TIDMISH
RNS Number : 8268F
Ishaan Real Estate PLC
21 June 2012
Ishaan Real Estate plc
The Directors of Ishaan Real Estate plc ("Ishaan") announce the
Company's audited results for the year ended 31 March 2012.
Overview for the year ended 31 March 2012
Net Asset Value 31 Mar 30 Sep 31 Mar % Change % Change
12 11 11 over Sep over Mar
11 11
--------------------------------- ------ ------ ------ --------- ---------
Adjusted NAV per share (pence)
(1) (2) 80.9 87.4 95.4 -7.4% -15.2%
--------------------------------- ------ ------ ------ --------- ---------
Reported NAV per share (pence)
(1) (2) 69.0 70.5 75.9 -2.1% -9.1%
--------------------------------- ------ ------ ------ --------- ---------
-- Portfolio value down c.3.6 per cent to GBP604 million from GBP627 million at 31 March 2011.
-- Underlying decline in portfolio value of 3.2 per cent, after
adjusting for construction expenditure capitalised during the year,
reflecting increased project costs caused by high level of
inflation and rupee depreciation.
-- Net additions of c.728,000 sq. ft. (including c.432,000 sq.
ft. previously under option) made to the aggregate area let or
under terms agreed, since the interim results on 9 December
2011.
-- c.80 per cent (c.8.8 million sq. ft.) of lettable area
constructed or under construction is let or under terms agreed.
-- As at 31 March 2012, revenue is being received on c.5.7
million sq. ft. of the portfolio, with an equivalent annualised
rental income of c.GBP30 million.
-- Financing of c.INR 36.8 billion (c.GBP450 million) in place,
including debt facilities of c.INR 30.2 billion (c.GBP369 million)
secured by Indian SPVs to fund c.INR 36.7 billion (c.GBP448
million) cost of areas constructed or under construction.
-- With the Reserve Bank of India reducing the policy rates
(repo rates) by 50 bps since March 2012, to address the domestic
economic slowdown, borrowing costs of the Indian SPVs are expected
to reduce from the current c.13-14 per cent.
-- Cash of GBP10.1 million (31 March 2011: GBP13.6 million).
Ian Henderson, Chairman of Ishaan, commented:
Ishaan continued to progress the development of its portfolio
assets and achieved satisfactory lettings at the projects, despite
the challenges posed by the domestic and global economic
environment and weak commercial real estate markets. Around 8.8
million sq. ft. of the portfolio is now let or under terms agreed
with c.5.7 million sq. ft. yielding rental income, and we expect an
additional c.1 million sq. ft. to yield rental income by March
2013.
Although we have achieved steady operational performance,
continued depreciation of the Indian Rupee and persistent increases
in construction costs caused by high cost inflation have impacted
the valuation. Improvement in rentals at several projects has
helped to partially offset these effects, although the overall
valuation remains disappointing.
While the Board reiterates its confidence in the long term
fundamentals of India and in its ability to develop the high
quality assets in the portfolio successfully, in response,
inter-alia, to a share price trading at a significant discount to
Adjusted Net Asset Value, the Board is actively considering options
available to realise cash for shareholders in the near term. The
Board is principally focused on the disposal of assets within the
Company's portfolio, including any opportunity to dispose all or
parts of the portfolio as a block to enable realisation of cash.
The Board remains committed to the realisation of value from the
portfolio and the return of cash to shareholders, although
conditions in the investment market for Indian real estate remain
challenging thereby providing limited assurance on the timeline for
cash to be returned 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 2012 and at 31 March
2011 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
= 81.80 INR, the Reserve Bank of India reference rate at 30 March
2012. Exchange rate at 31 March 2011 was 1GBP = 71.93 INR and at 30
September2011 was 1GBP = 76.52 INR.
Contacts:
College Hill Deutsche Bank AG London (NOMAD)
Mike Davies Ben Lawrence
Direct : +44 207 457 2020 Tel: +44 20 7545 8000
Email: mike.davies@collegehill.com Email: ben.lawrence@db.com
Chairman's Statement
I am pleased to report the Company's results for the year ended
31 March 2012.
Results for the year ended 31 March 2012
The Company made a loss before tax for the year of GBP1.2
million (GBP4.9 million loss for the year ended 31 March 2011),
arising from the cost of investment advisory fees and our share of
post-tax losses of associates partially offset by the write-back of
investments in the Company's portfolio and reversal of accrued
investment adviser performance fees.
Valuation
The 100 per cent. interests in the properties in the portfolio
have been valued by Cushman & Wakefield (India) Pvt. Limited
('Cushman & Wakefield') at a total of INR 49.4 billion at 31
March 2012. This represents an increase of c.9.7 per cent. against
a valuation of INR 45.1 billion reported at 31 March 2011. If
construction expenditure of INR 6.0 billion capitalised during the
year, which broadly reflects physical progress in construction, is
adjusted for, the portfolio's value showed a decline of c.3.2 per
cent over the year. The decline in the underlying value of the
portfolio has been mainly on account of increased costs at most of
the projects in the portfolio due to high level of inflation and
depreciation of the rupee.
After conversion to pound Sterling, the 100 per cent interests
in the properties in the portfolio were valued at GBP604 million at
31 March 2012, with Ishaan's 40 per cent interest valued at GBP242
million, compared to GBP251 million at 31 March 2011, a decline of
c.3.6 per cent (a decline of c.14.9 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 c.11.7 per cent
decrease in value on account of exchange translation loss (the
exchange rate moved from INR 71.93 on 31 March 2011 to INR 81.80 on
30 March 2012).
Compared with the value of GBP247 million at 30 September 2011,
Ishaan's 40 per cent interest in the properties in the portfolio
shows a decline of c.8.6 per cent, after adjusting for construction
expenditure capitalised during the period, which reflects a c.6.3
per cent decrease in the value on account of exchange translation
loss (the exchange rate moved from INR 76.52 on 30 September 2011
to INR 81.80 on 30 March 2012).
Net Asset Value
Reported net asset value per share was 69.0p at 31 March 2012
against 75.9p at 31 March 2011. 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 80.9p at 31 March 2012, a
decrease of c.7.4per cent against 87.4p at 30 September 2011 and a
decrease of c.15.2per cent against 95.4p at 31 March 2011. 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 should trigger the crystallisation of the
deferred tax provision.
Recently there has been an amendment to the Indian Income Tax
law due to which gains on divestment outside India by overseas
sellers of shares in Indian companies would be liable to payment of
Income Tax in India on such gains. Further, acquirers of such
shares should withhold Indian Income Tax from the consideration
payable to such overseas sellers. Given the uncertainty of mode of
divestment, value to be realized, and the quantum of resulting
taxable gains, the Board considers it to be premature to include
any provision in respect of such Income Tax, if any, in determining
the Adjusted NAV per share.
Project Progress
Since the interim results announcement on 9 December 2011,
construction has been completed on c.1.5 million sq. ft. With this,
total area constructed in the portfolio is c.7.6 million sq. ft.
with a further c.4.3 million sq. ft. currently under
construction.
As announced in the Trading Update on 21 March 2012, Maharashtra
Industrial Development Corporation (MIDC) has been successful in a
dispute with a third party on an area of land adjacent to the
existing Mindspace, Airoli, Navi Mumbai project land. Consequently,
this portion has been handed over to Serene Properties Private
Limited (Serene), the SPV developing this project, thereby
increasing the development area at the project by c.140,000 sq. ft.
