REG - Infrastructure India - Final Results
26/03/2024 07:00
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RNS Number : 2372I Infrastructure India plc 26 March 2024
26 March 2024
Infrastructure India plc
("IIP" or the "Company" and together with its subsidiaries, the "Group")
Annual results for the twelve months ended 31 March 2023
Infrastructure India plc, an AIM quoted infrastructure fund investing directly
into assets in India, announces its audited annual results for the twelve
months ended 31 March 2023.
The Company will be announcing its interim results for the six months ended 30
September 2023, together with information on the Annual General Meeting, later
this week.
The Annual Report is being sent to shareholders shortly and will be
available to view on the Company's website www.iiplc.com.
Summary
· Value of the Company's investments were £99.1 million as at 31
March 2023 (£194.1 million as at 30 September 2022; £168.7 million as at 31
March 2022).
· Net liabilities were £184.9 million as at 31 March 2023 (against
net liabilities of £85.7 million as at 30 September 2022; £46.8 million as
at 31 March 2022).
· The net liability position is based on preliminary terms with a
third party and the ascribed consideration for the disposal of IIP's largest
holding, Distribution Logistics Infrastructure Limited ("DLI") and the
increase in Group net debt.
· As at 31 March 2023, the Group had gross cash resources of £0.3
million. The sale of Indian Energy Limited is expected to complete imminently
for total cash consideration of approximately US$4.37 million (approximately
£3.39 million). IIP is also discussing preliminary terms for the sale of DLI
and further announcements with regard to this will be made as and when
appropriate.
· The Board has been active in securing sources of financing to
ensure the Group has adequate funding to continue to meet liabilities as they
fall due and, as announced, this includes asset sales. As a result of this
process, the Group has prepared the accounts on a basis other than going
concern due to the uncertainty in relation to the timing of potential
transactions, ultimate receipt of sale proceeds and the specifics of any
deferred consideration. This basis was considered the most appropriate method
for the reporting period.
Enquiries:
Infrastructure India plc www.iiplc.com (http://www.iiplc.com/)
Sonny Lulla Via Novella
Strand Hanson Limited +44 (0) 20 7409 3494
Nominated Adviser
James Dance / Richard Johnson
Singer Capital Markets +44 (0) 20 7496 3000
Broker
James Maxwell - Corporate Finance
James Waterlow - Investment Fund Sales
Novella +44 (0) 20 3151 7008
Financial PR
Tim Robertson / Safia Colebrook
JOINT STATEMENT FROM THE CHAIRMAN AND THE CHIEF EXECUTIVE
We would like to report Infrastructure India plc's ("IIP" or the "Company"
and, together with its subsidiaries, the "Group") audited annual results for
the year ended 31 March 2023.
The Group has prepared the accounts on a basis other than going concern due to
the uncertainty in relation to the timing of potential transactions, ultimate
receipt of sale proceeds and the specifics of any deferred consideration. This
basis was considered the most appropriate method for the reporting period.
Net liabilities were £184.9 million as at 31 March 2023, (net liabilities of
£85.7 million as at 30 September 2022; net liabilities of £46.7 million as
at 31 March 2022). The net liability position was based on preliminary terms
with a third party and the ascribed consideration for the disposal of IIP's
largest holding, Distribution Logistics Infrastructure Limited ("DLI"). The
increase in Group net debt was also a contributor to the net liability
position.
The reporting period was dominated by discussions and due diligence around the
sale of both DLI and Indian Energy Limited ("IEL").
Transport
DLI is a supply chain transportation and container infrastructure company and
one of the largest private operators in its sector in India with a nationwide
network of terminals and a quality road and rail transportation fleet. Basic
operations remained steady at Nagpur, while construction, other than immediate
requirements, was put on hold due to funding constraints. DLI has focused on
servicing and maintaining existing customers.
Subsequent to the fiscal year end, on 6 September 2023, IIP announced that it,
along with The DLI Group and Distribution and Logistics Infrastructure India,
Mauritius, IIP's wholly-owned subsidiary ("DLI Mauritius"), had entered into a
share purchase and shareholders' agreement (the "Agreement") for the
conditional sale of DLI to Pristine Malwa Logistics Park Private Limited
("Pristine Malwa") (the "Transaction"). The Transaction comprised a share swap
of up to 33% of Pristine Malwa's issued share capital and an upfront cash
consideration of approximately US $10 million. The final equity and cash
consideration payable was subject to customary adjustments based on the net
current assets and indebtedness of DLI on the closing date. On 15 February
2024, IIP announced that it would not be proceeding with the Transaction. Some
key areas of the Agreement were subject to final agreement, which could not be
reached in a manner satisfactory to the IIP Board, in the best interests of
IIP shareholders, and potentially materially undervalued DLI in the Board's
view. Consequently, DLI Mauritius issued a termination notice to Pristine
Malwa. Neither Pristine Malwa nor DLI had fulfilled all conditions precedent
and the long stop date had expired without a mutually agreed extension.
Further to the announcement on 15 February 2024, the Company is in early
discussions with a third party with regard to the proposed sale of DLI and is
evaluating the potential transaction and related timelines, with due diligence
underway, although there can be no guarantee that discussions will lead to
definitive agreements for the sale of DLI. Further announcements will be made
in due course.
Energy
Indian Energy Limited ("IEL") is an independent power producer that owns and
operates wind farms at two sites in the states of Karnataka and Tamil Nadu,
with 41.3 MW of installed capacity.
Subsequent to the period end, on 4 April 2023 IIP entered into a conditional
agreement for the sale of IEL to FA Power Renewables Private Limited. The
sale of IEL is expected to complete imminently. The total cash consideration
for IEL is approximately US $4.37 million.
IIP also retains its 50% interest in India Hydropower Development Company's
("IHDC"), details of which are set out in the Review of Investments further
below.
Group liquidity
As at 31 March 2023, the Group had gross cash resources of £0.3 million.
On 31 August 2022, IIP announced that the term loan provided by IIP Bridge
Facility was being increased by US$6 million to meet urgent operational
overheads at DLI as well as Group working capital needs.
The sale of IEL is expected to complete imminently. The total cash
consideration for IEL is approximately US$4.37 million. IIP is also discussing
preliminary terms for the sale of DLI and further announcements with regard to
this will be made as and when appropriate.
Financing
IIP has three fully drawn facilities: a secured term loan provided by IIP
Bridge Facility LLC (the "Term Loan"), an unsecured working capital loan
provided by GGIC, Ltd (the "Working Capital Loan") and an unsecured bridging
loan provided by Cedar Valley Financial (the "Bridging Loan").
