TIDMISH
RNS Number : 1985T
Ishaan Real Estate PLC
11 December 2012
Ishaan Real Estate plc
Interim Report
For the six months ended 30 September 2012
Overview
The Directors of Ishaan Real Estate plc ("Ishaan") announce the
Company's unaudited results for the six months ended 30 September
2012.
Overview of the six months ended 30 September 2012
Net Asset Value 30 Sep 31 Mar 12 Change
12
------------------------------------- ------ --------- ------
Adjusted NAV per share (pence) (1)
(2) 76.9 80.9 -5.0%
------------------------------------- ------ --------- ------
Reported NAV per share (pence) (1)
(2) 69.3 69.0 0.4%
------------------------------------- ------ --------- ------
-- Portfolio value GBP613 million, up c.1.4 per cent. (31 March 2012: GBP604 million).
-- Underlying portfolio value down 3.9 per cent. (up 0.7 per
cent. in Rupee terms) after adjusting for construction expenditure
capitalised during the period and exchange translation losses
(which translation losses contributed 4.6 per cent.). These items
had a similar impact on adjusted net asset value per share over the
period.
-- Net additions of c.186,000 sq. ft. made to the aggregate area
let or with terms agreed since 21 June 2012.
-- Equivalent annualised rental income of c.GBP37 million being
received on c.7.1 million sq. ft. of the portfolio at 30 September
2012, with the rent being used primarily to pay interest and repay
principal on borrowings.
-- c.INR 38.4 billion (c.GBP448 million) financing secured by
Indian SPVs including debt facilities of c.INR 31.7 billion
(c.GBP370 million) to fund the c.INR 39.5 billion (c.GBP461
million) cost of areas constructed or under construction.
-- Following April 2012 policy rates reduction by the Reserve
Bank of India, interest rates have reduced by a further c.25-50bps.
Current average borrowing cost of Indian SPVs is c.12-13 per
cent.
-- In line with previous disclosure, Andhra Pradesh Industrial
Infrastructure Corporation Ltd's (APIIC's) stake in the Intime and
Sundew SPVs has been increased to 11 per cent. resulting in the
dilution of Ishaan's equity interest in Intime and Sundew from 40
per cent. to 38.98 per cent.
-- Inorbit Mall in Bangalore was launched in August 2012 with
c.55 per cent. of the retail area currently trading.
-- Cash deposits of GBP8.5 million at 30 September 2012 (31 March 2012: GBP10.1 million).
Ian Henderson, Chairman of Ishaan, commented:
"The slow pace of domestic and global economic growth resulted
in letting activity at Ishaan's commercial projects remaining
subdued during the first six months. In contrast, our construction
programme has continued to progress well, with c.8.9 million sq.
ft. of commercial and retail space being now complete. c.7.1
million sq. ft. of this space is yielding rental income and we
expect an additional c.0.5 million sq. ft. to yield rental income
by March 2013.
Portfolio value in Rupee terms remained stable amidst the
difficult market conditions, although the value in GBP terms
decreased on account of negative movement in the exchange rate.
As previously disclosed, the Board is focused on the disposal of
the assets within the Company's portfolio and returning cash to
shareholders. In the second half of 2012, the Board appointed a
leading global commercial real estate firm to comment on valuation
of the Company's assets and to approach potential third party
purchasers (Indian and international) of the Company's assets to
determine interest both on a whole portfolio basis and in respect
of individual assets.
The Board has received preliminary feedback from a number of
potential purchasers, which has highlighted the following:
-- While the assets in the portfolio were generally perceived to
be of high quality, transaction execution remains challenging in
the current environment.
-- The potential exists for a portfolio exit to occur, providing
a more immediate cash realisation for shareholders. However, as of
today, such an exit is likely to take place at a significant
discount to Adjusted Net Asset Value per share.
-- An asset by asset divestment strategy is most likely to
maximise proceeds for shareholders. However, the completion of a
piecemeal disposal process can be expected to take place over an
extended time period.
-- The highest levels of interest shown were in the income
generating assets in the portfolio. Limited interest was shown in
the longer term development projects at Pocharam and Juinagar.
Initial steps down the disposal route have been made and the
Company will update shareholders as and when there is further
information to make available. The Board remains committed to
pursuing all options to realise cash for shareholders and will look
to advance the disposal process in an orderly manner going
forward".
(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 30 September 2012 and at 31
March 2012 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
= 85.71 INR, the Reserve Bank of India reference rate at 28
September 2012. Exchange rate at 30 March 2012 was 1GBP = 81.8 INR
and at 30 September 2011 was 1GBP = 76.52 INR.
11 December 2012
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
The profit before tax for the period of GBP3.3 million (2011:
loss before tax of GBP3.5 million), reflects the share of post-tax
profits of associates and write back of investments in associates
partially offset by the cost of investment advisory fees paid /
payable to the investment adviser.
Valuation
The underlying valuation of 100 per cent. interests in the
portfolio properties at 30 September 2012, as valued by Cushman
& Wakefield (India) Pvt. Limited ('Cushman & Wakefield') at
30 September 2012 increased by 6.2 per cent. to INR 52.5 billion
(31 March 2012: INR 49.4 billion). Adjusting for construction
expenditure capitalised during the period (which broadly reflects
physical progress in construction) the portfolio's value increased
by 0.7 per cent.
After conversion to pound Sterling, the 100 per cent. interests
in portfolio properties were valued at GBP613 million at 30
September 2012. Ishaan's interest was valued at GBP243 million,
with an increase of 0.4 per cent. compared to GBP242 million at 31
March 2012, (a decrease of 3.9 per cent. after adjusting for
construction expenditure capitalised during the period). This
decrease in pound Sterling valuation in part reflects a 4.6 per
cent. decrease in value since 31 March 2012 on account of exchange
translation loss (the exchange rate moved from INR 81.8 on 30 March
2012 to INR 85.71 on 28 September 2012).
