in applying the Group's accounting
policies
In the process of applying the Group's accounting policies,
which are described in Note 3, the Directors have made the
following judgements that have a significant effect on the amounts
recognised in the financial statements:
Determination of functional currency
The determination of the functional currency of Group companies
is critical since recording of transactions and exchange
differences arising thereon are dependent on the functional
currency selected. The Directors have considered those factors
therein and have determined the functional currency of the Company
and the Mauritius subsidiaries to be Pounds Sterling and of the
Indian Associates to be Indian Rupee.
Provision for fees payable to the Investment Adviser
In accordance with the accounting policy presented in note 3,
the Directors have made their best estimate of the amount payable
to the Investment Adviser at the balance sheet date. In order to
determine the liability, the Directors have used a model to
calculate the expected Internal Rate of Return ("IRR") of each
project which forms the basis of the adviser fees payable. Inputs
to the model are based on various assumptions including future sale
proceeds, build costs, financing costs, and an appropriate discount
rate.
Valuation of investment properties
The fair value of investment properties held by associates was
determined by independent valuers. The financial markets have seen
significant reduction in the volume of transactions due to current
difficulties which have led to a degree of uncertainty in the
property market as to the volatility of values in the near future.
In these circumstances there is a greater degree of uncertainity
than which exists in a more active and stronger market in forming
an opinion of the realisation prices of investment properties.
The significant methods and assumptions used by the valuers in
estimating fair value of investment properties is set out in note
11.
5. Net finance income
Group Company Group Company
2011 2011 2010 2010
GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
Interest income on bank
balances 107 107 152 152
Net finance income 107 107 152 152
========= ========= ========= =========
6. Taxation
Isle of Man
With effect from 6 April 2006 the Corporate Income Tax rate for
Isle of Man resident companies is zero per cent. As such, the
Company's tax liability is zero. Additionally, the Isle of Man does
not levy tax on capital gains.
Shareholders resident outside the Isle of Man will not suffer
any income tax in the Isle of Man on any income distributions to
them.
Other
The subsidiaries and associates of the Company are taxed in
accordance with the applicable tax laws in the countries in which
they were incorporated.
7. Segment reporting
The Directors consider the Group to be operating in one
geographic segment and one business segment since all investments
are in India and all the operations in India are concerned with
property development. Consequently no segmental disclosures are
presented.
8. Administrative expenses
Group Company Group Company
2011 2011 2010 2010
GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
Directors' fees and expenses 155 155 93 93
Secretarial and administration 108 72 110 76
Audit fees 81 60 79 58
Investment Adviser fee
(note 21) 3,040 - 3,040 -
Other professional fees 357 355 339 333
Other expenses 135 131 119 122
Share based payment charge - - 20 20
Grant of directors' annual
share options 100 100 136 136
3,976 873 3,936 838
========= ========= ========= =========
The Company has no employees.
9. Directors' remuneration
Details of the Directors' remuneration are as follows:
2011 2011 2010 2010
Basic No. of ordinary Basic No. of ordinary
salary shares under Salary shares under
per annum option per annum option
GBP000's GBP000's
R.P. Chitale 30 nil 30 nil
T.G. Walker 35 nil 30 nil
I.J. Henderson 60 300,000 60 300,000
V Radice nil 90,000 nil 90,000
N.C. Raheja nil nil nil nil
S.J.R. Vernon nil nil nil nil
Anne Elizabeth 20 nil nil nil
Couper Woods
Total remuneration paid/payable to the Directors for the year
ended 31 March 2011 amounted to GBP131,250 (2010: GBP83,836).
The Directors are each entitled to receive reimbursement of any
expenses in relation to their appointment. Total expenses
reimbursed to the Directors for the year ended 31 March 2011
amounted to GBP54,227 (2010: GBP23,615).