The total planned development at this project is now c.4,585,000
sq. ft.
Details of the area constructed or under construction:
Project Area constructed Area under Area constructed Area for Total planned
(sq. ft.) construction and under future development
(sq. ft.) construction development (sq. ft.)
(sq. ft.) (sq. ft.)
(a) (c = a + (e = c
(b) b) (d) + d)
--------------------------- ----------------- -------------- ----------------- ------------- --------------
Mindspace, Airoli,
Navi Mumbai 2,847,000 1,382,000 4,229,000 356,000 4,585,000
--------------------------- ----------------- -------------- ----------------- ------------- --------------
Mindspace, Pocharam 380,000 - 380,000 1,690,000 2,070,000
--------------------------- ----------------- -------------- ----------------- ------------- --------------
Mindspace, Madhapur
(SEZ) 1,107,000 1,714,000 2,821,000 1,995,000 4,816,000
--------------------------- ----------------- -------------- ----------------- ------------- --------------
Mindspace, Madhapur
(non-SEZ) 1,714,000 - 1,714,000 - 1,714,000
--------------------------- ----------------- -------------- ----------------- ------------- --------------
Mindspace, Juinagar,
Navi Mumbai - - - 2,250,000 2,250,000
--------------------------- ----------------- -------------- ----------------- ------------- --------------
Inorbit, Hyderabad 780,000 - 780,000 322,000 1,102,000
--------------------------- ----------------- -------------- ----------------- ------------- --------------
Inorbit, Pune 546,000 - 546,000 98,000 644,000
--------------------------- ----------------- -------------- ----------------- ------------- --------------
Commerzone, Bangalore
** 271,000 175,000 446,000 65,000 511,000
--------------------------- ----------------- -------------- ----------------- ------------- --------------
Total lettable area 7,645,000 3,271,000 10,916,000 6,776,000 17,692,000
--------------------------- ----------------- -------------- ----------------- ------------- --------------
Commerzone, Bangalore
*** - 360,000 360,000 - 360,000
--------------------------- ----------------- -------------- ----------------- ------------- --------------
Vivarea, Mumbai - 620,000 620,000 240,000 860,000
--------------------------- ----------------- -------------- ----------------- ------------- --------------
Total planned development 7,645,000 4,251,000 11,896,000 7,016,000 18,912,000
--------------------------- ----------------- -------------- ----------------- ------------- --------------
Areas reported above are chargeable / saleable areas.
Minor revision has been carried out to the area constructed or
under construction at some of the above projects to reflect the
actual developed area of the completed buildings or buildings
nearing completion.
**Area under construction comprises commercial space and future
development comprises multiplex space.
*** Area under construction comprises hotel development.
Demand for commercial space at the projects in the portfolio has
been stable. Mindspace, Airoli, Navi Mumbai and Mindspace,
Madhapur, SEZ have seen moderate increase in rentals. Residential
real estate activity in Mumbai has remained weak on account of
continued cautiousness shown by the consumer and a slowdown in the
receipt of development approvals during most of the previous year
due to the planned amendments to the development regulations, which
were announced in January 2012.
Since the interim results announcement on 9 December 2011, net
additions of c.728,000 sq. ft. (including c.432,000 sq. ft.
previously under option) have been made to area let or under terms
agreed across the following projects in the portfolio:
-- c.424,000 sq. ft. at Mindspace, Airoli, Navi Mumbai
-- c.147,000 sq. ft. at Mindspace, Madhapur, Hyderabad SEZ and Non SEZ
-- c.136,000 sq. ft. at Mindspace, Pocharam, Hyderabad
-- c.21,000 sq. ft. at Inorbit, Hyderabad, Pune and Bangalore
This amounts to a net addition of c.158,000 sq. ft. to area let
or under terms agreed since the last trading update on 21 March
2012.
With this, the total area let or under terms agreed in the
portfolio has increased to c.8.8 million sq. ft., representing c.80
per cent. of the lettable area constructed or under construction
and c.49 per cent. of the aggregate lettable area of the
portfolio.
At 31 March 2012, revenue is being received on c.5.7 million sq.
ft. of the portfolio. Annualised rent from this area is estimated
at c.GBP30 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
2012-13.
Updated levels of letting activity in the Company's
portfolio:
Project Area let Terms Aggregate Lettable % of Area yielding
agreed area area constructed lettable rent as
or under area at 31
construction constructed March
or under 2012
construction
(sq. ft.) (sq. ft.) (Area (sq. ft.) (c)/(d) (sq. ft.)
let and
Terms
Agreed)
(sq. ft.)
(c)= (a+b) (d)
(b)
(a)
----------------------- ----------- ----------- ------------ ------------------ -------------- --------------
Mindspace, Airoli,
Navi Mumbai 1,598,000 1,722,000 3,320,000 4,229,000 78% 2,242,000
----------------------- ----------- ----------- ------------ ------------------ -------------- --------------
Mindspace, Pocharam 26,000 136,000 162,000 380,000 43% 26,000
----------------------- ----------- ----------- ------------ ------------------ -------------- --------------
Mindspace, Madhapur
(SEZ) 1,281,000 974,000 2,255,000 2,821,000 80% 691,000
----------------------- ----------- ----------- ------------ ------------------ -------------- --------------
Mindspace, Madhapur
(non-SEZ) 1,659,000 2,000 1,661,000 1,714,000 97% 1,661,000
----------------------- ----------- ----------- ------------ ------------------ -------------- --------------
Inorbit, Hyderabad 691,000 - 691,000 780,000 *89% 654,000
----------------------- ----------- ----------- ------------ ------------------ -------------- --------------
Inorbit, Pune 489,000 6,000 495,000 546,000 *91% 470,000
----------------------- ----------- ----------- ------------ ------------------ -------------- --------------
Commerzone, Bangalore 142,000 27,000 169,000 446,000 *62% -
----------------------- ----------- ----------- ------------ ------------------ -------------- --------------
Total 5,886,000 2,867,000 8,753,000 10,916,000 80% 5,744,000
----------------------- ----------- ----------- ------------ ------------------ -------------- --------------
* % of the retail space at each of these projects
In addition to the above area let or with terms agreed,
c.774,000 sq. ft. is under option / ROFRs. These options / ROFRs
are due to be exercised over the next 1-2 years.
Project Area under option
/
ROFR
(sq. ft.)
-------------------------------- ------------------
Mindspace, Airoli, Navi
Mumbai 285,000
-------------------------------- ------------------
Mindspace, Madhapur (SEZ) 273,000
-------------------------------- ------------------
Mindspace, Pocharam, Hyderabad 216,000
-------------------------------- ------------------
Total 774,000
-------------------------------- ------------------
Since the interim results on 9 December 2011, c.50,000 sq. ft.
(including c.15,000 sq. ft. pre-sold since the year-end) has been
pre-sold at Vivarea, Mumbai. As a result, an aggregate of c.545,000
sq. ft. has been pre-sold at this project, representing c.88 per
cent. of the saleable residential area currently under
construction. Part occupation certificate has been received for
Phase I of the development. Building interiors and finishes work is
in progress at the three residential towers.