The Term Loan was originally provided to IIP's wholly owned Mauritian
subsidiary, Infrastructure India Holdco, in April 2019, in multiple tranches
totalling US$105 million on a four-year termwith an interest rate of 15% per
annum and maturing on 1 April 2023. On 31 August 2022, the Term Loan was
increased by US$6 million, taking the principal to US$111 million, with all
other terms and conditions remaining the same. On 17 April 2023, the Term Loan
was increased by US$8 million, taking the principal to US$119 million, with
all other terms and conditions remaining the same. The current amount of
interest accrued is approximately US$95 million.
In April 2019, the Group extended the maturity of the Working Capital Loan and
extended and enlarged the Bridging Loan.
The Working Capital Loan was originally provided to the Group in April 2013 by
GGIC in an amount of US$17 million and increased to US$21.5 million in
September 2017. The Working Capital Loan carried an interest rate of 7.5% per
annum on its principal amount. The Group and GGIC agreed to increase its
interest rate to 15% per annum from 1 April 2019. The current amount of
interest accrued is approximately US$31 million.
The Bridging Loan was originally provided to the Group in June 2017 by Cedar
Valley Financial and was subsequently increased in multiple tranches
to US$64.1 million in March 2019. The Bridging Loan carried an interest
rate of 12.0% per annum on its principal. The Group and Cedar Valley Financial
agreed increase its interest rate to 15% per annum from 1 April 2019. The
current amount of interest accrued is approximately US$71 million.
Post-period, the maturity for the three facilities has been extended until 15
May 2024.
Tom Tribone & Sonny Lulla
March 2024
REVIEW OF INVESTMENTS
Distribution Logistics Infrastructure Private Limited ("DLI")
Description Supply chain transportation and container infrastructure company with a large
operational road and rail fleet; developing four large container terminals
across India.
Promoter A subsidiary of IIP
Date of investment Mar 2011 Oct 2011 Jan 12- Sep 2021
Investment amount £34.8 million £58.4 million £181.1 million
Aggregate percentage interest 37.4% 99.9% 99.9%
Investment during the period nil
Valuation as at 31 March 2023 £78.8 million
Project debt outstanding £66.7 million
as at 31 March 2023
· Liquidity constraints at DLI throughout the period necessitated a
strong focus on cost control along with maintaining efficiencies of existing
Key developments operations, with the scheduled completion of work at under-construction
terminals on hold.
· The reporting period was dominated by due diligence.
· The Group has received preliminary terms for the sale of DLI from
a third party.
Investment details
DLI is a supply chain transportation and container infrastructure company
headquartered in Bangalore and Gurgaon with a material presence in central,
northern and southern India. DLI provides a broad range of logistics services
including rail freight, trucking, handling, customs clearing and bonded
warehousing with terminals located in the strategic locations of Nagpur,
Bangalore, Palwal (in the National Capital Region) and Chennai.
Developments during the reporting period
Nagpur remained operational with increased export volumes but limited traction
in domestic volumes due to funding constraints. Overall, liquidity constraints
resulting from DLI's lenders restricting working capital disbursements,
impacted DLI's ability to maintain and grow its business during the period.
Construction activities at Palwal remain on hold due to financing.
The Eastern and Western portions of the Dedicated Freight Corridor (DFC) are
expected to be completed by the end of calendar year 2024. In addition to
increased freight throughput, the DFC is expected to reduce charges by Indian
Railways by up to 50%.
Valuation
The reported DLI valuation of £78.8 million as at 31 March 2023 is based on
preliminary terms received from a third party for the disposal of DLI, and the
ascribed consideration for DLI.
India Hydropower Development Company LLC ("IHDC")
Description IHDC develops, owns and operates small hydropower projects with seven fully
operational plants (74 MW of installed capacity), and a further 13 MW of
capacity under development or construction.
Promoter Dodson-Lindblom International Inc. ("DLZ")
Date of investment Mar 2011 Jan 2012 May 2012
Investment amount £25.7 million £0.3 million £1.1 million
Aggregate % interest 50% 50% 50%
Investment during the period Nil
Valuation as at 31 March 2023 £17.3 million
Project debt outstanding £5.3 million
as at 31 March 2023
Key developments · Overall generation from IHDC's projects was higher than the
corresponding period the previous year, largely as a result of higher
generation at Sechi in Himachal Pradesh, Birsinghpur in Madhya Pradesh and
Darna in Maharashtra.
Investment details
The IHDC portfolio has installed capacity of approximately 74 MW across seven
projects - Bhandardara Power House I ("BH-I"), Bhandardara Power House II
("BH-II"), Darna in Maharashtra; Birsinghpur in Madhya Pradesh; and Sechi,
Panwi and Raura in Himachal Pradesh. IHDC has an additional 13 MW of capacity
under development and construction.
Project update
Overall generation from IHDC's projects was 46.7 GWh in the second half of the
fiscal year ending 31 March 2023 against 55.4 GWh during the same period last
year.
IHDC is working on securing a long term PPA with higher tariff on Raura.
Trading of Renewable Energy Certificates ("REC") continued. The price of REC's
as at 31 March 2023 was INR 1,000 per REC.
At Melan, the management team has maintained the necessary permits with
regulatory authorities to keep the project viable while construction of the
Melan project is expected to be further delayed.
Valuation
The IHDC portfolio was valued in accordance with the Group's stated valuation
methodology by using a composite risk premium of 2.67% over the risk free rate
of 7.29%. The composite risk premium is computed using a MW-based weighted
average of risk premia of individual assets related to their stage of
operations.
The value for IHDC investments as at 31 March 2023 is £17.3 million (30
September 2022 £18.5 million; 31 March 2022 £18.5 million). The factors
which impacted the valuation were movement in the risk-free rate, changes in
currency and changes in management assumptions such as the delay in projected
completion for the Melan project.
Directors' Report
The Directors have pleasure in presenting their report and financial
statements of the Group for the year ended 31 March 2023.
Principal activity and incorporation
The Company is a closed-ended investment company, incorporated on 18 March
2008 in the Isle of Man as a public limited company under the 2006 Companies
Act. It was admitted to the Official List of the London Stock Exchange on 30
June 2008, and subsequently moved to a listing on AIM, a market operated by
the London Stock Exchange on 16 November 2010.
The Group's investment objective is to provide shareholders with both capital
growth and income by investing in assets in the Indian infrastructure sector,
with particular focus on assets and projects related to energy and transport.
Results and dividends
The Group's results for the year ended 31 March 2023 are set out in the
Consolidated Statement of Comprehensive Income.
A review of the Group's activities is set out in the Joint Statement from the
Chairman and the Chief Executive report.
The Directors do not recommend the payment of a dividend (2022: nil).
Directors
The Directors of the Company during the year and up to the date of this report
were as follows:
Tom Tribone Chairman
Rahul Sonny Lulla Chief Executive
Robert Venerus Non-Executive Director
Madras Seshamani Ramachandran Non-Executive Director
Graham Smith Non-Executive Director
Directors' interests in the shares of the Company are detailed in note 17.
Company Secretary
The secretary of the Company during the year and to the date of this report
was Grainne Devlin.