In addition, the following Directors, on each anniversary date
of their effective date of appointment, are entitled to share
options over the number of ordinary shares calculated in accordance
with the formula stated in their letters of appointment. The value
of the share options granted is stated against their names
below:-
Value of options Effective date
of appointment
/ re-appointment
GBP
Ian Henderson 40,000 7 November 2009
Vittorio Radice 30,000 7 November 2009
Stephen Vernon 30,000 1 August 2010
*From 7 November 2009, Ian Henderson opted to receive 60% of his
annual remuneration of GBP100,000 in cash and the balance 40% in
share options, instead of the earlier 100% in shares options.
Ian Henderson, Vittorio Radice and Stephen Vernon are entitled
to the grant of share options for the financial year ended 31 March
2011. The value of the share options has been provided for in the
financial statements. The grants of options to the directors are as
follows:
31 March 2011 31 March 2010
Average
No. of price per No. of Average price
ordinary share ordinary per share
Name shares (pence) shares (pence)
Ian Henderson 64,381 62.13 283,849 35.23
Vittorio
Radice 48,285 62.13 85,155 35.23
Stephen Vernon 53,629 55.94 73,891 40.60
The Board at its meetings held on 10 September 2010, 23 February
2011 and 23 March 2011 approved the grant of share options for the
year 2010 and the shares were issued on 16 September 2010, 11 March
2011 and 31 March 2011 to the directors.
Details of the terms attaching to the share options are set out
in note 23.
10. Write-down of investments in associates
At 31 March 2010 and 31 March 2011, the Group wrote-down its
investments in associates, including the cost of performance fees
payable, to its share of net assets in respect of those associates
holding investment properties which were stated at valuation. The
investment in one of the associates, which holds properties held
for sale, has not been written down and is stated at cost plus
share of profits/losses and cost of performance fees payable.
The reversal of investment adviser performance fee as referred
to in Note 19 and the movement in deferred tax liability related to
the valuation gains arising on the investment properties held by
the associates have been adjusted against the above write-down.
11. Investments in associates
2011 2010
GROUP GBP000's GBP000's
--------- ---------
Unquoted
Balance brought forward from 1 April 106,497 107,044
Share of post-tax losses of associates 2,459 (1,438)
Write-down of investments to share of
net assets in associates* (3,925) (4,205)
Foreign currency translation (4,304) 5,096
100,727 106,497
========= =========
* As detailed in note 10, the Group wrote-down its investments
in associates except for one associate which holds properties held
for sale. Had the fair value gains on the properties in this
associate been recorded in the books, the investment in associate
would have been higher by GBP 15.228 million (31 March 2010: GBP
18.830 million).
Properties held by the associates have been valued by Cushman
& Wakefield (India) Pvt. Limited at 31 March 2011. All the
properties were valued on the basis of market value. The valuations
have been made in accordance with the appropriate sections of both
the current Practice Statements and United Kingdom Practice
Statements contained within the RICS Appraisal and Valuation
Standards, 6(th) Edition (the "Red Book"). For development
projects, the valuation assumes completion to a high standard and
is based on gross development value less future expenditure to be
incurred on costs of development.
The valuers have made certain assumptions for the input
variables to form an opinion of value. While they consider their
assumptions as reasonable and appropriate the values reported are
valid only within the context of the assumptions adopted by
them.
Details of the investments in associates are as follows:
Investee Country of Type of Cost % Cost %
company incorporation shares 31 March Holding 31 March Holding
2011 31 2010 31
GBP March GBP March
2011 2010
------------- -------------- ----------- ----------- -------- ----------- --------
Trion India Equity 21,179,491 40.00% 21,179,491 40.00%
Properties Preference 2,777,645 100.00% 2,777,645 100.00%
Private *1.)
Limited
------------- -------------- ----------- ----------- -------- ----------- --------
Serene India Equity 35,774,656 40.00% 35,774,656 40.00%
Properties Preference 2,800,100 100.00% 2,800,100 100.00%
Private *1.)
Limited
------------- -------------- ----------- ----------- -------- ----------- --------
Magna India Equity 11,083,105 40.00% 11,083,105 40.00%
Warehousing Preference 2,777,645 100.00% 2,777,645 100.00%
and *1.)