In respect of the residential project Vivarea, Mumbai, under the
modified policy of the government authorities, upon constructing
and handing over a Public Parking Lot (for general public use) to
the government authorities, the project would become entitled to
additional Floor Space Index (FSI) for development. Genext Hardware
& Parks Pvt. Ltd. (the SPV developing the residential project
Vivarea), is under negotiations with the land owner for availment
of the additional FSI. Subject to the outcome of such negotiations
and consequent documentation and receiving the requisite approvals
from the government authorities, additional area would be developed
and available for sale in the said residential project Vivarea
which is likely to have a positive impact on Ishaan's net asset
value per share up to 1 pence.
As announced in the Trading Update on 21 March 2012, continued
high levels of inflation over most of the previous year and
depreciation of the rupee together with the increase in planned
development area has resulted in an increase in the estimated
construction cost at Mindspace, Airoli, Navi Mumbai. At Vivarea,
Mumbai, high inflation and rupee depreciation, as well as changes
to the development regulations, have contributed to an increase in
the estimated statutory and other costs of the project.
Since the Trading Update, a review of estimated costs at the
other projects in the portfolio has been completed. High inflation
and an increase in building development fees has caused the
estimated cost at Mindspace, Madhapur, SEZ and the commercial space
at Inorbit Hyderabad to increase. In aggregate, the total estimated
cost of the projects in the portfolio has been revised from c.INR
55.9 billion to c.INR 59.5 billion.
As stated in the interim results on 9 December 2011, with a view
to maintaining a harmonious relationship with APIIC and the
Government of Andhra Pradesh and in the interests of the projects
involved, the JV Company (i.e. K Raheja IT Park Pvt Ltd, the entity
set-up to develop IT Parks in Hyderabad) has offered to restore
APIIC's stake in the JV Company to 11% for a nominal consideration.
This also required Intime and Sundew (investee companies of
Ishaan), which were demerged from the JV Company, to offer to APIIC
restoration of APIIC's stake in these companies to 11%. The
restoration of APIIC's stake in these companies will be effected
through a transfer of shares owned in Intime and Sundew by K Raheja
Corp Group and an issue of new shares to APIIC by Intime and
Sundew. The issue of new shares will result in the dilution of
Ishaan's equity interest in Intime and Sundew from 40% to 38.98%. K
Raheja Corp Group will continue to hold a majority stake in the
companies even after dilution by the transfer of shares and issue
of new shares. Confirmation from APIIC of its acceptance of the
above proposals is awaited.
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 36.7 billion (c.GBP448 million) for the
area currently under development (excluding Vivarea, which will be
self-funded), the SPVs have secured funding of c.INR 36.8 billion
(c.GBP450 million) comprising:
-- shareholders equity of c.INR 4.2 billion (c.GBP52 million),
-- debt facilities of c.INR 30.2 billion (c.GBP369 million) and
-- security deposits received/receivable on the lettable area
constructed or currently under construction of c.INR 2.4 billion
(c.GBP29 million).
Of this estimated project cost of c.INR 36.7 billion (c.GBP448
million), c.INR 30.1 billion (c.GBP368 million) has been incurred
up to 31 March 2012. The Indian SPVs had drawndown debt of c.INR
23.3 billion (c.GBP285 million) at 31 March 2012. Unutilised
facilities stand at c.INR 6.9 billion (c.GBP84 million). In
addition, c.88 per cent. of the saleable residential area under
construction at Vivarea is pre-sold, which will fund the cost of
construction of this project.
Debt facilities of c.INR 30.2 billion (c.GBP369 million) include
long term amortizing loans of c.INR 21.7 billion (c.GBP265
million). The balance of the debt facililities of c.INR 8.5 billion
(c.GBP104 million) is other construction debt. All borrowings are
at variable interest rates.
Debt Profile:
INR bn GBP mn
================================================= ======== =========
Long term amortizing loans (tenure around
9-10 years) 21.7 265
================================================= ======== =========
Other construction debt (Only INR 0.39 billion
payable upto March 13) 8.5 104
================================================= ======== =========
TOTAL 30.2 369
================================================= ======== =========
Having secured funding for the area currently under development,
the Company is confident of meeting its future development
requirements through further debt financing.
The Reserve Bank of India has in the past few months taken
monetary policy measures to ease the liquidity situation and
address the concerns of slowdown in economic activity.
Consequently, the Reserve Bank has reduced the policy rates (repo
rates) by 50 bps since March 2012 and the Cash Reserve Ratio by 75
bps. This is expected to reduce the borrowing costs of the Indian
SPVs from the current c.13-14 per cent. Banks however continue to
remain cautious 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 2012. The Board will consider
payment of dividends when it becomes commercially prudent to do
so.
Outlook
GDP growth in the financial year 2011-12 slowed significantly to
6.5 per cent from 8.4 per cent in the previous year. Growth in the
Index of Industrial Production (IIP) decelerated to 2.8 per cent in
financial year 2011-12 from 8.2 per cent in the previous year.
On 17 April 2012, the Reserve Bank of India (RBI) for the first
time in the past three years cut policy rates (repo rates) by 50
bps to 8 per cent driven by the deceleration in economic growth and
moderation in inflation. Future monetary policy stance of the
Reserve Bank of India shall depend on the domestic growth and level
of inflation.
Uncertain global and domestic market conditions have kept the
demand for commercial real estate muted as companies have slowed
down their expansion plans. Improvement in commercial real estate
demand will be largely dependent on the improvement in global and
domestic economic activity. Residential real estate activity
moderated in FY12, though some micro-markets witnessed robust
absorption and launches. In Mumbai, residential volumes continue to
remain weak. Also, changes to the development regulations delayed
the receipt of development approvals thereby affecting the
residential real estate activity in the city. Demand for high
quality retail real estate has been stable across most markets.
In response, inter-alia, to a share price that has persistently
traded at a significant discount to the adjusted net asset value
and poor liquidity in the Company's shares, the Board is actively
considering options available to realise cash for shareholders in
the near term. The Board is principally focused on the disposal of
assets within the Company's portfolio, including any opportunity to
dispose all or parts of the portfolio as a block to enable
realisation of cash.
While there has continued to be progress made on developments
currently under construction, conditions in the investment market
for Indian real estate remain challenging and provide limited
assurance on the achievable timeline for disposal of these assets
and return of cash to shareholders. The Company, however, remains
confident of the sustained progress with the development of the
high quality assets in the portfolio.
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.18.9 million sq. ft.
Projects Type SPV Area Estimated
mn sq. completion
ft.