Net Asset Value
Reported net asset value per share was 69.3p at 30 September
2012 (31 March 2012: 69.0p). Reported net asset value per share is
calculated based on the Group's reported net assets at period 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 76.9p at 30 September
2012 down 5.0 per cent compared with 80.9p at 31 March 2012. The
decline in adjusted net asset value per share reflects the exchange
translation loss and reduction in cash deposits with the
Company.
The Board considers Adjusted NAV per share to be a more
appropriate method of evaluating the performance of the Company
than Reported NAV per share, as it includes all investments at
current valuations in proportion to the Group's shareholdings in
each project as well as a provision for a potential income tax
liability on the Vivarea project while excluding 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 involve the sale of development
properties, which should trigger the crystallisation of the
deferred tax provision.
In March 2012 amendments were made to the Indian Income Tax law
under 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 the method by which
Ishaan will divest its interest in the Indian SPVs, the values to
be realized, and the quantum, if any, of resulting taxable gains,
the Board considers it to be premature to include any provision in
respect of such Income Tax, in determining the Adjusted NAV per
share at this time.
Project Progress
Construction has been completed on an additional c.1.3 million
sq. ft., bringing the total area constructed to c.8.9 million sq.
ft. An additional area of c.0.7 million sq. ft. has been brought
under construction at Mindspace Madhapur, Hyderabad (SEZ). Also,
since the period end, work has commenced on the commercial space at
Inorbit, Pune. Subsequently the total area constructed and under
construction in the portfolio now stands at c.11.7 million sq. ft.
excluding hotel and residential development and c.12.7 million sq.
ft. including hotel and residential development.
Details of the area constructed or under construction:
Area sq. ft.
Project Area constructed Area under Area constructed Area for Total planned
(a) construction and under future development development
(b) construction (d) (e = c +
(c = a d)
+ b)
Mindspace, Airoli, Navi
Mumbai 3,191,000 1,038,000 4,229,000 356,000 4,585,000
Mindspace, Pocharam 380,000 - 380,000 1,690,000 2,070,000
Mindspace, Madhapur (SEZ) 2,017,000 1,463,000 3,480,000 1,336,000 4,816,000
Mindspace, Madhapur
(non-SEZ) 1,714,000 - 1,714,000 - 1,714,000
Inorbit, Hyderabad 780,000 - 780,000 322,000 1,102,000
Inorbit, Pune * 546,000 98,000 644,000 - 644,000
Commerzone, Bangalore
** 271,000 175,000 446,000 65,000 511,000
Mindspace, Juinagar,
Navi Mumbai - - - 2,250,000 2,250,000
Sub-Total 8,899,000 2,774,000 11,673,000 6,019,000 17,692,000
Commerzone, Bangalore
*** - 360,000 360,000 - 360,000
Vivarea, Mumbai - 620,000 620,000 240,000 860,000
Total 8,899,000 3,754,000 12,653,000 6,259,000 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.
**Area under construction comprises commercial space and future
development comprises multiplex space.
*** Area under construction comprises hotel development.
Since the preliminary results announcement on 21 June 2012, net
addition of c.186,000 sq. ft. (including c.38,000 sq. ft.
previously under option) have been made to the area let or under
terms agreed across the following projects in the portfolio:
-- c.108,000 sq. ft. at Mindspace, Airoli, Navi Mumbai
-- c.42,000 sq. ft. at Mindspace, Madhapur, Hyderabad SEZ
-- c.30,000 sq. ft. at Mindspace, Madhapur, Hyderabad Non- SEZ
-- c.8,000 sq. ft. at Inorbit Malls, Hyderabad, Pune and Bangalore
-- c.2,000 sq. ft. reduction in lettings at Mindspace, Pocharam, Hyderabad
With this, the total area let or under terms agreed in the
portfolio has increased to c.8.9 million sq. ft., representing c.77
per cent. of the lettable area constructed or under construction
and c.51 per cent. of the aggregate lettable area of the
portfolio.
Options over c.34,000 sq. ft. have been given up by the tenants.
The aggregate area under option now stands at c.702,000 sq. ft.
which is in addition to the area let or terms agreed.
At 30 September 2012, revenue is being received on c.7.1 million
sq. ft. of the portfolio. Rent of c.GBP17 million has been
generated from these lettings in the six months ended 30 September
2012, being used primarily to repay principal and interest on
borrowings. Annualised rent from this area is estimated at c.GBP37
million, and a further c.0.5 million sq. ft. is expected to become
income producing by March 2013.
Updated levels of letting activity in the Company's portfolio
are as follows:
Area sq. ft.