Distribution
Private
Limited
------------- -------------- ----------- ----------- -------- ----------- --------
Genext India Equity 20,127,633 40.00% 17,203,358 38.80%
Hardware and Preference - - 2,924,275 100.00%
Parks *3.)
Private
Limited
------------- -------------- ----------- ----------- -------- ----------- --------
Sundew India Equity 26,028,732 40.00% 23,066,109 39.87%
Properties Preference - - 2,962,623 100.00%
Private *2.)
Limited
------------- -------------- ----------- ----------- -------- ----------- --------
Intime India Equity 10,696,151 40.00% 7,733,528 39.89%
Properties Preference - - 2,962,623 100.00%
Private *2.)
Limited
------------- -------------- ----------- ----------- -------- ----------- --------
Newfound India Equity 26,234,787 40.00% 23,300,767 38.64%
Properties Preference - - 2,934,020 100.00%
and Leasing *3.)
Private
Limited
------------- -------------- ----------- ----------- -------- ----------- --------
11. Investments in associates (continued)
*1.) The Preference Shares shall be redeemed at par at any time
at the option of the Company, but in no event earlier than three
years from the date of allotment or any such period as may be
required by law and not later than seven years from the date of
allotment or such other period as may be required by law. The
Preference Shares shall, subject to availability of profits during
any financial year, be entitled to nominal non cumulative dividend
of INR1 per Preference Share per year. The preference shares shall
not carry any voting rights, even if dividend on the Preference
Shares has remained unpaid for any year or dividend has not been
declared by the Company for any year.
*2.) The Preference Shares to be compulsorily converted into
Equity shares in one tranche at the expiry of a period of three
years and ten calendar days from the date of the allotment. Out of
the face value of INR100,000 of each of the preference share upon
its conversion, INR10 shall be treated as the face value of each
equity share and INR99,990 shall be treated as premium payable in
respect of each such equity share. The Preference Shares, till the
date of conversion and subject to availability of profits during
any financial year, were entitled to nominal non cumulative
dividend of INR1 per Preference Share per year. The preference
shares did not carry any voting rights, even if dividend on the
Preference Shares has remained unpaid for any year or dividend has
not been declared by the Company for any year. On 15 June 2010,
preference shares in Intime Properties Private Limited were
converted into equity shares and consequently the percentage of
shareholding in equity is now 40% in the associate. On 1 July 2010,
preference shares in Sundew Properties Private Limited were
converted into equity shares and consequently the percentage of
shareholding in equity is now 40% in the associate.
*3.) The Preference Shares to be compulsorily converted into
Equity shares in one tranche at the expiry of a period of three
years and ten calendar days from the date of the allotment. Out of
the face value of INR1,000,000 of each of the preference share upon
its conversion, INR10 shall be treated as the face value of each
equity share and INR999,990 shall be treated as premium payable in
respect of each such equity share. The Preference Shares shall,
till the date of conversion and subject to availability of profits
during any financial year, be entitled to nominal non cumulative
dividend of INR1 per Preference Share per year. The preference
shares shall not carry any voting rights, even if dividend on the
Preference Shares has remained unpaid for any year or dividend has
not been declared by the Company for any year. On 9 August 2010,
preference shares in Genext Hardware and Parks Private Limited were
converted into equity shares and consequently the percentage of
shareholding in equity is now 40% in the associate. On 23 November
2010, preference shares in Newfound Properties and Leasing Private
Limited were converted into equity shares and consequently the
percentage of shareholding in equity is now 40% in the
associate.
The principal activity of all associates is to do business in
real estate.
All associates draw up their accounts to 31 March.