**
---------------------------------- ------------- ---------- -------- ------------
Mindspace, Airoli, Navi Mumbai IT SEZ Serene 4.59 Q3 2014
---------------------------------- ------------- ---------- -------- ------------
Mindspace, Pocharam, Hyderabad IT SEZ Serene 2.07 On hold
---------------------------------- ------------- ---------- -------- ------------
Mindspace, Madhapur, Hyderabad IT SEZ Sundew 4.82 Q3 2015
(SEZ) / IT Park
---------------------------------- ------------- ---------- -------- ------------
Mindspace, Madhapur, Hyderabad IT Park Intime 1.71 Completed
(Non-SEZ)
---------------------------------- ------------- ---------- -------- ------------
Inorbit, Hyderabad Primarily Trion
Retail
---------------------------------- ------------- ---------- -------- ------------
- Mall 0.78 Completed
---------------------------------- ------------- ---------- -------- ------------
- Commercial 0.32 On Hold
---------------------------------- ------------- ---------- -------- ------------
Inorbit, Pune Primarily Trion
Retail
---------------------------------- ------------- ---------- -------- ------------
- Mall 0.55 Completed
---------------------------------- ------------- ---------- -------- ------------
- Commercial 0.09 On Hold
---------------------------------- ------------- ---------- -------- ------------
Vivarea, Mumbai Residential Genext
---------------------------------- ------------- ---------- -------- ------------
- Residential(-) Phase 1 0.62 Q1 2013
---------------------------------- ------------- ---------- -------- ------------
-Residential - Tower 4 0.24 Q3 2015
---------------------------------- ------------- ---------- -------- ------------
Commerzone, Bangalore Mixed Magna
Use
---------------------------------- ------------- ---------- -------- ------------
- Hotel 0.36 Q3 2012
---------------------------------- ------------- ---------- -------- ------------
- Retail^ 0.34 Completed
---------------------------------- ------------- ---------- -------- ------------
- Commercial 0.17 Q3 2013
---------------------------------- ------------- ---------- -------- ------------
Mindspace, Juinagar, Navi Mumbai IT SEZ Newfound 2.25 On Hold
---------------------------------- ------------- ---------- -------- ------------
TOTAL 18.91
----------------------------------------------------------- -------- ------------
^ Includes Multiplex which is 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 c.4.59 million sq. ft. The
development area at the project has increased by c.140,000 sq. ft.
with MIDC winning a dispute with a third party on an area of land
adjacent to the existing Mindspace, Airoli, Navi Mumbai project
land and consequently handing over this portion of land to Serene
Properties Private Limited (Serene), the SPV developing this
project. As a result of this increase in area, the completion
schedule of this project has been extended by a year to September
2014.
Seven buildings with aggregate area of c.2.8 million sq. ft. are
operational. Construction work is ongoing on another four buildings
with area of c.1.4 million sq. ft.
Since the announcement of interim results on 9 December 2011,
terms have been agreed with multinational and IT/ITES companies for
a net area of c.424,000 sq. ft. (including c.345,000 sq. ft.
previously under option). As a result, the total area let or terms
agreed at this project is c.3.3 million sq. ft., representing c.78
per cent of the area currently under development. As at 31 March
2012 rent has commenced from c.2.2 million sq. ft. In addition,
c.285,000 sq. ft. is under option / ROFR at this project.
Area sq. ft.
---------------------------------------------- -----------------
Area let 1,598,000
---------------------------------------------- -----------------
Terms agreed 1,722,000
---------------------------------------------- -----------------
Aggregate area let / terms agreed (a) 3,320,000
---------------------------------------------- -----------------
Area constructed or under construction (b) 4,229,000
---------------------------------------------- -----------------
Letting as a % of area constructed or under
construction (a/b) 78%
---------------------------------------------- -----------------
Area under option /ROFR 285,000
---------------------------------------------- -----------------
Area generating rent as at 31 March 2012 2,242,000
---------------------------------------------- -----------------
Area for future development 356,000
---------------------------------------------- -----------------
Tenants include Capgemini, Wipro,
IBM, Syntel, L&T
Infotech
---------------------------------------------- -----------------
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 further
transport infrastructure is being planned in this area. 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 tenants. Super structure work is partly completed on
another building. Since the interim results announced on 9 December
2011, terms have been agreed for additional c.136,000 sq. ft. As a
result, total area let or terms agreed at this project now stands
at c.162,000 sq. ft. In addition, c.216,000 sq. ft. is under
option/ ROFR.
Area sq. ft.
-------------------------------------------- -------------------
Area let 26,000
-------------------------------------------- -------------------
Terms agreed 136,000
-------------------------------------------- -------------------
Aggregate area let / terms agreed (a) 162,000
-------------------------------------------- -------------------
Area under construction (b) 380,000
-------------------------------------------- -------------------
Letting as a % of area under construction
(a/b) 43%
-------------------------------------------- -------------------
Area under option /ROFR 216,000
-------------------------------------------- -------------------
Area generating rent as at 31 March 2012 26,000
-------------------------------------------- -------------------
Area for future development 1,690,000
-------------------------------------------- -------------------
Tenants include Genpact, 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 c.4.8 million sq. ft. of
planned development. Construction is completed on two of the
buildings aggregating c.1.1 million sq. ft., finishes and exterior
work in progress on third building of area c.0.9 million sq. ft.;
and one other building with an area of c.0.8 million sq. ft. is
currently under construction.
Since the interim results announcement on 9 December 2011, a net
addition of c.150,000 sq. ft. has been made to area let or terms
agreed. The aggregate area let or terms agreed at this project is
now c.2.3 million sq. ft. representing c.80 per cent of the area
constructed or currently under construction. As at 31 March 2012
rent has commenced from an area of c.691,000 sq. ft. In addition,
c.273,000 sq. ft. is under option at this project.
Area sq. ft.
---------------------------------------------- --------------------
Area let 1,281,000
---------------------------------------------- --------------------
Terms agreed 974,000
---------------------------------------------- --------------------
Aggregate area let / terms agreed (a) 2,255,000
---------------------------------------------- --------------------
Area constructed or under construction (b) 2,821,000
---------------------------------------------- --------------------
Letting as a % of area constructed or under
construction (a/b) 80%
---------------------------------------------- --------------------
Area under option /ROFR 273,000
---------------------------------------------- --------------------
Area generating rent as at 31 March 2012 691,000
---------------------------------------------- --------------------
Area for future development 1,995,000
---------------------------------------------- --------------------
Tenants include JP Morgan, Facebook,
United Health
Group
---------------------------------------------- --------------------
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.1,661,000 sq. ft. representing c.97 per cent of the project area.
As at 31 March 2012, the entire area let is generating rent.
Area sq. ft.
------------------------------------------- ------------------
Area let 1,659,000
------------------------------------------- ------------------
Terms agreed 2,000
------------------------------------------- ------------------
Aggregate area let / terms agreed (a) 1,661,000
------------------------------------------- ------------------
Project area (b) 1,714,000
------------------------------------------- ------------------
Letting as a % of project area (a/b) 97%
------------------------------------------- ------------------
Area generating rent as at 31 March 2012 1,661,000
------------------------------------------- ------------------
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). Aggregate area let and
terms agreed at this project is c.691,000 sq. ft. representing c.89
per cent of the retail space. Approximately 85 per cent of the
retail space is currently trading.
Area sq. ft.
------------------------------------------- -------------------
Aggregate retail area let (a) 691,000
------------------------------------------- -------------------
Retail area (b) 780,000
------------------------------------------- -------------------
Letting as a % of retail area (a/b) 89%
------------------------------------------- -------------------
Area generating rent as at 31 March 2012 654,000
------------------------------------------- -------------------
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 a c.546,000 sq. ft. shopping centre
which was opened in March 2011 and c.98,000 sq. ft. commercial
space, currently on hold.
The area let and terms agreed at this project is c. 495,000 sq.
ft. representing c.91 per cent. of the retail space. Over 85 per
cent of the retail space is trading.
Area sq. ft.