By Order of The Board
Sonny Lulla
Director
25 March 2024
Statement of Directors' Responsibilities
In Respect of the Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations and
have elected to prepare the financial statements in accordance with
International Financial Reporting Standards ("IFRSs"), as adopted by the
European Union ("EU").
The financial statements are required to give a true and fair view of the
state of affairs of the Group and of the profit or loss of the Group for that
year.
In preparing these financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· make judgements and accounting estimates that are reasonable and
prudent;
· state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the financial
statements; and
· prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's transactions and disclose with
reasonable accuracy at any time its financial position. 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; the
work carried out by the auditors does not involve the consideration of these
matters and, accordingly, the auditors accept no responsibility for any
changes that may have occurred in the accounts since they were initially
presented on the website. Legislation governing the preparation and
dissemination of financial statements may differ from one jurisdiction to
another.
Each of the Directors confirm that, to the best of their knowledge:
· the financial statements, prepared in accordance with
International Financial Reporting Standards as adopted by the EU, give a true
and fair view of the assets, liabilities, financial position and profit or
loss of the Group;
· the director's report includes a fair review of the development
and performance of the business and the position of the Group, together with a
description of the principal risks and uncertainties that they face.
By Order of the Board
Sonny Lulla
Director
25 March 2024
Corporate Governance Statement
Introduction from the Chairman
The Board of Infrastructure India plc fully endorses the importance of good
corporate governance and applies the QCA Corporate Governance Code, published
in April 2018 by the Quoted Companies Alliance (the "QCA Code"), which the
Board believes to be the most appropriate recognised governance code for a
company of the Company's size with shares admitted to trading on the AIM
market of the London Stock Exchange. This is a practical, outcome-oriented
approach to corporate governance that is tailored for small and mid-size
quoted companies in the UK and which provides the Company with the framework
to help ensure that a strong level of governance is maintained.
As Chairman, I am responsible for leading an effective board, fostering a good
corporate governance culture, maintaining open communications with the major
shareholders and ensuring appropriate strategic focus and direction for the
Company.
Notwithstanding the Board's commitment to applying the QCA Code, we will not
seek to comply with the QCA Code where strict compliance in the future would
be contrary to the primary objective of delivering long-term value for IIP's
shareholders and stakeholders. However, we do consider that following the QCA
Code, and a framework of sound corporate governance and an ethical culture, is
conducive to long-term value creation for IIP shareholders.
All members of the Board believe strongly in the importance of good corporate
governance to assist in achieving objectives and in accountability to IIP's
stakeholders. In the statements that follow, the Company explains its approach
to governance in more detail.
QCA Code - Governance Principles
The QCA code is constructed around 10 broad principles of corporate
governance. These principles are as follows:
Deliver Growth
1. Establish a strategy and business model which promote
long term value for shareholders.
2. Seek to understand and meet shareholder needs and
expectations
3. Take into account wider stakeholder and social
responsibilities and their implications for long- term success
4. Embed effective risk management, considering both
opportunities and threats, throughout the organisation
Maintain a dynamic management framework
5. Maintain the board as a well-functioning, balanced team
led by the chair
6. Ensure that between them the directors have the
necessary up-to-date experience, skills and capabilities
7. Evaluate board performance based on clear and relevant
objectives, seeking continuous improvement
8.
Promote a corporate culture that is based on ethical values and behaviours
9. Maintain governance structures and processes that are
fit for purpose and support good decision-making by the board
Build Trust
10. Communicate how the Company is governed and is
performing by maintaining a dialogue with shareholders and other relevant
stakeholders
Principle 1 Establish a strategy and business model which promote long-term
value for shareholders
IIP is an AIM quoted closed end investment company investing in core economic
infrastructure.
The Company's Investment Strategy is as follows:
The Company will invest at the asset level or through specific holding
companies (not by investing in other funds or in the equity of non-specific
parent companies) in infrastructure projects in India. Such investments are to
be focused on the broader sectors of:
· Energy - including assets involved in electricity generation,
transmission and distribution; infrastructure assets related to oil and gas,
service provision and transmission; renewable fuel production and renewable
energy assets; and
· Transport - including investment in roads, rail, ports and
airport assets, and associated transport interchanges and distribution hubs.
Additionally, the Company may make investments in other economic and social
infrastructure sectors within India where opportunities arise and which the
Board considers offer similar risk and return characteristics to those found
within the energy and transport sectors.
In common with other investing companies in the sector, access to projects and
valuable assets is competitive and challenging but the Board is confident of
its ability and that of its investment manager, to continue to source
attractive investment opportunities given close relationships with a number of
companies and their management teams, and recognition of the Board's
experience and strong network.
Status of the Company's Portfolio
Details of the Company's portfolio are contained on the Company's website at
Portfolio (iiplc.com) (https://www.iiplc.com/portfolio/)
(https://www.iiplc.com/portfolio/current-portfolio/) a
(https://www.iiplc.com/portfolio/current-portfolio/) nd a full update of the
investments including investment details, a description of investments, key
developments and valuations are available through the Company's announcements
which are also available on the Company's website at
https://www.iiplc.com/regulatory-news/
Principle 2 Seek to understand and meet shareholder needs and expectations
The Company is committed to engaging and communicating openly with its
shareholders to ensure that its strategy, business model and performance are
clearly understood. All Board members have responsibility for shareholder
liaison but queries are primarily delegated to the Company's Advisors in the
first instance or the Company's CEO. Contact details for the Company's
advisors are contained on the Company's website
https://www.iiplc.com/contact/. (http://www.iiplc.com/contact/)
(http://www.iiplc.com/contact/)
Copies of the annual and interim reports are sent to all shareholders and
copies can be downloaded from the Company website https://ww
(http://www.iiplc.com/investor-relations/financial-reports/)
w.iiplc.com/investor
(http://www.iiplc.com/investor-relations/financial-reports/) -
(http://www.iiplc.com/investor-relations/financial-reports/)
relations/financial
(http://www.iiplc.com/investor-relations/financial-reports/) -
(http://www.iiplc.com/investor-relations/financial-reports/) reports/
(http://www.iiplc.com/investor-relations/financial-reports/)
(http://www.iiplc.com/investor-relations/financial-reports/) a
(http://www.iiplc.com/investor-relations/financial-reports/) lternatively,
they are available on request by writing to the Company Secretary at 55 Athol
Street, Douglas, Isle of Man IM 1 1LA. Other Company information for
shareholders is also available on the website.
The Company also engages with shareholders at its AGM in each year, which
gives investors the opportunity to enter into dialogue with the Board and for
the Board to receive feedback and take action if and when necessary. The
results of the AGM are subsequently announced via RNS and published on the
Company's website. Feedback from, and engagement with, substantial
shareholders has historically been successful in ensuring, for example,
material transactions are suitably structured with shareholder considerations
in mind.