Summarised financial information extracted from the 31 March
2011 financial statements of the associates are given below:
Genext Trion Serene Magna Sundew Intime Newfound
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
---------------------- --------- --------- --------- --------- --------- --------- ---------
Share of the
associates balance
sheet:
---------------------- --------- --------- --------- --------- --------- --------- ---------
Total assets 68,924 42,308 63,330 16,710 42,894 39,576 11,063
---------------------- --------- --------- --------- --------- --------- --------- ---------
Total liabilities 60,983 31,450 46,058 13,559 26,396 27,693 4,087
---------------------- --------- --------- --------- --------- --------- --------- ---------
Share of the
associates results:
---------------------- --------- --------- --------- --------- --------- --------- ---------
Total revenue 1,447 3,530 3,598 - 1,367 4,325 4
---------------------- --------- --------- --------- --------- --------- --------- ---------
Profit/(loss)
for the year
(excluding movements
in valuation
of properties) 2,601 (155) (436) (29) (920) 1,681 (283)
---------------------- --------- --------- --------- --------- --------- --------- ---------
11. Investments in associates (continued)
Summarised financial information extracted from the 31 March
2010 financial statements of associates are given below:
Genext Trion Serene Magna Sundew Intime Newfound
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
---------------------- --------- --------- --------- --------- --------- --------- ---------
Share of the
associates balance
sheet:
---------------------- --------- --------- --------- --------- --------- --------- ---------
Total assets 44,997 37,607 56,825 12,555 37,700 31,894 16,174
---------------------- --------- --------- --------- --------- --------- --------- ---------
Total liabilities 39,154 27,128 35,038 8,570 19,770 22,534 5,036
---------------------- --------- --------- --------- --------- --------- --------- ---------
Share of the
associates results:
---------------------- --------- --------- --------- --------- --------- --------- ---------
Total revenue - 1,341 1,525 - 352 1,546 11
---------------------- --------- --------- --------- --------- --------- --------- ---------
Profit/(loss)
for the year
(excluding movements
in valuation
of properties) 602 (296) 624 32 (870) (1,265) (265)
---------------------- --------- --------- --------- --------- --------- --------- ---------
As a result of early adoption of the Amendment to IAS 40
Investment Property, except for one associate which holds
properties held for sale, share in the assets and liabilities in
associates includes valuation gain on investment properties and the
related deferred tax liability.
12. Investments in subsidiaries
Group Company Group Company
2011 2011 2010 2010
GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
Balance brought forward - 94,809 - 96,360
Write-down - (8,043) - (1,551)
At 31 March - 86,766 - 94,809
========= ========= ========= =========
Details of investments in subsidiaries are given below:
Name of Country of % Holding Principal
subsidiaries incorporation activity
Held by the
Company
I Holding Mauritius 100% Investment Ord Shares
Company holding
(Mauritius) Ltd
Held by I
Holding Company
(Mauritius) Ltd
I-1 Company Mauritius 100% Investment Ord Shares
(Mauritius) Ltd holding
I-2 Company Mauritius 100% Investment Ord Shares
(Mauritius) Ltd holding
I-3 Company Mauritius 100% Investment Ord Shares
(Mauritius) Ltd holding
I-4 Company Mauritius 100% Investment Ord Shares
(Mauritius) Ltd holding
I-5 Company Mauritius 100% Investment Ord Shares
(Mauritius) Ltd holding
I-6 Company Mauritius 100% Investment Ord Shares
(Mauritius) Ltd holding
I-7 Company Mauritius 100% Investment Ord Shares
(Mauritius) Ltd holding
I-8 Company Mauritius 100% Investment Ord Shares
(Mauritius) Ltd holding
The registered office of each of the above subsidiary
undertakings is 3(rd) Floor, Tower A, 1 Cybercity, Ebene,
Mauritius.
13. Amounts due from subsidiaries
Group Company Group Company
2011 2011 2010 2010
GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
Loan due from I-Holding
Company (Mauritius) Ltd - 12,002 - 9,646
- 12,002 - 9,646
========= ========= ========= =========
The above loan is unsecured, interest free and has no fixed
repayment terms.
14. Trade and other receivables
Group Company Group Company
2011 2011 2010 2010
GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
Debtors and prepayments 129 117 113 102
========= ========= ========= =========
15. Cash and short term deposits
Group Company Group Company
2011 2011 2010 2010
GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
Cash at bank and in hand 814 786 80 78
Short term deposits 12,781 12,685 16,561 16,451
13,595 13,471 16,641 16,529
========= ========= ========= =========
The short term deposits are made for varying periods between one
month and six months depending on the immediate cash requirements
of the Group, and earn interest at the respective short-term
deposit rates. The interest rate earned on short term deposits
fluctuated between 0.4% and 1.0% during the year (2010: 0.3% and
1.9%).