------------------------------------------- --------------------
Area let 489,000
------------------------------------------- --------------------
Terms agreed 6,000
------------------------------------------- --------------------
Aggregate retail area let / terms agreed
(a) 495,000
------------------------------------------- --------------------
Retail area (b) 546,000
------------------------------------------- --------------------
Letting as a % of retail area (a/b) 91%
------------------------------------------- --------------------
Area generating rent as at 31 March
2012 470,000
------------------------------------------- --------------------
Area for future development (Commercial
space) 98,000
------------------------------------------- --------------------
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
0.86 million sq. ft. comprises four residential towers.
A part Occupation Certificate has been received for Phase I of
the development. Building interior and finishes work is in progress
at the three residential towers and is estimated to be complete by
Q1 2013 as against Q3 2012 announced previously. Work on fourth
tower will commence when certain approvals are received.
Since the interim results announcement on 9 December 2011,
c.50,000 sq. ft. (including c.15,000 sq. ft. pre-sold since the
year-end) of residential space has been pre-sold at Vivarea. With
this, a total of c.545,000 sq. ft. has been pre-sold at this
project, representing c.88per 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.0.9 million sq. ft. Work on the retail component of the project
has been completed and the mall is expected to be launched
shortly.
Since the interim results announced on 9 December 2011, terms
have been agreed for an additional c.23,000 sq. ft. of retail
space. As a result, aggregate area let or terms agreed at this
project stands at c.169,000 sq. ft. of retail space, representing
c.62 per cent of the retail space of this project.
Area sq. ft.
--------------------------------------------------- ------------
Area let 142,000
--------------------------------------------------- ------------
Terms agreed 27,000
--------------------------------------------------- ------------
Aggregate area let / terms agreed (Retail)
(a) 169,000
--------------------------------------------------- ------------
Area under construction
--------------------------------------------------- ------------
- Retail (b) 271,000
--------------------------------------------------- ------------
- Hotel 360,000
--------------------------------------------------- ------------
- IT 175,000
--------------------------------------------------- ------------
Letting as a % of retail area under construction
(a/b) 62%
--------------------------------------------------- ------------
Area for future development * 65,000
--------------------------------------------------- ------------
* comprises multiplex space.
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.2.25 million sq. ft. SEZ development.
Foundation work has been completed on three buildings. Further
construction is on hold. Construction will commence when the
Company is confident of the potential demand.
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 2012.
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 26 of the financial
statements. The Group made a loss for the year after taxation
amounting to GBP1.230 million (2011: loss of GBP4.936 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 towards project
services and royalty was GBP2.325 million (2011: GBP2.881 million)
and other amounts paid to other K Raheja Corp entities were
GBP1.832 million (2011: GBP0.037 million).
The amount received by the Indian Investment Vehicles from K
Raheja Corp entities towards income from lease rentals and other
recoveries was GBP3.966 million (2011: Nil).
As at 31 March 2012, the amounts of loan receivable by associate
companies from K Raheja Corp entities totalled GBP76.110 million
(2011: GBP90.585 million). The loans were interest bearing and as
at 31 March 2012 interest owing totalled GBP7.857 million (2011:
GBP9.916 million). In addition, the associate companies had loan
balances owing to K Raheja Corp entities as at 31 March 2012 of
GBP37.292 million (2011: GBP36.446 million) and interest payable in
relation to these loans totalled GBP2.751 million (2011: GBP3.355
million).
The amount paid to K Raheja Corp Private Limited during the year
was GBP3.133 million (2011: GBP8.513 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 2012,
Neerav Investment Advisory Services (Cyprus) Private Limited, the
parent company of the investment adviser, held 7,493,811 shares of
the Company (2011: 6,643,811 shares).
In the previous year, Chitale & Associates, in which
Rajendra Chitale is a Partner, received fees of GBP 13,319 for
providing professional services to the Company.
Options have been granted for nil consideration over Ordinary
Shares of GBP0.01 each as follows:-
Name No of Ordinary Grant date Exercise Period Exercise
Shares under Price
Option
Ian Henderson 20/11/2006 7 years from GBP1
300,000 20/11/09
Vittorio Radice 20/11/2006 7 years from GBP1
90,000 20/11/09
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
2012. 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 2012 31 March 2011
================= ===================================== =====================================
Name No. of ordinary Average price No. of ordinary Average price
shares per share (pence) shares per share (pence)
================= ================ =================== ================ ===================
Ian Henderson 70,633 56.63 64,381 62.13
================= ================ =================== ================ ===================
Vittorio Radice 52,975 56.63 48,285 62.13
================= ================ =================== ================ ===================
Stephen Vernon 48,804 61.47 53,629 55.94
================= ================ =================== ================ ===================
The Board at its meetings held on 13 March 2012 and 28 March
2012 approved the grant of share options for the year 2011. Shares
were issued to Stephen Vernon and Ian Henderson on 13 March 2012
and 31 March 2012 respectively. Shares to Vittorio Radice were
issued on 23 May 2012.
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 2012 are set out below:-
Name No. of Ordinary
Shares
Ian Henderson 821,288
Vittorio Radice* 447,180
Tim Walker 125,000
Stephen Vernon 506,688
*Excludes 52,975 shares under annual share options, which were
allotted on 23 May 2012.
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 7,493,811 shares of
the Company (2011: 6,643,811 shares).
The mid market price of each ordinary share as at 31 March 2012
was GBP0.4125 (2011: GBP0.5838) and the range during the year was
GBP0.3850 to GBP0.5950 (2011: GBP0.5838 to GBP0.700).
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 30 April 2012, the Board had been notified, or was
otherwise aware of, the following shareholdings exceeding 3% and
over of the issued share capital:
Name No. of Ordinary % of Issued Share
Shares Capital
Lone Pine Capital 56,632,342 38.84
QVT Financial 13,985,309 9.59
Franklin Templeton Investments 13,888,231 9.53
J.P. Morgan (Suisse) S.A 12,196,150 8.36
Morgan Stanley Inv Mgmt (UK) 8,722,951 5.98
Neerav Investment Advisory
Services (Cyprus) Private Limited 7,493,811 5.14
Credit Suisse Private Banking 5,373,000 3.69
Lombard Odier Darier Hentsch 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 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: 20 June 2012
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 2012 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 2012 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: 20 June 2012
Statements of Comprehensive Income
For the year ended 31 March 2012
Group Company Group Company
2012 2012 2011 2011
Notes GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
Administrative expenses 8 (3,637) (733) (3,976) (873)
Share of post tax (losses)
/ profit of associates 11 (847) - 2,459 -
Write-back / (write-down)
of investments in associates
net of investment adviser
performance fees 10 3,138 - (3,526) -
Write-down of investments
in subsidiaries 12 - (9,320) - (8,043)
Group operating loss from
continuing operations (1,346) (10,053) (5,043) (8,916)
Net finance income 5 116 116 107 107
--------- --------- --------- ---------
Loss from continuing operations
before tax (1,230) (9,937) (4,936) (8,809)
Taxation 6 - - - -
--------- --------- --------- ---------
Loss for the year from
continuing operations (1,230) (9,937) (4,936) (8,809)
========= ========= ========= =========
Other comprehensive income
Translation reserve - associates (8,856) - (4,304) -
--------- --------- --------- ---------
Other comprehensive (loss)
/ income for the year (8,856) - (4,304) -
========= ========= ========= =========
Total comprehensive loss
for the year attributable
to equity holders of parent (10,086) (9,937) (9,240) (8,809)
========= ========= ========= =========
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 (0.84) (3.39)
Diluted loss per share 17 (0.84) (3.39)
The attached notes 1 to 24 form an integral part of these
financial statements.