Updates relating to the financing, restructuring of existing loans, and asset
transactions is communicated to investors via RNS announcements, and circulars
where appropriate. All announcements are available on the Company's website
https://www.iiplc.com/news/regulatory
(https://www.iiplc.com/news/regulatory-news/) -
(https://www.iiplc.com/news/regulatory-news/) news/
(https://www.iiplc.com/news/regulatory-news/) .
(https://www.iiplc.com/news/regulatory-news/)
(https://www.iiplc.com/news/regulatory-news/)
The company secretary is also available for shareholders to contact on matters
of governance and investor relations.
Principle 3 Take into account wider stakeholder and social responsibilities
and their implications for long-term success.
The Board is aware that engaging with IIP's stakeholders strengthens
relationships, assists the Board in making better business decisions and
ultimately promotes the long-term success of IIP. The group's stakeholders
include shareholders, members of staff of investee companies and of Advisors
and other service providers, suppliers, auditors, lenders, regulators,
industry Bodies and the surrounding communities of where its investments are
located.
The Board as a whole are responsible for reviewing and monitoring the parties
contracted to the Company, including their service terms and conditions. In
the absence of a formal audit committee, the Board as a whole considers and
monitors the risks to the Company.
The Company's portfolio consists of Distribution Logistics Infrastructure
Private Limited (DLI), Shree Maheshwar Hydel Power Corporation Limited, India
Energy Limited and India Hydropower Development Company LLC (together the
Portfolio).
The Board is regularly updated on wider stakeholder views and issues
concerning the Portfolio both formally at Board meetings and informally
through ad hoc updates. Representatives involved with the investment portfolio
are invited to join Board meetings and provide a report to the Board.
Engagement in this manner enables the Board to receive feedback and equips
them to make decisions affecting the business.
The Board recognises the importance of its social responsibilities concerning
its investment decisions. The Company has made investments in infrastructure
projects that seek to make a contribution to the development of communities in
which they are located.
As detailed in the Company's Admission document, a full analysis of the
Company's social responsibility and ways to address issues was undertaken. The
Admission Document (dated 11 February 2011) is available on the Company's
website: https://www.iiplc.com/investor-relations/downloads/
(https://www.iiplc.com/investor-relations/downloads/)
The Board adheres to the Company's Corporate Social Responsibility policy, an
extract of which is summarised as follows:
The Enlarged Group will ordinarily make investments in infrastructure projects
that seek to make a contribution to the development of communities in which
they are located. In planning its activities, the Board will give
consideration to evaluating the social impact of proposed developments with a
view to promoting where possible local employment and the delivery of other
local benefits, and mitigating negative impacts to the extent possible. The
Company intends to establish a community projects trust (the "Trust") and will
contribute to the Trust up to 2 per cent. of the net realised gains derived
from the re-financing of operational projects and of the net profit derived
from any disposal of equity interests in operational projects. It is intended
that the Trust will support community based education, training and employment
initiatives designed to foster social inclusion in communities where the Group
is active.
The Company is committed to continuing engagement with all stakeholders.
Principle 4 Embed effective risk management, considering both opportunities
and threats, throughout the organisation.
The Group's activities expose it to a variety of financial risks: market risk
(including currency risk and price risk), credit risk, liquidity risk and
interest rate risk.
Risk is monitored and assessed by the Board as a whole and are responsible for
ensuring that the financial performance of the Company is properly monitored
and reported. This process includes reviews of annual and interim accounts,
results announcements, internal control systems, procedures and accounting
policies. Risk management is carried out by the Board of Directors. The Board
identifies and evaluates financial risks in close co-operation with the Asset
Manager and the key risk factors for the Company are contained in the
Financial Statements for the year ended 31 March 2023.
Principle 5 Maintain the board as a well-functioning, balanced team led by the
chair.
The Board has five members, three of which are non-executive.
Tom Tribone is the Company's Chairman, Sonny Lulla is the Company's Chief
Executive and Rob Venerus, Graham Smith and M.S. Ramachandran are the
Company's three Non-Executive Directors. M.S. Ramachandran is considered an
independent director. Graham Smith is also considered to be an independent
director, notwithstanding the fact that FIM Capital Limited, of which he is a
director, provides administration and accounting services to the Company.
There is no formal audit committee in place at this time, but the function is
supported and informally carried out by independent director Graham Smith.
Until suitable committee members are identified, the Board as a whole will
deal with matters normally reserved for the Audit Committee.
The Board receives detailed reports from FIM Capital Limited, the
administrator and Company Secretary to the Company covering updates to
relevant legalisation and rules to ensure they remain fully informed and able
to make informed decisions.
All the Directors biographies are published on the Company's website and
outlined below: https://www.iiplc.com/team/board
(https://www.iiplc.com/team/board-of-directors/) -
(https://www.iiplc.com/team/board-of-directors/) of
(https://www.iiplc.com/team/board-of-directors/) -
(https://www.iiplc.com/team/board-of-directors/) directors/
(https://www.iiplc.com/team/board-of-directors/)
(https://www.iiplc.com/team/board-of-directors/)
The Directors devote sufficient time to ensure the Company's affairs are
managed as efficiently as possible. The Board aims to hold at least 4 meetings
each year with further ad hoc meetings held as required.
The Directors devote sufficient time to ensure the Company's affairs are
managed as efficiently as possible.
Board Meetings Attendance
Board Meetings Date R Venerus T Tribone S Lulla MS Ramachandran GSmith
1 30.08.2022 x x
(telephone call between Independent Directors)
2 20.12.2022 x x x x x
(telephone call between Directors)
3 23.03.2023 (telephone call between Independent Directors) x x
4 30.03.2023 - - x x x
(telephone call between Directors)
5 10.04.2023 x x
(telephone call between Independent Directors)
6 31.05.2023 (telephone call between Independent Directors) x x
7 28.07.2023 - x x x x
(telephone call between Directors)
Principle 6 Ensure that between them the directors have the necessary
up-to-date experience, skills and capabilities.
The Directors have extensive experience in infrastructure fund management and
a strong track record of value creation.
The Board believes it has the correct balance of skills, reflecting a broad
range of commercial and professional skills across geographies and industries
that is necessary to ensure the Company is equipped to deliver its investment
objective. Additionally, each Director has experience in public markets.
The Directors and their roles and key personnel are displayed on the Company's
website https://www.iiplc.com/team/board
(http://www.iiplc.com/team/board-of-directors/) -
(http://www.iiplc.com/team/board-of-directors/) of
(http://www.iiplc.com/team/board-of-directors/) -
(http://www.iiplc.com/team/board-of-directors/) directors/ a
(http://www.iiplc.com/team/board-of-directors/) nd a statement of the
Directors responsibilities is also included in the Statement of Directors'
Responsibilities.
The Directors receive an ad hoc guidance on certain matters concerning, for
example, the AIM Rules for Companies from the Company's Nominated Adviser and
Broker as well as receiving updates on the regulatory environment from FIM,
who provide specialist fund administration services to a variety of closed
ended funds and collective investment schemes.