Project Area let Terms Aggregate Lettable % of area Area yielding
(a) agreed area area constructed constructed rent as
(b) (Area let or under or under at 30 Sep
& Terms construction construction 12
Agreed)
(c)=(a+b) (d) (c)/(d)
Mindspace, Airoli,
Navi Mumbai 2,535,000 893,000 3,428,000 4,229,000 81% 2,507,000
Mindspace, Pocharam 160,000 - 160,000 380,000 42% 160,000
Mindspace, Madhapur
(SEZ) 1,707,000 590,000 2,297,000 3,480,000 66% 1,447,000
Mindspace, Madhapur
(non-SEZ) 1,691,000 - 1,691,000 1,714,000 99% 1,672,000
Inorbit, Hyderabad 706,000 - 706,000 780,000 *91% 687,000
Inorbit, Pune 493,000 - 493,000 **644,000 *90% 483,000
Commerzone, Bangalore 159,000 5,000 164,000 **446,000 *61% 150,000
Total 7,451,000 1,488,000 8,939,000 11,673,000 77% 7,106,000
* Figures are for the retail space at the respective projects;
** Includes commercial space at the project
In addition to the above area let or under terms agreed,
c.702,000 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 247,000
------------------------- ---------------
Mindspace, Pocharam 216,000
------------------------- ---------------
Mindspace, Madhapur
(SEZ) 239,000
------------------------- ---------------
TOTAL 702,000
------------------------- ---------------
Since the preliminary results announcement on 21 June 2012, an
additional c.16,000 sq. ft. of residential space has been pre-sold
at Vivarea, Mumbai. As a result, a total of c.561,000 sq. ft. has
been pre-sold at this project at an average price higher than that
estimated at the time of IPO. The area pre-sold represents c.90 per
cent. of the saleable residential area currently under
construction. Estimated completion of the fourth tower at this
project has been extended by a year to Q3 2016 on account of a
delay in receipt of approvals, some of which are still
outstanding.
Inorbit Mall at Whitefield, Bangalore was launched in August
2012 with c.55 per cent. of the mall area currently trading. Though
the demand supply situation in this micro market remains
challenging, the Company is hopeful of achieving additional
lettings by the end of the year.
Letting activity at the commercial projects moderated during the
period owing to the slowdown in expansion plans of many IT/ITES
companies in view of sluggish economic conditions in India. Rentals
remained stable or increased marginally at some of the commercial
projects in the portfolio.
During the period, the decision was taken to merge certain of
the Mauritian subsidiaries owned by I Holding Company (Mauritius)
Ltd. In consequence, it is expected that changes will also need to
be made to certain aspects of the Investment Advisory Agreement to
reflect this simplified Group structure and to ensure consistency
of the Investment Advisory Agreement with the terms as set out at
the time of IPO.
Final resolution of dispute between K Raheja Corp and APIIC
As previously announced on 20 September 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, K
Raheja IT Park Pvt Ltd (the 'JV Company'), the entity set-up by K
Raheja Corp to develop IT Parks in Hyderabad, had offered to
restore APIIC's stake in the JV Company to 11 per cent. for nominal
consideration. This also required Intime Properties Private Limited
('Intime) and Sundew Properties Private Limited ('Sundew')
(investee companies of Ishaan), which were demerged from the JV
Company in March 2007, to offer to APIIC restoration of APIIC's
stake in Intime and Sundew to 11 per cent. The restoration proposal
was unanimously passed by the boards of Intime and Sundew with the
participation of the APIIC nominee director.
Consequently, restoration of APIIC's stake in Intime and Sundew
has been 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 and transfer of
shares have resulted in the dilution of Ishaan's equity interest in
Intime and Sundew from 40 per cent. to 38.98 per cent., as
previously disclosed. The impact of this dilution on Ishaan's Net
Asset Value per share at 30 September 2012 is c.0.5p or 0.7% of
Adjusted NAV per share of 76.9p.
Additionally, in 2011, a private action was brought by an
advocate in the Anti-Corruption Bureau (ACB) Court at Hyderabad
alleging corruption by Mr. Neel Raheja and an employee of K Raheja
Corp in connection with the dilution of APIIC's shareholding in the
JV Company at the time of the equity issue by the JV Company in
2005. The ACB enquiry is now underway. Mr. Raheja, on advice,
maintains that the allegations are without foundation and there was
no corruption on his part or on the part of the K Raheja Corp
employee in connection with the 2005 equity issue by the JV
Company.
Project Update:
Mindspace, Airoli, Navi Mumbai
Since the preliminary results announcement on 21 June 2012, net
additions of c.108,000 sq. ft. have been made to area let or terms
agreed. As a result, c.3.4 million sq. ft., representing c.81 per
cent of the area constructed or currently under construction, has
been let or has had terms agreed. A further c.247,000 sq. ft. is
under option/ROFR at this project. As at 30 September 2012, rent
has commenced from c.2,507,000 sq. ft. of space.
Eight buildings, with an aggregate area of c.3.2 million sq.
ft., are currently operational. Another three buildings with an
aggregate area of c.1.0 million sq. ft. are under construction with
finishes in progress at one of the three buildings and super
structure work in progress on the other two buildings.
Mindspace, Pocharam, Hyderabad
One building at this project is completed. Super structure work
is partly complete on a second building and further construction is
currently on hold. The area let at this project stands at c.
160,000 sq. ft. Another 216,000 sq. ft. is under options.
Mindspace, Madhapur, Hyderabad (SEZ Development)
Since the preliminary results announcement on 21 June 2012, net
addition of c.42,000 sq. ft. has been made to area let or with
terms agreed. As a result, the aggregate area let or with terms
agreed is now c.2.3 million sq. ft. representing c.66 per cent. of
the area constructed or currently under construction at this
project. As at 30 September 2012, rent has commenced from an area
of c. 1,447,000sq. ft.
Options over c.34,000 sq. ft. have been given up by the
prospective tenants since 21 June 2012. The total area under
options at this project is now c.239,000 sq. ft.
Three buildings at the project are operational, while super
structure work is on-going on one building and foundation work is
in progress on another building. Delayed receipt of approvals has
caused extension of the estimated project completion by a year from
Q3 2015 to Q3 2016.
Mindspace, Madhapur, Hyderabad (Non-SEZ Development)
All three buildings at this project are completed and
operational. Aggregate area let is c.1.69 million sq. ft.,
representing c.99 per cent of the project area. As at 30 September
2012, rent has commenced from an area of c.1.67 million sq. ft.