Statements of Financial Position
As at 31 March 2012
Group Company Group Company
2012 2012 2011 2011
ASSETS Notes GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
Non-current assets
Investments in associates 11 92,555 - 100,727 -
Investments in subsidiaries 12 - 77,446 - 86,766
Amounts due from subsidiaries 13 - 14,942 - 12,002
--------- --------- --------- ---------
92,555 92,388 100,727 98,768
--------- --------- --------- ---------
Current assets
Trade and other receivables 14 95 84 129 117
Cash and short term deposits 15 10,139 10,077 13,595 13,471
--------- --------- --------- ---------
10,234 10,161 13,724 13,588
--------- --------- --------- ---------
TOTAL ASSETS 102,789 102,549 114,451 112,356
========= ========= ========= =========
EQUITY AND LIABILITIES
Equity attributable to shareholders of the parent
company
Share capital 16 1,458 1,458 1,457 1,457
Share capital redemption
reserve 16 622 622 622 622
Foreign currency translation
reserve (6,068) - 2,788 -
Retained profits 104,568 100,349 105,699 110,187
--------- --------- --------- ---------
Total equity 100,580 102,429 110,566 112,266
--------- --------- --------- ---------
Current liabilities
Trade and other payables 18 805 120 874 90
Non-current liabilities
Financial liabilities 19 1,404 - 3,011 -
TOTAL EQUITY AND LIABILITIES 102,789 102,549 114,451 112,356
========= ========= ========= =========
Approved by the Board of Directors on 20 June 2012
and signed on its behalf by:
Ian Henderson Tim Walker
Director Director
The attached notes 1 to 24 form an integral part of these
financial statements.
Statements of Cash Flows
For the year ended 31 March 2012
Group Company Group Company
2012 2012 2011 2011
GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
OPERATING ACTIVITIES
Loss before tax from continuing
operations (1,230) (9,937) (4,936) (8,809)
Adjustments for:
Interest income (116) (116) (107) (107)
Share of post tax losses /
(profits) of associates 847 - (2,459) -
Grant of Directors' annual
share options 100 100 100 100
(Write-back) / write-down
of investments in associates
net of investment adviser
performance fee/ subsidiaries (3,138) 9,320 3,526 8,043
Operating loss before working
capital changes (3,537) (633) (3,876) (773)
Decrease / (increase) in trade
and other receivables 34 33 (16) (15)
(Decrease) / increase in trade
and other payables (69) 30 739 (21)
--------- --------- --------- ---------
Net cash flows from operating
activities (3,572) (570) (3,153) (809)
--------- --------- --------- ---------
INVESTING ACTIVITIES
Interest received 116 116 107 107
Increase in amounts due from
subsidiaries - (2,940) - (2,356)
Net cash flows generated from
/ (used in) investing activities 116 (2,824) 107 (2,249)
--------- --------- --------- ---------
Net movements in cash and
cash equivalents (3,456) (3,394) (3,046) (3,058)
Cash and cash equivalents
at the beginning of the year 13,595 13,471 16,641 16,529
--------- --------- --------- ---------
Cash and cash equivalents
at 31 March 10,139 10,077 13,595 13,471
========= ========= ========= =========
Represented by:
Cash and short term deposits 10,139 10,077 13,595 13,471
--------- --------- --------- ---------
10,139 10,077 13,595 13,471
========= ========= ========= =========
The attached notes 1 to 24 form an integral part of these
financial statements
Statements of Changes in Equity
For the year ended 31 March 2012
Share capital Share Capital Retained earnings / Foreign currency Total equity
Redemption Reserve (losses) translation reserve
GROUP GBP000's GBP000's GBP000's GBP000's GBP000's
-------------- -------------------- -------------------- -------------------- -------------
Balance at 1 April
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)
-------------- -------------------- -------------------- -------------------- -------------
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
Total comprehensive
loss for the year
Loss for the year - - (1,230) - (1,230)
Other comprehensive
loss
Translation reserve
- associates (8,856) (8,856)
-------------- -------------------- -------------------- -------------------- -------------
Total other
comprehensive loss
for the year - - - (8,856) (8,856)
-------------- -------------------- -------------------- -------------------- -------------
Total comprehensive
loss for the year (1,230) (8,856) (10,086)
-------------- -------------------- -------------------- -------------------- -------------
Transactions with
owners, recorded
directly in equity
(Contributions by
and distributions
to owners)
Issue of shares
under Directors'
annual options 1 - (1) - -
Grant of Directors'
annual share
options - - 100 - 100
-------------- -------------------- -------------------- -------------------- -------------
1 - 99 - 100
-------------- -------------------- -------------------- -------------------- -------------
Balance at 31 March
2012 1,458 622 104,568 (6,068) 100,580
============== ==================== ==================== ==================== =============
The attached notes 1 to 24 form an integral part of these
financial statements.
Share capital Share Capital Redemption Retained earnings / Total equity
Reserve (losses)
COMPANY GBP000's GBP000's GBP000's GBP000's
-------------- --------------------------- ---------------------------- -------------
Balance at 1 April 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 2010 1,457 622 110,187 112,266
Total comprehensive loss
for the year
Loss for the year - - (9,937) (9,937)
-------------- --------------------------- ---------------------------- -------------
Total comprehensive loss
for the year - - (9,937) (9,937)
-------------- --------------------------- ---------------------------- -------------
Transactions with owners,
recorded directly in equity
(Contributions by and
distributions
to owners)
Issue of shares under
Directors' annual options 1 - (1) -
Grant of Directors' annual
share options - - 100 100
Total transaction with
owners 1 - 99 100
-------------- --------------------------- ---------------------------- -------------
Balance at 31 March 2012 1,458 622 100,349 102,429
============== =========================== ============================ =============
The attached notes 1 to 24 form an integral part of these
financial statements.
Notes to the Financial Statements
1 1 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.
2 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.
3 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.
(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 (IAS/IFRS) Effective for accounting
periods beginning on
or after
IFRS 9 Financial instruments 1 January 2015
IFRS 10 Consolidation and amended standard 1 January 2013
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 32 Financial Instruments: Presentation 1 January 2012
- Classification of Rights Issues
(Amendment)
IFRIC Extinguishing Financial Liabilities 1 January 2012
19 with Equity Instruments (Amendment)
IFRIC Prepayments of a Minimum Funding 1 January 2012
14 Requirement (Amendment)
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.
(c) Basis of consolidation
The Group financial statements incorporate the net assets and
liabilities of the Group at the reporting 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
3 Accounting Policies
(c) Basis of consolidation (continued)
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 profit or loss. On disposal of
the investment, the difference between the net disposal proceeds
and the carrying amount is charged or credited to profit or
loss.
(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 statement of financial position 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 profit or
loss.
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
(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 profit or loss 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 profit or loss (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 profit or loss.
(i) Investment property
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 profit or loss.
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 profit or
loss 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.
(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 profit or
loss, 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 reporting 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 profit or loss 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 reporting 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 recognised in other
comprehensive income. On disposal of a foreign entity, the deferred
cumulative amount recognised in other comprehensive income relating
to that particular foreign operation is recognised in profit or
loss.