16. Share capital and share premium
31 March 2011 31 March 2010
Authorised:
Number of ordinary shares
of GBP0.01 each 400,000,000 400,000,000
Share Capital (GBP 000's) 4,000 4,000
Allotted, called up and
fully paid:
Number of ordinary shares
of GBP0.01 each 145,681,721 145,515,426
Share Capital (GBP 000's) 1,457 1,455
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of the Company. All shares rank equally with
regard to the Company's assets.
16. Share capital and share premium (continued)
Details of shares are as follows:
Share capital
Nominal redemption
Number of value Share premium reserve
shares GBP GBP GBP
------------------- ------------- ---------- -------------- --------------
As at 31 March
2009 206,897,644 2,068,976 175,932,640 2,340
Shares issued
under options to
directors 617,767 6,178 - -
Court approved
capital reduction - - (175,932,640) -
Shares acquired (61,999,985) (620,000) - 620,000
------------------- ------------- ---------- -------------- --------------
As at 31 March
2010 145,515,426 1,455,154 - 622,340
Shares issued
under options to
directors 166,295 1,663 - -
Court approved
capital reduction - - - -
Shares acquired - - - -
------------------- ------------- ---------- -------------- --------------
As at 31 March
2011 145,681,721 1,456,817 - 622,340
=================== ============= ========== ============== ==============
Purchase of own shares
The Company repurchased 61,999,985 ordinary shares as a result
of a tender offer in April 2009 with a nominal value of GBP620,000
at a price of GBP0.30 per share. The ordinary shares repurchased
have been cancelled and the nominal value transferred to the share
capital redemption reserve.
Court approved capital reduction
Share premium account, by virtue of a confirmation of an Order
of the High Court of Justice of the Isle of Man granted on 11 March
2010, was reduced by GBP175,932,640 and transferred to retained
earnings account.
Capital management
The Board's policy is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and to sustain
future development of the business. The Board manages the Group's
affairs to achieve shareholder returns through capital growth
rather than income, and monitors the achievement of this through
growth in net asset value per share.
Gearing may be employed by the Group with the aim of enhancing
shareholder returns. This is in the form of bank borrowings,
secured on specific investment properties, taken on by the
Company's associates.
Group capital comprises share capital, share premium and
reserves.
Neither the Company nor any of its subsidiaries are subject to
externally imposed capital requirements.
17. Loss per share
Basic and diluted loss per share
Basic loss per share is calculated by dividing the net loss
attributable to the equity shareholders of the Company by the
weighted average number of ordinary shares outstanding during the
year.
17. Loss per share (continued)
Basic and diluted loss per share (continued)
Diluted loss per share is the same as basic loss per share.
GROUP
2011 2010
GBP000's GBP000's
--------- ---------
Loss attributable to equity holders
of the company (GBP000's) (4,936) (7,294)
Weighted average of number of ordinary
shares in issue (thousands) 145,547 150,133
--------- ---------
Weighted average number of ordinary
shares in issue (diluted) (thousands) 145,547 150,133
--------- ---------
Basic loss per share (pence) (3.39) (4.86)
========= =========
Diluted loss per share (pence) (3.39) (4.86)
========= =========
18. Trade and other payables
Group Company Group Company
2011 2011 2010 2010
GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
Amounts due to other creditors 775 15 27 27
Accruals 99 75 108 84
874 90 135 111
========= ========= ========= =========
19. Financial liabilities
Group Company Group Company
2011 2011 2010 2010
GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
Investment Adviser performance
fees 3,011 - 3,410 -
As at 31 March 3,011 - 3,410 -
========= ========= ========= =========
The provision for performance fees payable to the Investment
Adviser represents the Directors' estimate of the present value of
the future cash flows payable, discounted using the Directors'
estimate of the risk adjusted value of money. These fees are
considered to be directly attributable to the acquisition by the
Group of its investment in its associates and the amount provided
on initial recognition has been included in the cost of the Group's
investment in associates.