Inorbit, Madhapur, Hyderabad
Since its launch in October 2009 the mall has continued to trade
well. c.91 per cent of the retail space is currently let and c.88
per cent of the space is currently trading. As at 30 September
2012, rent had commenced on c.687,000 sq. ft. The planned IT
development at this project is currently on hold.
Inorbit, Pune
Aggregate area let or terms agreed at this project stands at c.
493,000 sq. ft., representing c.90 per cent. of the retail space.
c.88 per cent of the retail area is currently trading. As on 30
September 2012, rent had commenced on c. 483,000 sq. ft.
Construction has commenced on the planned IT development of
c.98,000 sq. ft.
Vivarea, Mumbai
Interiors and finishes work is in progress on the three towers
and is due to be completed by March 2013. Estimated completion of
the fourth tower (which we are obligated to deliver) has been
delayed by a year to Q3 2016 on account of a delay in receipt of
planning approvals, some of which are still awaited. c.561,000 sq.
ft. has been pre-sold at this project, representing c.90 per cent
of the saleable area currently under construction.
Commerzone Bangalore
The mall was launched in August 2012 and the aggregate retail
area let or terms agreed at this project stands at c.164,000 sq.
ft., representing c.61 per cent of the completed retail space.
Construction cost of the hotel has increased by INR 360 million
due to delay in the hotel completion, inflation, rupee depreciation
and enhancement of certain amenities and safety measures. Interior
and finishes work is in progress at the hotel site and the hotel is
planned to be operational by Q1 2013.
Mindspace, Juinagar, Navi Mumbai
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 potential demand for the development.
Cost & Financing
Currently, an area of c.12.0 million sq. ft. (excluding Vivarea)
is constructed or under construction. The Indian SPVs remain well
funded to meet the development requirements of this area. Against
the revised estimated cost of c.INR 39.5 billion (c.GBP461
million), which includes the increase in cost at Commerzone,
Whitefield Bangalore, the Indian SPVs have secured funding of c.INR
38.4 billion (c.GBP448 million) comprising:
-- shareholders' equity of c.INR 4.2 billion (c.GBP49 million),
-- debt facilities of c.INR 31.7 billion (c.GBP370 million) and
-- security deposits received/receivable on areas let or terms
agreed of c.INR 2.5 billion (c.GBP29 million).
Of the above estimated project costs for the area currently
under development, c.INR 32.6 billion (c.GBP380 million) has been
incurred up-to 30 September 2012. The Indian SPVs had drawndown
debt of c.INR 25.7 billion (c.GBP299 million) at 30 September 2012,
with unutilised facilities of c.INR 6.0 billion (c.GBP71 million).
In addition, c.90 per cent. of the saleable residential space
currently under construction at Vivarea is pre-sold, which will
fund the cost of construction of this project.
The debt facility of c.INR 31.7 billion (c.GBP370 million)
includes debt of c.INR 23.4 billion (c.GBP273 million) in the form
of long term amortizing loans, with an average maturity of about
9.5 years. The balance debt of c.INR 8.3 billion (c.GBP97 million)
is other construction debt, with an average maturity of about 3.5
years.
Debt Maturity Profile INR GBP mn
bn
========================================= ====== ======
Long term amortizing loans 23.4 273
========================================= ====== ======
Other Construction debt (Nil repayable
before March 2013) 8.3 97
========================================= ====== ======
TOTAL 31.7 370
========================================= ====== ======
Having largely secured funding for the area currently under
development, the Company is confident of meeting its future
development requirements through further debt financing.
Construction debt and long term amortising loans have largely
been obtained from domestic and foreign banks. Average tenure of
construction debt is generally around 3-4 years with refinancing on
construction completion to Lease Rent Discounting (LRD) loans with
tenure around 9-10 years. The current interest rates on the funding
secured by the Indian SPVs are c.12-13 per cent. p.a. Aggregate
bank debt drawn to portfolio value is c.49 per cent.
Dividend
In accordance with the dividend policy set out in the IPO
admission document, which stated that it was not anticipated that
dividends would be paid in the foreseeable future, as the projects
remain in a highly capital intensive stage, the Board is not
declaring a dividend for the six months ended 30 September 2012.
The Board will consider payment of dividends when it becomes
commercially prudent to do so.
Outlook
Economic activity in India remains sluggish with the Index of
Industrial Production (IIP) in India for September 2012 reducing by
0.4 per cent. year on year. Inflation for October 2012 remained
high at 7.45 per cent. Recently, the Government of India announced
a series of measures to revive long term economic growth and reduce
fiscal deficit. These included opening up of the retail sector for
Foreign Direct Investment (FDI) by allowing up to 51 per cent. FDI
in multi brand retailing and 100 per cent. FDI in single brand
retailing, allowing FDI in the aviation business, a divestment plan
for Public Sector Undertakings and an increase in the price of
subsidized fuel amongst other measures. Growth and inflationary
pressures are however expected to continue in the near term.
In order to manage liquidity and support growth, the Reserve
Bank of India (RBI) in its monetary policy review in September 2012
and again in October 2012 reduced Cash Reserve Ratio by 25 bps each
time to 4.25 per cent., injecting c.INR 340 billion of liquidity
into the Indian financial system. However, with inflation
continually above the RBI's target level, the RBI kept the policy
rates i.e. repo and reverse repo rates unchanged at 8 per cent. and
7 per cent. respectively.
Demand for commercial space remained subdued due to the slowdown
in economic activity both globally and domestically. Improvement in
demand for commercial space will be driven by the recovery of
domestic and international markets. Residential volumes in Mumbai
were muted on the back of high property prices and weakening
affordability. While demand for high quality retail real estate was
stable, increased costs and slowdown in consumption have put
pressure on the rentals that retailers are willing to pay. Rentals
are expected to remain under pressure in the near term.