The role and responsibilities of the Directors are set out in the Statement of
Directors' Responsibilities at the foot of this document.
All Directors are able to take independent professional advice in the
furtherance of their duties, if necessary, at the Company's expense.
Principle 7 Evaluate board performance based on clear and relevant objectives,
seeking continuous improvement.
Board evaluations will take place periodically, whereby Board members will be
asked to complete and return an effectiveness questionnaire across a variety
of criteria, then return these to the Company Secretary, who, where necessary,
would seek clarification on any responses given. Responses will then be
recorded anonymously to enable the Board to have open follow-up discussions on
the aggregated evaluation data.
The criteria against which the Board complete periodic self-evaluations of
performance will be based on externally determined guidelines appropriate to
the composition of the Board and the Company's operation, including Board
sub-committees. The scope of the self-evaluation exercise will be re-assessed
in each instance to ensure appropriate depth and coverage of the Board's
activities consistent with corporate best practice.
The Board effectiveness questionnaire underlying the board evaluation process
assesses the composition, processes, behaviours and activities of the board
through a range of criteria, including board size and independence, mix of
skills (for example corporate governance, financial, industry and regulatory)
and experience, and general corporate governance considerations in line with
the QCA code.
All Board appointments have been made after consultation with advisers and
with major shareholders in some cases. Detailed due diligence is carried out
on all new potential board candidates. The Board will consider using external
advisers to review and evaluate the effectiveness of the Board and Directors
in future to supplement internal evaluation processes. Additionally, the Board
will consider the need to undertake formal and periodic succession planning.
The Independent Directors have remained independent throughout their office,
and due to the close- knit working environment and size of the Board,
performance evaluations will be on an ongoing and ad-hoc basis to ensure that
they are committed to the progress and success of the Company and that their
contribution is effective.
When the Board wishes to complete a periodic evaluation process, the relevant
materials and guidance in respect of this process, following current best
practice at the time of the evaluation, is available from and provided by FIM.
Given the stage of the Company's maturity and its contracted external
management, the responsibilities of a nomination committee are delegated to
the Board, and there are no formal succession planning processes in place. The
Board intends to keep this under review in the future.
Principle 8 Promote a corporate culture that is based on ethical values and
behaviours.
The Board is mindful that the tone and culture set by the Board will impact
many aspects of the Company and the way that stakeholders behave and form
views.
The Board welcomes the views of all stakeholders who can contact the Directors
and / or the Company Secretary by email / telephone and ensures that the
Company has the means to determine that ethical values and behaviours are met
through the adoption of appropriate company-wide policies.
As stated earlier the Company has extensively considered its wider social
responsibilities and the steps taken to actively address these. Details are
contained in the Company's Admission Document,
https://www.iiplc.com/investor-relations/downloads/
(https://www.iiplc.com/investor-relations/downloads/) In particular, the
Company will ordinarily make investments in infrastructure projects that seek
to make a contribution to the development of communities in which they are
located. In planning its activities the Board will give consideration to
evaluating the social impact of proposed developments with a view to promoting
where possible local employment and the delivery of other local benefits, and
mitigating negative impacts to the extent possible.
The Company promotes and supports the rights and opportunities of all people
to seek, obtain and hold employment without discrimination. It is our policy
to make every effort to provide a working environment free from bullying,
harassment, intimidation and discrimination on the basis of disability,
nationality, race, sex, sexual orientation, religion or belief.
The Company is also committed to being honest and fair in all its dealings
with partners, contractors and suppliers. Procedures are in place to ensure
that any form of bribery or improper behaviour is prevented from being
conducted on the Company's behalf by investee companies, contractors and
suppliers. The Company also closely guards its information entrusted to it by
investee companies, contractors and suppliers, and seeks to ensure that it is
never used improperly.
In order to comply with legislation or regulations aimed at the prevention of
money laundering the Fund has adopted anti-money laundering and anti-bribery
procedures.
Principle 9 Maintain governance structures and processes that are fit for
purpose and support good decision-making by the board.
A description of each board member and their experience, the role of the Audit
Committee functions, carried out by the Board as a whole and that neither a
Nomination or Remuneration Committee exists are displayed on the website at
https://www.iiplc.com/team/board-of-directors/
Responsibilities of the Board
The Board of Directors is responsible for the determination of the investment
policy of the Company and for its overall supervision via the investment
policy and objectives that it has set out. The Board is also responsible for
the Company's day-to-day operations. In order to fulfil these obligations, the
Board has delegated operations through arrangements with the Investment
Adviser and Administrator.
The Company has not established nomination and remuneration committees as it
is satisfied that any issues can be considered by the Board.
The Board intends to meet formally at least four times each year. At each
Board meeting the financial performance of the Company and all other
significant matters are reviewed so as to ensure the Directors maintain
overall control and supervision of the Company's affairs. The Board receives
investment reports from the Asset Manager and Valuation and Portfolio Services
Adviser and management accounts from the Administrator. The Board maintains
regular contact with all its service providers and are kept fully informed of
investment and financial controls and any other matters that should be brought
to the attention of the Directors. The Directors also have access where
necessary to independent professional advice at the expense of the Company.
The Chairman, is responsible for leading an effective board, fostering a good
corporate governance culture, maintaining open communications with the major
shareholders and ensuring appropriate strategic focus and direction.
The Chief Executive Officer has overall responsibility for managing the day to
day operations of the Company and the Board as a whole is responsible for
implementing the Company's strategy.
In addition to these, the Directors review and approve the following matters:
· Strategy and management
· Policies and procedures
· Financial reporting and controls
· Capital structure
· Contracts
· Shareholder documents / Press announcements
· Adherence to Corporate Governance and best practice
procedures
Principle 10 Communicate how the Company is governed and is performing by
maintaining a dialogue with shareholders and other relevant stakeholders.
The Company communicates with shareholders through the Annual Report and
Financial statements, full-year and half-year announcements, the Annual
General Meeting and investors can email the Directors and Company Secretary
with any queries they may have.
The website includes information in relation to the outcome of shareholder
voting under the regulatory news section pursuant to the AIM rules.
If a significant proportion of independent votes were to be cast against a
resolution at any general meeting, the Board's policy would be to engage with
the shareholders concerned in order to understand the reasons behind the
voting results. Following this process, the Board would make an appropriate
public statement via this website regarding any different action it has taken,
or will take, as a result of the vote.
Historical information is available on the website:
The Company's financial reports for the last five years can be found here
https://www.iiplc.com/investor-relations/financial-reports/
(https://www.iiplc.com/investor-relations/financial-reports/)
Notices of General Meetings of the Company for the last five years can be
found here https://www.iiplc.com/investor-relations/downloads/
(https://www.iiplc.com/investor-relations/downloads/)
Committees
Audit Committee
As stated in Principle 5 above, the Company intends to appoint an additional
Independent Non-Executive Director to the Board in due course, who will also
serve on the Audit Committee. Until such time as the appointment is made, the
Board as a whole will deal with matters normally reserved for the Audit
Committee.