(m) Financial instruments
Financial assets and liabilities are recognised on the Group's
statement of financial position when the Group becomes a party to
the contractual provisions of the instruments. Financial assets and
liabilities are initially measured at fair value which includes
transaction costs. Subsequent to initial recognition, they are
measured as set out below:-
(m) Financial instruments (continued)
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 profit or loss 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 reporting 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 profit or
loss.
(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 reporting 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.
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 reporting
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 reporting 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 profit or loss.
(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 reporting 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, building 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
2012 2012 2011 2011
GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
Interest income on bank
balances 116 116 107 107
Net finance income 116 116 107 107
========= ========= ========= =========
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
2012 2012 2011 2011
GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
Directors' fees and expenses 159 159 155 155
Secretarial and administration 110 74 108 72
Audit fees 85 63 81 60
Investment Adviser fee
(note 21) 2,840 - 3,040 -
Other professional fees 244 240 357 355
Other expenses 99 97 135 131
Grant of Directors' annual
share options 100 100 100 100
3,637 733 3,976 873
========= ========= ========= =========
The Company has no employees.
9. Directors' remuneration
Details of the Directors' remuneration are as follows:
2012 2012 2011 2011
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 35 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
Couper Woods 20 nil 20 nil
Total remuneration paid/payable to the Directors for the year
ended 31 March 2012 amounted to GBP145,000 (2011: GBP131,250).
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 2012
amounted to GBP13,344 (2011: GBP54,227).
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:-
Effective date
Value of options 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
2012. 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 2012 31 March 2011
================= ===================================== =====================================
Name No. of ordinary Average price No. of ordinary Average price
shares per share (pence) shares per share (pence)
================= ================ =================== ================ ===================
Ian Henderson 70,633 56.63 64,381 62.13
================= ================ =================== ================ ===================
Vittorio Radice 52,975 56.63 48,285 62.13
================= ================ =================== ================ ===================
Stephen Vernon 48,804 61.47 53,629 55.94
================= ================ =================== ================ ===================
The Board at its meetings held on 13 March 2012 and 28 March
2012 approved the grant of share options for the year 2011. Shares
were issued to Stephen Vernon and Ian Henderson on 13 March 2012
and 31 March 2012 respectively. Shares to Vittorio Radice were
issued on 23 May 2012.
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 2011 and 31 March 2012, 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
2012 2011
GROUP GBP000's GBP000's
--------- ---------
Unquoted
Balance brought forward from 1 April 100,727 106,497
Share of post-tax (losses) /profit of associates (847) 2,459
Write-back/(write-down) of investments to
share of net assets in associates* 1,531 (3,925)
Foreign currency translation (8,856) (4,304)
92,555 100,727
========= =========
* 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 7.114 million (31 March 2011: GBP
15.228 million).
Properties held by the associates have been valued by Cushman
& Wakefield (India) Pvt. Limited at 31 March 2012. 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 company Country of Type of Cost % Cost %
incorporation shares 31 March Holding 31 March Holding
2012 31 March 2011 31 March
GBP 2012 GBP 2011
====================== ================ ============= =========== ========== =========== ==========
Trion Properties
Private Limited India Equity 21,179,491 40.00% 21,179,491 40.00%
Preference
*1.) 2,777,645 100.00% 2,777,645 100.00%
===================================================== =========== ========== =========== ==========
Serene Properties
Private Limited India Equity 35,774,656 40.00% 35,774,656 40.00%
Preference
*1.) 2,800,100 100.00% 2,800,100 100.00%
===================================================== =========== ========== =========== ==========
Magna Warehousing
and Distribution
Private Limited India Equity 11,083,105 40.00% 11,083,105 40.00%
Preference
*1.) 2,777,645 100.00% 2,777,645 100.00%
===================================================== =========== ========== =========== ==========
Genext Hardware Equity
and Parks Private Preference 20,127,633 40.00% 20,127,633 40.00%
Limited India *3.) - - - -
====================== ================ ============= =========== ========== =========== ==========
Equity
Sundew Properties Preference 26,028,732 40.00% 26,028,732 40.00%
Private Limited India *2.) - - - -
====================== ================ ============= =========== ========== =========== ==========
Equity
Intime Properties Preference 10,696,151 40.00% 10,696,151 40.00%
Private Limited India *2.) - - - -
====================== ================ ============= =========== ========== =========== ==========
Newfound Properties Equity
and Leasing Private Preference 26,234,787 40.00% 26,234,787 40.00%
Limited India *3.) - - - -
====================== ================ ============= =========== ========== =========== ==========
*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
2012 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 70,893 37,258 65,765 22,332 43,154 34,262 9,715
------------------------- --------- --------- --------- --------- --------- --------- ---------
Total liabilities 61,804 27,350 52,938 18,991 30,994 20,931 3,964
------------------------- --------- --------- --------- --------- --------- --------- ---------
Share of the associates
results:
------------------------- --------- --------- --------- --------- --------- --------- ---------
Total revenue 460 5,645 6,110 - 1,946 4,486 -
------------------------- --------- --------- --------- --------- --------- --------- ---------
Profit/(loss) for
the year (excluding
movements in valuation
of properties) 2,255 (427) (808) (355) (628) (505) (379)
------------------------- --------- --------- --------- --------- --------- --------- ---------
Profit/(loss) for
the year (excluding
depreciation and
movements in valuation
of properties) 2,255 399 (261) (338) (241) 1,522 (379)
------------------------- --------- --------- --------- --------- --------- --------- ---------
Summarised financial information extracted from the 31 March
2011 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 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)
-------------------------- --------- --------- --------- --------- --------- --------- ---------
Profit/(loss)
for the year
(excluding depreciation
and movements
in valuation
of properties) 2,601 582 29 (29) (505) 2,876 (283)
-------------------------- --------- --------- --------- --------- --------- --------- ---------
As a result 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
2012 2012 2011 2011
GBP000's GBP000's GBP000's GBP000's
---------- --------- --------- ---------
Balance brought forward - 86,766 - 94,809
Write-down - (9,320) - (8,043)
At 31 March - 77,446 - 86,766
========== ========= ========= =========
Details of investments in subsidiaries are given below:
Name of subsidiaries Country of % Holding Principal activity
incorporation
Held by the Company
I Holding Company
(Mauritius) Ltd Mauritius 100% Investment holding Ord Shares
Held by I Holding
Company (Mauritius)
Ltd
I-1 Company (Mauritius)
Ltd Mauritius 100% Investment holding Ord Shares
I-2 Company (Mauritius)
Ltd Mauritius 100% Investment holding Ord Shares
I-3 Company (Mauritius)
Ltd Mauritius 100% Investment holding Ord Shares
I-4 Company (Mauritius)
Ltd Mauritius 100% Investment holding Ord Shares
I-5 Company (Mauritius)
Ltd Mauritius 100% Investment holding Ord Shares
I-6 Company (Mauritius)
Ltd Mauritius 100% Investment holding Ord Shares
I-7 Company (Mauritius)
Ltd Mauritius 100% Investment holding Ord Shares
I-8 Company (Mauritius)
Ltd Mauritius 100% Investment holding Ord Shares
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
2012 2012 2011 2011
GBP000's GBP000's GBP000's GBP000's
---------- --------- --------- ---------
Loan due from I-Holding
Company (Mauritius) Ltd - 14,942 - 12,002
- 14,942 - 12,002
===================================== ========= ========= =========
The above loan is unsecured, interest free and has no fixed
repayment terms.