Realisation of Cash
As previously disclosed, the Board is focused on the disposal of
the assets within the Company's portfolio and returning cash to
shareholders. In the second half of 2012, the Board appointed a
leading global commercial real estate firm to comment on valuation
of the Company's assets and to approach potential third party
purchasers (Indian and international) of the Company's assets to
determine interest both on a whole portfolio basis and in respect
of individual assets.
The Board has received preliminary feedback from a number of
potential purchasers, which has highlighted the following:
-- While the assets in the portfolio were generally perceived to
be of high quality, transaction execution remains challenging in
the current environment.
-- The potential exists for a portfolio exit to occur, providing
a more immediate cash realisation for shareholders. However, as of
today, such an exit is likely to take place at a significant
discount to Adjusted Net Asset Value per share.
-- An asset by asset divestment strategy is most likely to
maximise proceeds for shareholders. However, the completion of a
piecemeal disposal process can be expected to take place over an
extended time period.
-- The highest levels of interest shown were in the income
generating assets in the portfolio. Limited interest was shown in
the longer term development projects at Pocharam and Juinagar.
Initial steps down the disposal route have been made and the
Company will update shareholders as and when there is further
information to make available. The Board remains committed to
pursuing all options to realise cash for shareholders and will look
to advance the disposal process in an orderly manner going
forward.
Ian Henderson
Chairman
Review report by KPMG Audit LLC to Ishaan Real Estate plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly report for the six
months ended 30 September 2012, which comprises the consolidated
statement of comprehensive income, the consolidated statement of
financial position, the consolidated statement of changes in
equity, the consolidated statement of cash flows and the related
explanatory notes. We have read the other information contained in
the half-yearly report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the Company in accordance with the
terms of our engagement. Our review has been undertaken so that we
might state to the Company those matters we are required to state
to it in this 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 for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for
preparing the half-yearly report in accordance with the AIM
Rules.
As disclosed in note 2 the annual financial statements are
prepared in accordance with IFRS. The condensed set of financial
statements included in this half yearly report have been prepared
in accordance with IAS 34 Interim Financial Reporting.
The accounting policies that have been adopted in preparing the
condensed set of financial statements are consistent with those
applied by the Group in its consolidated financial statements as at
and for the year ended 31 March 2012.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly report
based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and
Ireland) and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly report for the six months ended 30 September
2012 is not prepared, in all material respects, in accordance with
IAS 34 and the AIM Rules.
KPMG Audit LLC
Chartered Accountants
Douglas
Isle of Man
10 December 2012
Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2012
Unaudited Unaudited Audited
From 1 April 2012 to 30 From 1 April 2011 to 30 From 1 April 2011 to 31
September 2012 September 2011 March 2012
Notes GBP000's GBP000's GBP000's
-------------------------- -------------------------- --------------------------
Administrative expenses 4 (1,725) (1,913) (3,637)
Share of post tax profit
/ (losses) of associates 6 2,405 (994) (847)
Write-back / (write-down)
of investments in
associates net of
investment adviser
performance
fees 5 2,578 (664) 3,138
-------------------------- -------------------------- --------------------------
Group operating profit /
(loss) from continuing
operations 3,258 (3,571) (1,346)
Net finance income 52 58 116
-------------------------- -------------------------- --------------------------
Profit /(loss) from
continuing operations
before tax 3,310 (3,513) (1,230)
Taxation - - -
-------------------------- -------------------------- --------------------------
Profit / (loss) for the
period from continuing
operations 3,310 (3,513) (1,230)
========================== ========================== ==========================
Other comprehensive
(loss)/ income
Translation reserve -
associates 6 (2,882) (4,378) (8,856)
-------------------------- -------------------------- --------------------------
Other comprehensive
(loss) for the period (2,882) (4,378) (8,856)
========================== ========================== ==========================
Total comprehensive
profit / (loss) for the
period attributable to
equity holders of parent 428 (7,891) (10,086)
========================== ========================== ==========================
Basic and diluted
earnings / (loss) per
share attributable to the
equity holders of the
parent
during the period
(expressed as pence per
share)
Basic earnings / (loss)
per share 8 2.27 (2.41) (0.84)
Diluted earnings / (loss)
per share 8 2.27 (2.41) (0.84)
The attached notes 1 to 10 form an integral part of these
unaudited consolidated financial statements.
Consolidated Statement of Financial Position
As at 30 September 2012
Unaudited Unaudited Audited
30 September 30 September 31 March
2012 2011 2012
Notes GBP000's GBP000's GBP000's
-------------- -------------- ----------
ASSETS
Non-current assets
Investment in associates 6 94,399 94,090 92,555
-------------- -------------- ----------
94,399 94,090 92,555
-------------- -------------- ----------
Current assets
Trade and other receivables 64 91 95
Cash and short term
deposits 8,543 11,783 10,139
-------------- -------------- ----------
8,607 11,874 10,234
-------------- -------------- ----------
TOTAL ASSETS 103,006 105,964 102,789
============== ============== ==========
EQUITY AND LIABILITIES
Equity attributable
to shareholders of the
parent company
Share capital 7 1,459 1,457 1,458
Share capital redemption
reserve 622 622 622
Foreign currency translation
reserve (8,950) (1,590) (6,068)
Retained profits 107,927 102,236 104,568
-------------- -------------- ----------
Total equity 101,058 102,725 100,580
-------------- -------------- ----------
Current liabilities
Trade and other payables 801 829 805
Non-current liabilities
Financial liabilities 1,147 2,410 1,404
TOTAL EQUITY AND LIABILITIES 103,006 105,964 102,789
============== ============== ==========
The attached notes 1 to 10 form an integral part of these
unaudited consolidated financial statements.