Remuneration Committee and Nomination Committee
As stated in principle 9, there is no Remuneration Committee or Nomination
Company in existence.
The Company has not established a remuneration committee as it is satisfied
that any issues can be considered by the Board as a whole.
Details of the directors' remuneration can be found in the Financial
Statements for the year ended 31 March 2023.
Independent Auditor's Report to the Members of Infrastructure India Plc
Opinion
We have audited the financial statements of Infrastructure India Plc and its
subsidiaries (the 'group') for the year ended 31 March 2023 which comprise 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 notes to the financial
statements, including a summary of significant accounting policies. The
financial reporting framework that has been applied in their preparation is
applicable law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union.
In our opinion the financial statements:
· give a true and fair view of the state of the group's affairs as
at 31 March 2023, and of the group's results for the year then ended;
· have been properly prepared in accordance with IFRSs as adopted
by the European Union;
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing
(UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor's responsibilities for the
audit of the financial statements section of our report. We are independent of
the group in accordance with the ethical requirements that are relevant to our
audit of the financial statements, including the FRC's Ethical Standard, and
we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Emphasis of matter - financial statements prepared on a basis other than going
concern
We draw attention to note 2(d) in the financial statements which explains that
for the Group to repay its loans, which are due to mature in May 2024, they
are actively pursuing a sale of their investments in DLI and IEL, and
therefore do not consider it to be appropriate to adopt the going concern
basis of accounting in preparing the financial statements. Accordingly, the
financial statements have been prepared on a basis other than going concern as
described in note 2(d). Our opinion is not modified in respect of this matter.
Emphasis of matter - valuation of investments at fair value
As described in accounting policy note 3.8, management have elected to value
investments in subsidiaries at fair value through profit and loss. The fair
value has been determined based on a valuation model as discussed in notes 5
and 12. The fair value model estimates the present fair value of the
investments using a discounted cashflow analysis, based on assumptions about
the future performance of the investments. In the current year, the
discounted cashflow analysis basis of valuation only applies to the investment
in IHDC. The fair value of DLI and IEL has been determined based on expected
sales value as described in note 3.9 and those investments have been
reclassified as held for sale since the prior year.
We have determined that the valuation model for IHDC (valued at £18.5m) is
suitable for inclusion in these financial statements. It is, however,
subject to high estimation uncertainty and we draw your attention to the
disclosures made in notes 5 and 12 and to the sensitivity analyses presented
in note 12.
In respect of the high estimation uncertainty we note that owing to the
forward-looking nature of the projections and the lack of past performance
history and financial information, it is not possible to corroborate certain
key unobservable inputs in the projections, such as expected start date of
commercial operations, market size, market share, price points, forecast
annual growth rates and EBITDA margins and operational efficiency estimates.
These projections are based on management estimates and actual results could
therefore differ materially from the amounts presented in the financial
statements.
Capability of the audit in detecting irregularities, including fraud
Our approach to identifying and assessing the risks of material misstatement
in respect of irregularities, including fraud and non-compliance with laws and
regulations, was as follows:
· we identified the laws and regulations applicable to the Company
through discussions with Directors and other management, and from our
commercial knowledge and experience of the sector;
· we made specific requests of component auditors within the Group
to determine their approach to detecting irregularities, including fraud and
non-compliance with laws and regulations, and considered their findings as
part of our approach;
· we focused on specific laws and regulations which we considered
may have a direct material effect on the financial statements or the
operations of the Company, including company law, taxation legislation,
anti-bribery, environmental and health and safety legislation;
· we assessed the extent of compliance with the laws and
regulations identified above through making enquiries of management and
inspecting legal correspondence; and
· identified laws and regulations were communicated within the
audit team regularly and the team remained alert to instances of
non-compliance throughout the audit.
We assessed the susceptibility of the Company's financial statements to
material misstatement, including obtaining an understanding of how fraud might
occur, by:
· making enquiries of management as to where they considered there
was susceptibility to fraud, their knowledge of actual, suspected and alleged
fraud;
· considering the internal controls in place to mitigate risks of
fraud and non-compliance with laws and regulations; and
· understanding the design of the Company's remuneration policies.
To address the risk of fraud through management bias and override of controls,
we:
· performed analytical procedures to identify any unusual or
unexpected relationships;
· tested journal entries to identify unusual transactions;
· assessed whether judgements and assumptions made in determining
the accounting estimates were indicative of potential bias; and
· investigated the rationale behind significant or unusual
transactions.
In response to the risk of irregularities and non-compliance with laws and
regulations, we designed procedures which included, but were not limited to:
· agreeing financial statement disclosures to underlying supporting
documentation;
· reading the minutes of meetings of those charged with governance;
· enquiring of management as to actual and potential litigation and
claims; and
· reviewing correspondence with tax authorities, relevant
regulators and the company's legal advisors.
There are inherent limitations in our audit procedures described above. The
more removed that laws and regulations are from financial transactions, the
less likely it is that we would become aware of non-compliance. Auditing
standards also limit the audit procedures required to identify non-compliance
with laws and regulations to enquiry of the Directors and other management and
the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than
those that arise from error as they may involve deliberate concealment or
collusion.
Other information
The directors are responsible for the other information. The other information
comprises the information included in the annual report, other than the
financial statements and our auditor's report thereon. Our opinion on the
financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility
is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the
other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the group and their
environment obtained in the course of the audit, we have not identified
material misstatements in the directors' report.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, the
directors are responsible for the preparation of the financial statements and
for being satisfied that they give a true and fair view, and for such internal
control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
As part of an audit in accordance with ISAs (UK), we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the
financial statements, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
· Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
group's internal control.
· Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
directors.
· Evaluate the overall presentation, structure and content of the
financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that
achieves fair presentation.
· Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities within the group
to express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audit.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the consolidated
financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or when, in extremely
rare circumstances, we determine that a matter should not be communicated in
our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Use of our report
This report is made solely to the company's members, as a body, in accordance
with the terms of our engagement letter. 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.
( )
Baker Tilly Isle of Man LLC
Chartered Accountants
P O Box 95
2a Lord Street
Douglas
Isle of Man
IM99
1HP
25 March 2024
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2023
Continuing operations Note 2023 2022
£'000 £'000
Movement in fair value on investments at fair value through profit or loss 12 (1,203) (2,202)
Commitment fee income 210 -
Foreign exchange (loss)/gains (13,252) (9,839)
Asset management and valuation services 7 (5,520) (5,520)
Other administration fees and expenses 6 (2,202) (3,246)
Operating loss (21,967) (20,807)
Finance costs 8 (37,277) (27,617)
Loss before taxation (59,244) (48,424)
Taxation 9 - -
Loss for the year (59,244) (48,424)
Other comprehensive income - -
Total comprehensive loss - continuing operations (59,244) (48,424)
Total comprehensive loss - discontinued operations 13 (78,909) (91,601)
Total comprehensive loss (138,153) (140,025)
Basic and diluted loss per share (pence) 10 (20.26)p (20.54)p
The notes referred to above form an integral part of the financial
statements.