14. Trade and other receivables
Group Company Group Company
2012 2012 2011 2011
GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
Debtors and prepayments 95 84 129 117
========= ========= ========= =========
15. Cash and short term deposits
Group Company Group Company
2012 2012 2011 2011
GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
Cash at bank and in hand 333 284 814 786
Short term deposits 9,806 9,793 12,781 12,685
10,139 10,077 13,595 13,471
========= ========= ========= =========
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 0.5% and 1.3% during the year (2011: 0.4% and
1.0%).
16. Share capital and share premium
31 March 2012 31 March 2011
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 145,801,158 145,681,721
Share Capital (GBP 000's) 1,458 1,457
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.
Details of shares are as follows:
Number of Nominal Share premium Share capital
shares value GBP redemption
GBP reserve
GBP
----------------------- ------------ ---------- -------------- --------------
As at 31 March 2010 145,515,426 1,455,154 - 622,340
Shares issued under
options to Directors 166,295 1,663 - -
As at 31 March 2011 145,681,721 1,456,817 - 622,340
Shares issued under
options to Directors 119,437 1,194 - -
As at 31 March 2012 145,801,158 1,458,011 - 622,340
======================= ============ ========== ============== ==============
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 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.
Diluted loss per share is the same as basic loss per share.
GROUP
2012 2011
GBP000's GBP000's
--------- ---------
Loss attributable to equity holders
of the company (GBP000's) (1,230) (4,936)
Weighted average of number of ordinary
shares in issue (thousands) 145,684 145,547
--------- ---------
Weighted average number of ordinary
shares in issue (diluted) (thousands) 145,684 145,547
--------- ---------
Basic loss per share (pence) (0.84) (3.39)
========= =========
Diluted loss per share (pence) (0.84) (3.39)
========= =========
18. Trade and other payables
Group Company Group Company
2012 2012 2011 2011
GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
Amounts due to other creditors 669 9 775 15
Accruals 136 111 99 75
805 120 874 90
========= ========= ========= =========
19. Financial liabilities
Group Company Group Company
2012 2012 2011 2011
GBP000's GBP000's GBP000's GBP000's
--------- --------- --------- ---------
Investment Adviser performance
fees 1,404 - 3,011 -
As at 31 March 1,404 - 3,011 -
========= ========= ========= =========
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 profit or loss. The amount of such adjustment for the year ended
31 March 2012 was a reversal of GBP1,607,000 (2011: reversal of
GBP399,000). 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 2012 31 March 2011
Currency % of Net Assets % of Net Assets
--------------- ---------------- ----------------
UK Sterling 18 18
Indian Rupees 82 82
--------------- ---------------- ----------------
If the Indian Rupee appreciated/depreciated by 5% against
Sterling the effect on net assets would be to increase/decrease net
assets by GBP4,120,000 (2011: GBP4,529,000).
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 reporting date.
At the reporting date, the Group's financial assets exposed to
credit risk amounted to the following:
31 March 31 March
2012 2011
GBP000's GBP000's
-------------------------------------- --------- ---------
Trade and other receivables 95 129
Cash at bank and short term deposits 10,139 13,595
-------------------------------------- --------- ---------
10,234 13,724
-------------------------------------- --------- ---------
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.
Residual undiscounted contractual maturities of financial
liabilities:
Year ended 31 March 2012
Less than 1-3 months 3 months 1 - 5 Over
1 GBP000's to 1 years five
Month year GBP000's years
GBP000's GBP000's GBP000's
-------------------------------- ---------- ----------- ---------- ---------- ----------
Financial liabilities
Trade and other payables 674 131 - - -
Investment Adviser performance - - - 2,807 -
fees
-------------------------------- ---------- ----------- ---------- ---------- ----------
674 131 - 2,807 -
-------------------------------- ---------- ----------- ---------- ---------- ----------
Year ended 31 March 2011
Less than 1-3 months 3 months 1 - 5 Over
1 GBP000's to 1 years five
Month year GBP000's years
GBP000's GBP000's GBP000's
-------------------------------- ---------- ----------- ---------- ---------- ----------
Financial liabilities
Trade and other payables 777 97 - - -
Investment Adviser performance - - - 5,368 -
fees
-------------------------------- ---------- ----------- ---------- ---------- ----------
777 97 - 5,368 -
-------------------------------- ---------- ----------- ---------- ---------- ----------
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 2012 was 1.18% (31 March 2011: 0.90%). Cash balances comprise
short term deposits which mature as follows:
31 March 31 March
2012 2011
Cash balances Cash balances
GBP000's GBP000's
-------------- --------------
Less than 1 month 5,921 5,510
1-3 months 2,218 5,085
3 months to 1 year 2,000 3,000
10,139 13,595
============== ==============
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 reporting date there was a GBP14.942 million (2011:
GBP12.002 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 2012 which are eliminated on consolidation and are not
disclosed in these accounts.
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 2012 is GBP1.404 million (2011: GBP3.011 million).
In addition, the annual base fee paid to the Investment Adviser
for the year in accordance with the terms of the agreement is
GBP2,840,250 (2011: 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. Since October 2011, the annual base fee has
been revised from 2% to 1.75% 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 towards project
services and royalty was GBP2.325 million (2011: GBP2.881 million)
and other amounts paid to other K Raheja Corp entities were
GBP1.832 million (2011: GBP0.037 million).
The amount received by the Indian Investment Vehicles from K
Raheja Corp entities towards income from lease rentals and other
recoveries was GBP3.966 million (2011: Nil).
As at 31 March 2012, the amounts of loan receivable by associate
companies from K Raheja Corp entities totalled GBP76.110 million
(2011: GBP90.585 million). The loans were interest bearing and as
at 31 March 2012 interest owing totalled GBP7.857 million (2011:
GBP9.916 million). In addition, the associate companies had loan
balances owing to K Raheja Corp entities as at 31 March 2012 of
GBP37.292 million (2011: GBP36.446 million) and interest payable in
relation to these loans totalled GBP2.751 million (2011: GBP3.355
million).
The amount paid to K Raheja Corp Private Limited during the year
was GBP3.133 million (2011: GBP8.513 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 2012,
Neerav Investment Advisory Services (Cyprus) Private Limited, the
parent company of the investment adviser, held 7,493,811 shares of
the Company (2011: 6,643,811 shares).
In the previous year, Chitale & Associates, in which
Rajendra Chitale is a Partner, received fees of GBP 13,319 for
providing professional services to the Company.
Information on Directors' emoluments and share options is given
in note 9.
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 (2011: Nil).
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 * 7 November
40,000 2006
Vittorio Radice 7 November
30,000 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 2012 was as
follows:
2012 2011
GBP GBP
-------- --------
Ian Henderson 40,000 40,000
Vittorio Radice 30,000 30,000
Stephen Vernon 30,000 30,000
-------- --------
100,000 100,000
======== ========
This charge has been recognised in the share based equity
reserve.
24. Events after the reporting date
There have been no material post-balance sheet events which
would require disclosure or adjustment to the 31 March 2012
financial statements.
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 IQE 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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