Consolidated Statement of Cash Flows
For the six months ended 30 September 2012
Unaudited Unaudited
From 1 April From 1 April Audited
2012 to 30 2011 to 30 From 1 April
September September 2011 to 31
2012 2011 March 2012
GBP000's GBP000's GBP000's
----------------------- ----------------- ------------------
OPERATING ACTIVITIES
Profit / (loss) before tax
from continuing operations 3,310 (3,513) (1,230)
Adjustments for:
Interest income (52) (58) (116)
Share of post tax (profits)
/ losses of associates (2,405) 994 847
Grant of directors' annual
share options 50 50 100
(Write-back) / write-down
of investments in associates
net of investment adviser
performance fee (2,578) 664 (3,138)
----------------------- ----------------- ------------------
Operating loss before working
capital changes (1,675) (1,863) (3,537)
Decrease in trade and other
receivables 31 38 34
Decrease in trade and other
payables (4) (45) (69)
----------------------- ----------------- ------------------
Net cash flows from operating
activities (1,648) (1,870) (3,572)
----------------------- ----------------- ------------------
INVESTING ACTIVITIES
Interest received 52 58 116
Net cash flows generated
from investing activities 52 58 116
----------------------- ----------------- ------------------
FINANCING ACTIVITIES
Net cash flows used in financing -
activities - -
----------------------- ----------------- ------------------
Net movements in cash and
cash equivalents (1,596) (1,812) (3,456)
Cash and cash equivalents
at the beginning of period 10,139 13,595 13,595
----------------------- ----------------- ------------------
Cash and cash equivalents
at the end of the period 8,543 11,783 10,139
----------------------- ----------------- ------------------
Represented by:
Cash and short term deposits 8,543 11,783 10,139
----------------------- ----------------- ------------------
8,543 11,783 10,139
----------------------- ----------------- ------------------
The attached notes 1 to 10 form an integral part of these
unaudited consolidated financial statements.
Consolidated Statement of Changes in Equity
For the six months ended 30 September 2012
Share capital Share Capital Retained earnings / Foreign currency Total equity
Redemption Reserve (losses) translation reserve
GBP000's GBP000's GBP000's GBP000's GBP000's
-------------- -------------------- -------------------- -------------------- -------------
Balance at 1 April
2011 1,457 622 105,699 2,788 110,566
Total comprehensive
loss for the period
Loss for the period - - (3,513) - (3,513)
Other comprehensive
loss
Foreign currency
translation reserve
- associates - - - (4,378) (4,378)
-------------- -------------------- -------------------- -------------------- -------------
Total other
comprehensive loss - - - (4,378) (4,378)
-------------- -------------------- -------------------- -------------------- -------------
Total comprehensive
loss for the period - - (3,513) (4,378) (7,891)
-------------- -------------------- -------------------- -------------------- -------------
Transactions with
owners, recorded
directly in equity
(Contributions by
and distributions
to owners)
Issue of shares - - - - -
under directors'
annual options
Grant of directors'
annual share
options - - 50 - 50
Total transaction
with owners - - 50 - 50
-------------- -------------------- -------------------- -------------------- -------------
Balance at 30
September 2011 1,457 622 102,236 (1,590) 102,725
Total comprehensive
loss for the period
Loss for the period - - 2,283 - 2,283
Other comprehensive
loss
Foreign currency
translation reserve
- associates - - - (4,478) (4,478)
-------------- -------------------- -------------------- -------------------- -------------
Total other
comprehensive loss - - - (4,478) (4,478)
-------------- -------------------- -------------------- -------------------- -------------
Total comprehensive
(loss)/ income for
the period - - 2,283 (4,478) (2,195)
-------------- -------------------- -------------------- -------------------- -------------
The attached notes 1 to 10 form an integral part of these
unaudited consolidated financial statements.
Consolidated Statement of Changes in Equity (continued)
For the six months ended 30 September 2012
Share Capital Retained earnings / Foreign currency
Share capital Redemption Reserve (losses) translation reserve Total equity
GBP000's GBP000's GBP000's GBP000's GBP000's
-------------- -------------------- -------------------- -------------------- -------------
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 - - 50 - 50
Total transaction
with owners 1 - 49 - 50
-------------- -------------------- -------------------- -------------------- -------------
Balance at 31 March
2012 1,458 622 104,568 (6,068) 100,580
Total comprehensive
loss for the period
Profit for the
period - - 3,310 - 3,310
Other comprehensive
loss
Foreign currency
translation reserve
- associates - - - (2,882) (2,882)
-------------- -------------------- -------------------- -------------------- -------------
Total other
comprehensive loss - - - (2,882) (2,882)
-------------- -------------------- -------------------- -------------------- -------------
Total comprehensive
profit / (loss) for
the period - - 3,310 (2,882) 428
-------------- -------------------- -------------------- -------------------- -------------
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 - - 50 - 50
Total transaction
with owners 1 - 49 - 50
-------------- -------------------- -------------------- -------------------- -------------
Balance at 30
September 2012 1,459 622 107,927 (8,950) 101,058
The attached notes 1 to 10 form an integral part of these
unaudited consolidated financial statements.
Notes to the Consolidated Financial Statements
Continued
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 AIM.
The principal activity of the Company and its subsidiaries is
that of investment holding.
The consolidated financial statements of Ishaan Real Estate plc
comprise the Company and its subsidiaries (together referred to as
the "Group").
This interim financial information for the period ended 30
September 2012 is unaudited and does not constitute statutory
accounts within the meaning of the Companies Acts 1931 to 2004.