Consolidated Statement of Financial Position
at 31 March 2023
Note 2023 2022
£'000 £'000
Non-current assets
Investments at fair value through profit or loss 12 17,334 18,537
Total non-current assets 17,334 18,537
Current assets
Debtors and prepayments 40 229
Cash and cash equivalents 322 347
Assets held for sale 13 81,779 156,474
Total current assets 82,141 157,050
Total assets 99,475 175,587
Current liabilities
Trade and other payables 14 (9,474) (3,129)
Long term loans & borrowings 15 (274,926) -
Total current liabilities (284,400) (3,129)
Long-term liabilities
15 - (219,230)
Total long-term liabilities - (219,230)
Total liabilities (284,400) (222,359)
Net liabilities (184,925) (46,772)
Equity
Ordinary share capital 16 6,821 6,821
Share premium 16 282,808 282,808
Retained earnings (474,554) (336,401)
Total equity (184,925) (46,772)
The notes referred to above form an integral part of the financial
statements.
These financial statements were approved by the Board on 25 March 2024 and
signed on their behalf by
Sonny Lulla Graham Smith
Chief Executive Director
Consolidated Statement of Changes in Equity
for the year ended 31 March 2023
Share capital Share premium Retained earnings Total
£'000 £'000 £'000 £'000
Balance at 1 April 2021 6,821 282,808 (196,376) 93,253
Total comprehensive loss for the year
Loss for the year-continuing operations - - (48,424) (48,424)
Loss for the year-discontinued operations - - (91,601) (91,601)
Total comprehensive loss for the year - - (140,025) (140,025)
Balance at 31 March 2022 6,821 282,808 (336,401) (46,772)
Balance at 1 April 2022 6,821 282,808 (336,401) (46,772)
Total comprehensive loss for the year
Profit for the year - continuing operations - - (59,244) (59,244)
Profit for the year - discontinued operations - - (78,909) (78,909)
Total comprehensive loss for the year - - (138,153) (138,153)
Balance at 31 March 2023 6,821 282,808 (474,554) (184,925)
The notes referred to above form an integral part of the financial
statements.
Consolidated Statement of Cash Flows
for the year ended 31 March 2023
Group
Note 2023 2022
£'000 £'000
Cash flows from operating activities
Profit / (Loss) for the year (138,153) (140,025)
Adjustments:
Movement in fair value on investments at fair value through profit or loss 12 1,203 2,202
Finance costs 8 37,277 27,617
Foreign exchange loss/(gain) 13,252 9,839
(86,421) (100,367)
Increase in debtors and prepayments 189 (76)
Increase/(decrease) in trade and other payables 6,345 1,416
Net cash utilised by operating activities - continuing operations (79,887) (99,027)
Net cash utilised by operating activities - discontinued operations 13 78,911 91,601
Net cash utilised by operating activities (975) (7,426)
Cash flows from investing activities
Purchase of investments - -
Purchase of fixed assets - -
Cash utilised by investing activities - continuing operations - -
Cash utilised by investing activities - discontinued operations 13 (4,216) (5,971)
Cash utilised by investing activities (4,216) (5,971)
Cash flows from financing activities
Loans received 5,163 -
Net cash utilised by financing activities 5,163 -
Decrease in cash and cash equivalents (29) (13,397)
Cash and cash equivalents at the beginning of the year 347 13,656
Effect of exchange rate fluctuations on cash held 4 88
Cash and cash equivalents at the end of the year 322 347
The notes referred to above form an integral part of the financial
statements.
Notes to the Financial Statements for the year ended 31 March 2023
1. General information
The Company is a closed-end investment company incorporated on 18 March 2008
in the Isle of Man as a public limited company. The address of its registered
office is 55 Athol Street, Douglas, Isle of Man.
The Company is listed on the AIM market of the London Stock Exchange.
The Company and its subsidiaries (together the Group) invest in assets in the
Indian infrastructure sector, with particular focus on assets and projects
related to energy and transport.
2. Basis of preparation
(a) Statement of compliance
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the EU.
The financial statements were authorised for issue by the Board of Directors
on 25 March 2024.
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical
cost basis except for financial instruments at fair value through profit or
loss which are measured at fair value in the Statement of Financial Position.
(c) Functional and presentation currency
These financial statements are presented in Sterling, which is the Group's
functional currency. All financial information presented in Sterling has been
rounded to the nearest thousand, unless otherwise indicated.
(d) Going concern
IAS 1 requires management to prepare financial statements on a going concern
basis unless they conclude that preparation on a basis other than going
concern is more appropriate.
At 31 March 2023, the Group has net liabilities of £184.9m which includes
loan financing of £274.9m maturing in on 15 May 2024. The Group's ability to
repay these loans is dependent on proceeds from the sale of its investments.
The principal investment in Distribution Logistics Infrastructure Limited
('DLI') is valued at £78.8 million. This valuation was determined through
initial non-binding talks with an independent third party regarding DLI's
potential sale. This valuation reflects the offer price and is amended for
purchase price adjustments. The offer is subject to due diligence and further
negotiation and if a sale is agreed the final value may be higher or lower
than the amount presented in the financial statements. The company is
assessing the potential transaction and associated timelines, but definitive
agreements for DLI's sale are not assured from these discussions.
The Board has concluded that the Group cannot be considered a going concern
and as a result the financial statements for the year ended 31 March 2023 have
been prepared on a basis other than that of going concern. The investments
holdings in DLI and IEL were moved to Assets held for sale in the prior year
and are carried at the expected realisable amounts as per IFRS 5. Other than
the reclassification, there is no impact to the financial information as a
result of changing to this basis as investments were already being carried at
realisable amounts.
The financial statements do not include any provision for the future costs
except to the extent that such costs were committed at the end of the
reporting period.
(e) Use of estimates and judgements
The preparation of the financial statements in conformity with IFRSs requires
management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these
estimates. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period in which
the estimates are revised and in any future periods affected.
The areas involving a higher degree of judgment or complexity, or areas where
assumptions and estimates are significant to the consolidated financial
statements are disclosed in note 5.
3. Summary of significant accounting policies
3.1 Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries and
subsidiary undertakings). Control is achieved where the Company has power over
an investee, exposure or rights to variable returns and the ability to exert
power to affect those returns.
The results of subsidiaries acquired or disposed of during the year are
included in the consolidated Statement of Comprehensive Income from the
effective date of acquisition or up to the effective date of disposal, as
appropriate.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used
by the Group. All intra-group transactions, balances, income and expenses are
eliminated on consolidation.