Subsequent to initial recognition, any adjustment is recognised
in the statement of comprehensive income. The amount of such
adjustment for the year ended 31 March 2011 was a reversal of
GBP399,000 (2010: reversal of GBP2,133,000). Details of the
agreement are disclosed in note 21.
20. Financial instruments
The Group's activities expose it to a variety of financial
risks: market price risk, foreign exchange risk, credit risk,
liquidity risk and cash flow interest rate risk.
Market price risk
The Company's strategy on the management of market price risk is
driven by the Company's investment objective. The Company has been
established to invest in the real estate development in India. The
main objective of the Company is to provide Shareholders with
capital growth.
% of Net Assets
The Group is exposed to property price and property rental risk.
The Group is not exposed to the market price risk with respect to
financial instruments as it does not hold any equity
securities.
Foreign exchange risk
The Group's operations are conducted in India, via its
associates, which generate revenue, expenses, assets and
liabilities in Indian Rupees, not the Company's functional currency
(GBP). As a result, the Group is subject to the effects of exchange
rate fluctuations with respect to the Indian Rupee.
The Group's policy is not to enter into any currency hedging
transactions.
At the reporting date the Group had the following exposure in
terms of net assets:
31 March 2011 31 March 2010
Currency % of Net Assets % of Net Assets
--------------- ---------------- ----------------
UK Sterling 18 20
Indian Rupees 82 80
--------------- ---------------- ----------------
If the Indian Rupee appreciated/depreciated by 5% against
Sterling the effect on net assets would be to increase/decrease net
assets by GBP4,529,000 (2010: GBP4,817,000).
Credit risk
Credit risk is the risk that a counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Group.
The carrying amounts of financial assets best represent the
maximum credit risk exposure at the balance sheet date.
At the reporting date, the Group's financial assets exposed to
credit risk amounted to the following:
31 March 31 March
2011 2010
GBP000's GBP000's
-------------------------------------- --------- ---------
Trade and other receivables 129 113
Cash at bank and short term deposits 13,595 16,641
-------------------------------------- --------- ---------
13,724 16,754
-------------------------------------- --------- ---------
The maximum exposure to credit risk is represented by the
carrying amount of each financial asset in the balance sheet.
Management does not expect any counterparty to fail to meet its
obligations.
Liquidity risk
The Group manages its liquidity risk by maintaining sufficient
cash balances.
The Group's liquidity position is monitored by the Board of
Directors.
20. Financial instruments (continued)
Liquidity risk (continued)
Residual undiscounted contractual maturities of financial
liabilities:
Year ended 31 March 2011
Less than 3 months Over
1 to 1 1 - 5 five
Month 1-3 months year years years
GBP000's GBP000's GBP000's GBP000's GBP000's
----------------- ---------- ----------- ---------- ---------- ----------
Financial
liabilities
Trade and other
payables 777 97 - - -
Investment
Adviser
performance
fees - - - 5,368 -
----------------- ---------- ----------- ---------- ---------- ----------
777 97 - 5,368 -
----------------- ---------- ----------- ---------- ---------- ----------
Year ended 31 March 2010
Less than 3 months Over
1 to 1 1 - 5 five
Month 1-3 months year years years
GBP000's GBP000's GBP000's GBP000's GBP000's
----------------- ---------- ----------- ---------- ---------- ----------
Financial
liabilities
Trade and other
payables 27 108 - - -
Investment
Adviser
performance
fees - - - 6,812 -
----------------- ---------- ----------- ---------- ---------- ----------
27 108 - 6,812 -
----------------- ---------- ----------- ---------- ---------- ----------
Interest rate risk
The Group is exposed to interest rate risk via cash balances,
which are invested at short-term market interest rates.