The statutory accounts for the period from 1 April 2011 to 31
March 2012 which were prepared in accordance with International
Financing Reporting Standards (IFRS) have been filed and copies can
be obtained from the Registered Office of the Company at Top Floor,
14 Athol Street, Douglas, Isle of Man. The auditors' report on
those accounts was unqualified. This unaudited interim financial
information includes the results of the Company and its wholly
owned subsidiaries for the period under review.
2 Significant Accounting Policies
(a) Basis of accounting
The condensed financial statements have been prepared under
historical cost convention except for investment properties that
have been measured at fair value.
(b) Basis of preparation
The condensed financial statements have been prepared using
accounting policies that are consistent with those followed in
preparation of the Group's annual financial statements for the
period 1 April 2011 to 31 March 2012, and in accordance with
International Accounting Standards ("IAS") 34: Interim Financial
Reporting. The consolidated financial statements have been prepared
in pounds sterling.
(c) Other financial liabilities - Investment adviser performance
fees
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
has been included in the cost of the Group's investment in
associates. Subsequent to the date of acquisitions, revisions to
these provisions are charged to the profit or loss.
(d) 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
recognized 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 recognized
in other comprehensive income 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 recognized in other comprehensive
income. Any loss arising in this manner is recognized 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.
3 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 have
been presented.
4 Administrative expenses
Unaudited Unaudited Audited
From 1 April 2012 to 30 From 1 April 2011 to 30 From 1 April 2011 to 31
September 2012 September 2011 March 2012
GBP000's GBP000's GBP000's
---------------------------- ---------------------------- ----------------------------
Directors' fees and
expenses 78 81 159
Secretarial and
administration 62 58 110
Audit fees 39 37 85
Investment adviser fees 1,320 1,520 2,840
Other professional fees 114 110 244
Other expenses 62 57 99
Grant of Directors' annual
share options 50 50 100
---------------------------- ---------------------------- ----------------------------
1,725 1,913 3,637
============================ ============================ ============================
5 Write-down of investments in associates
The Group writes-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, was not written down and is
stated at cost plus share of profits/losses and cost of performance
fees payable.
Unaudited Unaudited Audited
30 September 2012 30 September 2011 31 March 2012
GBP000's GBP000's GBP000's
------------------- ------------------- ---------------
Write-back / (write-down) of investments to share of net
assets in associates 2,321 (1,265) 1,531
Investment adviser performance fees 257 601 1,607
------------------- ------------------- ---------------
2,578 (664) 3,138
=================== =================== ===============
6 Investments in associates
Unaudited Unaudited Audited
30 September 2012 30 September 2011 31 March 2012
GBP000's GBP000's GBP000's
---------------------------- ------------------- ---------------
Unquoted
Balance at the beginning of the period 92,555 100,727 100,727
Share of post tax profit / (losses) of associates 2,405 (994) (847)
Write-back / (write-down) of investments to share
of net assets in associates* 2,321 (1,265) 1,531
Foreign currency translation (2,882) (4,378) (8,856)
---------------------------- ------------------- ---------------
Balance at the end of the period 94,399 94,090 92,555
============================ =================== ===============
6 Investments in associates (continued)
*As detailed in note 5, the Group wrote-back/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 1.535 million
(31 March 2012: GBP 7.114 million).
Properties held by the associates have been valued by Cushman
& Wakefield (India) Pvt. Limited at 30 September 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.
Summarised financial information extracted from the interim
financial statements of associates for six month period ended 30
September 2012 is 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 62,008 36,846 68,701 22,979 43,209 32,644 9,291
------------------------- --------- --------- --------- --------- --------- --------- ---------
Total liabilities 47,964 26,599 55,821 21,770 32,263 19,016 3,994
------------------------- --------- --------- --------- --------- --------- --------- ---------
Share of the associates
results:
------------------------- --------- --------- --------- --------- --------- --------- ---------
Total revenue 15,019 2,814 3,495 125 1,531 1,984 -
------------------------- --------- --------- --------- --------- --------- --------- ---------
Profit/(loss) for
the period (excluding
movements in valuation
of properties) 5,323 (73) (181) (2,358) (395) 274 (185)
------------------------- --------- --------- --------- --------- --------- --------- ---------
Profit/(loss) for
the period (excluding
depreciation and
movements in valuation
of properties) 5,323 285 307 (2,246) (128) 698 (185)
------------------------- --------- --------- --------- --------- --------- --------- ---------
Summarised financial information extracted from the interim
financial statements of associates for six month period ended 30
September 2011 is 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 70,545 39,881 63,433 17,874 43,882 35,399 10,391
------------------------- --------- --------- --------- --------- --------- --------- ---------
Total liabilities 61,713 30,276 49,402 16,269 29,334 22,429 4,040
------------------------- --------- --------- --------- --------- --------- --------- ---------
Share of the associates
results:
------------------------- --------- --------- --------- --------- --------- --------- ---------
Total revenue 375 3,220 2,777 - 963 2,295 -
------------------------- --------- --------- --------- --------- --------- --------- ---------
Profit/(loss) for
the period (excluding
movements in valuation
of properties) 1,427 (217) (547) (332) (458) (677) (190)
------------------------- --------- --------- --------- --------- --------- --------- ---------
Profit/(loss) for
the period (excluding
depreciation and
movements in valuation
of properties) 1,427 192 (267) (332) (258) 906 (190)
------------------------- --------- --------- --------- --------- --------- --------- ---------
6 Investments in associates (continued)
Details of the investments in associates are as follows:
% Holding % Holding
Country of Type of 30 September 31 March
Investee company Incorporation Shares 2012 2012
------------------------------------ ---------------- ------------- -------------- ----------
Trion Properties Private
Limited India Equity 40% 40%
Preference 100% 100%
------------------------------------------------------------------- -------------- ----------
Serene Properties Private
Limited India Equity 40% 40%
Preference 100% 100%
------------------------------------------------------------------- -------------- ----------
Magna Warehousing and Distribution
Private Limited India Equity 40% 40%
Preference 100% 100%
------------------------------------------------------------------- -------------- ----------
Genext Hardware and Parks
Private Limited India Equity 40% 40%
------------------------------------ ---------------- ------------- -------------- ----------
Sundew Properties Private
Limited* India Equity 38.98% 40%
------------------------------------ ---------------- ------------- -------------- ----------
Intime Properties Private
Limited** India Equity 38.98% 40%
------------------------------------ ---------------- ------------- -------------- ----------
Newfound Properties and
Leasing Private Limited India Equity 40% 40%
------------------------------------ ---------------- ------------- -------------- ----------
The principal activity of all associates is real estate
development.
* On 26 September 2012, the Board of Sundew Properties Private
Limited ("Sundew") allotted additional 28,711 equity shares each of
INR 10 for cash at par to Andhra Pradesh Industrial Infrastructure
Corporation Ltd ("APIIC") for restoration of 11% equity stake of
APIIC in Sundew. Consequently, restoration of APIIC's stake in
Sundew has been effected through a transfer of shares owned in
Sundew by K Raheja Corp Group and an issue of new shares to APIIC
by Sundew. The issue of new shares and transfer of shares has
resulted in the dilution of Ishaan's equity interest in Sundew from
40% to 38.98%.
** On 26 September 2012, the Board of Intime Properties Private
Limited ("Intime") allotted additional 34,490 equity shares each of
INR 10 for cash at par to Andhra Pradesh Industrial Infrastructure
Corporation Ltd ("APIIC") for restoration of 11% equity stake of
APIIC in Intime. Consequently, restoration of APIIC's stake in
Intime has been effected through a transfer of shares owned in
Intime by K Raheja Corp Group and an issue of new shares to APIIC
by Intime. The issue of new shares and transfer of shares has
resulted in the dilution of Ishaan's equity interest in Intime from
40% to 38.98%.
7 Share capital
Unaudited Unaudited Audited
30 September 30 September 31 March
2012 2011 2012
-------------- -------------- ------------
Authorised:
Number of ordinary shares
of GBP0.01 each 400,000,000 400,000,000 400,000,000
Share Capital (GBP 000's) 4,000 4,000 4,000
Allotted, called up and
fully paid:
Number of ordinary shares
of GBP0.01 each 145,854,133 145,681,721 145,801,158
Share Capital (GBP 000's) 1,459 1,457 1,458
8 Earnings per share
Basic and diluted earnings/(loss) per share
Basic earnings/(loss) per share is calculated by dividing the
net profit/(loss) attributable to the equity shareholders of the
Company by the weighted average number of ordinary shares
outstanding during the period.
8 Earnings per share (continued)
Basic and diluted earnings/(loss) per share (continued)
Diluted earnings/(loss) per share is calculated by dividing the
net profit/(loss) attributable to ordinary equitable holders of the
parent by the weighted average number of Ordinary Shares
outstanding during the period, plus the weighted average number of
Ordinary Shares that would be issued on the conversion of all the
dilutive potential Ordinary Shares into Ordinary Shares.
Unaudited Unaudited Audited
30 September 30 September 31 March
2012 2011 2012
----------------------- -------------- ---------------------
Profit / (loss) attributable
to equity holders of the
company (GBP'000) 3,310 (3,513) (1,230)
Weighted average of number
of ordinary shares in
issue (thousands) 145,839 145,682 145,684
Weighted average number
of ordinary shares in
issue (diluted) (thousands) 145,839 145,682 145,684
Basic earnings /(loss)
per share (pence) 2.27 (2.41) (0.84)
======================= ============== =====================
Diluted earnings/(loss)
per share (pence) 2.27 (2.41) (0.84)
======================= ============== =====================
9 Related party transactions
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 30
September 2012 is GBP1.147 million (31 March 2012: GBP1.404
million).
In addition, the annual base fee paid to the Investment Adviser
for the period in accordance with the terms of the agreement is
GBP1,320,450 (for the period ended 30 September 2011:
GBP1,519,800). 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 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 period towards
project support service and royalty was GBP0.616 million (September
2011: GBP0.787 million) and other amounts paid to other K Raheja
Corp entities were GBP 1.053 million (30 September 2011: GBP0.567
million).
The amount received by the Indian Investment Vehicles from K
Raheja Corp entities towards income from lease rentals and other
recoveries was GBP2.050 million (30 September 2011: GBP1.941).
As at 30 September 2012, the amounts of loan receivable by
associate companies from K Raheja Corp entities totaled GBP72.661
million (31 March 2012: GBP76.110 million). The loans were interest
bearing and as at 30 September 2012 interest owing totaled GBP4.799
million (31 March 2012: GBP7.857 million). In addition, as at 30
September 2012, the associate companies had loan balances owing to
K Raheja Corp entities of GBP38.671 million (31 March 2012 of
GBP37.292 million) and interest payable in relation to these loans
of GBP2.154 million (31 March 2012: GBP2.751 million).
9 Related party transactions (continued)
The amount paid to K Raheja Corp Private Limited during the
period was GBP1.841 million (September 2011: GBP1.724 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 30 September
2012, Neerav Investment Advisory Services (Cyprus) Private Limited,
the parent company of the investment adviser, held 7,493,811 shares
of the Company (31 March 2012: 7,493,811 shares).
10. Comparatives
Certain comparative figures have been reclassified to conform to
the presentation adopted in these consolidated financial
statement
This information is provided by RNS
The company news service from the London Stock Exchange
END
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