The weighted average interest rate on cash balances as at 31
March 2011 was 0.90% (31 March 2010: 0.56%). Cash balances comprise
short term deposits which mature as follows:
31 March 31 March
2011 2010
Cash balances Cash balances
GBP000's GBP000's
-------------- --------------
Less than 1 month 5,510 8,693
1-3 months 5,085 7,948
3 months to 1 year 3,000 -
13,595 16,641
============== ==============
In addition, the financial liability regarding Investment
Adviser fees is measured initially at fair value and then at
amortised cost using the effective interest rate method.
The effective interest rate on the financial liability is the
discount rate used in the calculation of the net present value of
the future liabilities, which is 25%.
21. Related party transactions
Terms and Conditions of Transactions with Subisidiaries
At the balance sheet date there was a GBP12.002 million (2010:
GBP9.646 million) amount due from the Company's subsidiary, I
Holding Company (Mauritius) Limited ("I Holdings"). This loan is
unsecured, interest free and has no fixed repayment terms. There
are other intercompany loans between I Holdings and the Mauritian
sub-subsidiary holding companies ("Mauritian SPVs") outstanding at
31 March 2011 which are eliminated on consolidation and are not
disclosed in these accounts.
21. Related party transactions (continued)
Investment Adviser Fees
The Investment Adviser is entitled to a performance fee in
respect of each Mauritian SPV which is designed to encourage the
Investment Adviser to seek the highest returns on the underlying
projects. Pursuant to the performance fee arrangements, if the
Mauritian SPVs achieve an SPV level IRR in respect of the partial
or total realisation of an investment in excess of 10 per cent,
then the Investment Adviser will be entitled to a performance fee
of 20 per cent of the realised proceeds which exceeds the proceeds
required to achieve a 10 per cent SPV level IRR (with such
participation increasing to 30 per cent for that portion of the
realised proceeds from an investment which exceeds the proceeds
required to achieve a 20 per cent SPV level IRR). The fair value of
the total performance fee payable to the Investment Adviser at 31
March 2011 is GBP3.011 million (2010: GBP3.410 million).
In addition, the annual base fee paid to the Investment Adviser
for the year in accordance with the terms of the agreement is
GBP3,039,600 (2010:GBP3,039,600). The annual base fee is calculated
on a quarterly basis based on the agreed formula of 2% on committed
capital less an allowance of GBP150,000 per annum pro-rated per
quarter.
Directors' Interests
Neel Raheja is a shareholder and director of various K Raheja
Corp entities. These entities include the Indian Investment
Vehicles, which are 40% owned by the Company, the K Raheja entities
which have sold shares in the Indian Investment Vehicles to the
Company and K Raheja Corporate Services Private Limited which is
contracted to provide services to the Indian Investment
Vehicles.
The amount charged to the Indian Investment Vehicles by K Raheja
Corporate Services Private Limited during the year was GBP2.881
million (2010: GBP2.132million) and other amounts paid to other K
Raheja Corp entities were GBP0.037 million (2010: GBP0.119
million). As at 31 March 2011, the amounts of loan receivable by
associate companies from K Raheja Corp entities totaled GBP90.585
million. The loans were interest bearing and as at 31 March 2011
interest owing totaled GBP9.916 million. In addition, the associate
companies had loan balances owing to K Raheja Corp entities as at
31 March 2011 of GBP36.446 million and interest payable in relation
to these loans of GBP3.355 million.
The amount paid to K Raheja Corp Private Limited during the year
was GBP8.513 million (2010: GBP8.722 million) towards deferred
consideration for transfer of development rights for a project
developed by one of the Indian Investment Vehicles.
Neel Raheja indirectly co-owns the Investment Adviser - Neerav
Investment Advisory Services (Dubai) Limited. As at 31 March 2011,
Neerav Investment Advisory Services (Cyprus) Private Limited, the
parent company of the investment adviser, held 6,643,811 shares of
the Company (2010: 6,643,811 shares).
During the year Chitale & Associates, in which Rajendra
Chitale is a Partner, received fees of GBP 13,319 for providing
professional services to the Company (2010: Nil).
Information on Directors' emoluments and share options is given
in note 9. The Company and Group have no employees, so there is no
disclosure of key management compensation.
22. Holding and ultimate holding company
Ishaan Real Estate plc, is the holding and ultimate parent
company of the Group.
23. Share based payments
In November 2006, 390,000 share options were granted to
Directors under the "IPO option plan" and remain outstanding at the
year end. The exercise price of the options is equal to the market
price of the shares on the date of grant. The options vest within
three years from date of grant. The fair value of the options
granted is estimated at the date of grant using a binomial pricing
model, taking into account the terms and conditions upon which the
options were granted. The weighted average contractual life of each
option granted is ten years. There are no cash settlement options.
The IPO options will generally become exercisable at the third
anniversary of their date of grant ("exercise date"), and are not
subject to the satisfaction of performance targets. The IPO options
may not be exercised under any circumstances following the tenth
anniversary of grant.
The expected volatility assumption reflects the assumption that
the historical volatility is indicative of future trends which may
not necessarily be the actual outcome.
The charge recognised in the share based equity reserve for the
year is Nil (2010: GBP20,120).
Three of the Directors, Ian Henderson, Vittorio Radice and
Stephen Vernon are entitled to receive a grant of annual share
options. The options are exercisable immediately and have an
exercise price of GBP0.01. Each is entitled to receive an agreed
value of shares per annum following the first anniversary of their
effective dates as follows:
Value of Effective
options date
GBP
Ian Henderson * 40,000 7 November
2006
Vittorio Radice 30,000 7 November
2006
Stephen Vernon 30,000 1 August 2007
*From 7 November 2009, Ian Henderson had opted to receive 60% of
his annual remuneration of GBP100,000 in cash and the balance 40%
in share options, instead of the earlier 100% in share options.
The charge recognised during the year ended 31 March 2011 was as
follows:
2011 2010
GBP GBP
-------- --------
Ian Henderson 40,000 76,164
Vittorio Radice 30,000 30,000
Stephen Vernon 30,000 30,000
-------- --------
Balance carried forwards 100,000 136,164
======== ========
This charge has been recognised in the share based equity
reserve.
24. Post balance sheet events
There have been no material post-balance sheet events which
would require disclosure or adjustment to the 31 March 2011
financial statements.
25. Comparatives
Certain comparative figures have been reclassified to conform to
the presentation adopted in these financial statements.
Ishaan Real Estate plc
Corporate Information
Registered office: Bankers
Top Floor Royal Bank of Scotland International
14 Athol Street Isle of Man Branch
Douglas PO Box 151, 2 Victoria Street
Isle of Man Douglas
IM1 1JA Isle of Man
British Isles IM99 1NJ
Lloyds TSB Corporate Banking
Registered number: Victory House, Prospect Hill
Registered in the Isle of Douglas
Man
No: 117470C Isle of Man
IM99 2JY
Company secretary: Standard Chartered Bank
Anne Elizabeth Couper Woods 3(rd) Floor, Basinghall Avenue
London, EC2V 5DD
Directors:
Ian James Henderson (Chairman)
Rajendra Prabhakar Chitale Auditors
Vittorio Radice KPMG Audit LLC
Neel Chandru Raheja Heritage Court
Timothy Graham Walker 41 Athol Street
Stephen John Roland Vernon Douglas
Anne Elizabeth Couper Woods Isle of Man
IM99 1HN
Investment adviser
Neerav Investment Advisory
Services
(Dubai) Limited Solicitors
Level 8, Suite 810B, Liberty Simmons & Simmons
House
Dubai International Financial City Point, One Ropemaker
Centre Street
P O Box 506731 London
Dubai, United Arab Emirates EC2Y 9SS
Nominated adviser and broker Administrator and registrar
Deutsche Bank AG, London Simcocks Trust Limited
Branch
1 Great Winchester Street Top Floor
London 14 Athol Street
EC2N 2DB Douglas
Isle of Man
IM1 1JA
Broker
J P Morgan Cazenove
20 Moorgate
London
EC2R 6DA
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Grafico Azioni Ishaan (LSE:ISH)
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Da Giu 2023 a Giu 2024