The Directors consider the Group to be an investment entity as defined by IFRS
10 Consolidated Financial Statements as it meets the following criteria as
determined by the accounting standard;
· Obtains funds from one or more investors for the purpose of
providing those investors with investment management services;
· Commits to its investors that its business purpose is to invest
funds solely for returns from capital appreciation, investment income or both;
and
· Measures and evaluates the performance of substantially all of
its investments on a fair value basis.
As an investment entity under the terms of the amendments to IFRS 10
Consolidated Financial Statements, the Group is not permitted to consolidate
its controlled portfolio entities.
3.2 Segment reporting
A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other business segments. A geographical segment is engaged in
providing products or services within a particular economic environment that
are subject to risks and returns that are different from those of segments
operating in other economic environments.
The Directors are of the opinion that the Group is engaged in a single segment
of business being investment in infrastructure assets in one geographical
area, being India.
3.3 Income
Dividend income from investments is recognised when the right to receive
payment has been established, normally the ex-dividend date.
Interest income is recognised on an accruals basis using the effective
interest method.
3.4 Expenses
All expenses are recognised on an accruals basis and are presented as revenue
items except for expenses that are incidental to the disposal of an investment
which are deducted from the disposal proceeds.
3.5 Taxation
Income tax expense comprises current and deferred tax. Current tax and
deferred tax is recognised in profit or loss except to the extent that it
relates to a business combination, or items recognised directly in equity or
in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or
loss for the year, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of previous
years. Current tax payable also includes any tax liability arising from the
declaration of dividends.
Deferred tax is recognised in respect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. Deferred tax is not recognised
for;
· temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit or loss;
· temporary differences related to investments in subsidiaries and
jointly controlled entities to the extent that it is probable that they will
not reverse in the foreseeable future; and
· taxable temporary differences arising on the initial recognition
of goodwill.
Deferred tax is measured at the tax rates that are expected to be applied to
temporary differences when they reverse, based on the laws that have been
enacted or substantively enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and they
relate to income taxes levied by the same tax authority on the same taxable
entity, or on different tax entities, but they intend to settle current tax
liabilities and assets on a net basis or their tax assets and liabilities will
be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and
deductible temporary differences, to the extent that it is probable that
future taxable profits will be available against which they can be utilised.
Deferred tax assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit will be
realised.
3.6 Foreign currency transactions
Transactions and balances
Transactions in foreign currencies are translated to the respective functional
currencies of Group entities at exchange rates at the dates of the
transactions. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are retranslated to the functional currency
at the exchange rate at that date. The foreign currency gain or loss on
monetary items is the difference between amortised cost in the functional
currency at the beginning of the year, adjusted for effective interest and
payments during the year, and the amortised cost in foreign currency
translated at the exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are
measured at fair value are retranslated to the functional currency at the
exchange rate at the date that the fair value was determined.
Non-monetary items in a foreign currency that are measured in terms of
historical cost are translated using the exchange rate at the date of the
transaction. Foreign currency differences arising on retranslation are
recognised in profit or loss, except for differences arising on the
retranslation of available-for-sale equity investments, a financial liability
designated as a hedge of the net investment in a foreign operation that is
effective, or qualifying cash flow hedges, which are recognised in other
comprehensive income.
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair
value adjustments arising on acquisition, are translated to Sterling at
exchange rates at the reporting date. The income and expenses of foreign
operations, excluding foreign operations in hyperinflationary economies, are
translated to Sterling at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income, and
presented in the foreign currency translation reserve (translation reserve) in
equity. However, if the operation is a non-wholly-owned subsidiary, then the
relevant proportionate share of the translation difference is allocated to the
non-controlling interests. When a foreign operation is disposed of such that
control, significant influence or joint control is lost, the cumulative amount
in the translation reserve related to that foreign operation is reclassified
to profit or loss as part of the gain or loss on disposal. When the Group
disposes of only part of its interest in a subsidiary that includes a foreign
operation while retaining control, the relevant proportion of the cumulative
amount is reattributed to non-controlling interests. When the Group disposes
of only part of its investment in an associate or joint venture that includes
a foreign operation while retaining significant influence or joint control,
the relevant proportion of the cumulative amount is reclassified to profit or
loss.
When the settlement of a monetary item receivable from or payable to a foreign
operation is neither planned nor likely in the foreseeable future, foreign
exchange gains and losses arising from such a monetary item are considered to
form part of a net investment in a foreign operation and are recognised in
other comprehensive income, and presented in the translation reserve in
equity.
3.7 Financial instruments
i. Initial recognition and measurement
The Group initially recognises financial assets and financial liabilities on
the date in which it becomes a party to the contractual provisions of the
instrument. Financial assets or financial liabilities are initially measured
at fair value, except for trade receivables that do not have a significant
financing component which are measured at transaction price. Transaction costs
that are directly attributable to the acquisition or issue of financial assets
and financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or deducted
from the fair value, as appropriate, on initial recognition. Transaction costs
directly attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised immediately in
profit or loss.
ii. Classification and subsequent measurement
Classification of financial assets
On initial recognition, the Group classifies financial assets as measured at
amortised cost or fair value if it meets both the following conditions;
- it is held within a business model whose objective is to hold
assets to collect contractual cash flows; and
- its contractual terms give rise on specified dates to cash flows
that are solely payment of principal and interest.
A financial asset that meets the following conditions are measured
subsequently at fair value through other comprehensive income ("FVTOCI");
- it is held within a business model whose objective is achieved
by both collecting contractual cash flows and selling the financial assets;
and
- its contractual terms give rise on specified dates to cash flows
that are solely payments of principal and interest on the principal amount
outstanding.
By default, all other financial assets are measured subsequently at fair value
through profit or loss ("FVTPL").
Subsequent measurement of financial assets at amortised cost
Financial assets at amortised cost are subsequently measured at amortised cost
using the effective interest method. Interest income from these financial
assets is included in finance income using the effective interest rate method.
Any gain or loss arising on derecognition is recognised directly in profit or
loss and presented in other gains/(losses) together with foreign exchange
gains and losses. Impairment losses are presented as a separate line item in
the statement of profit or loss.
Subsequent measurement of financial assets at FVTPL
Financial assets at FVTPL are subsequently measured at fair value. Net gains
and losses, including foreign exchange gains and losses, are recognised in the
Consolidated Statement of Comprehensive Income.
Financial liabilities - Classification, subsequent measurement and gains and
losses
Financial liabilities are classified as at FVTPL when the financial liability
is (i) contingent consideration of an acquirer in a business combination, (ii)
held for trading or (iii) it is designated as at FVTPL. Financial liabilities
at FVTPL are measured at fair value, and net gains and losses, including any
interest expense, are recognised in profit or loss.
Other financial liabilities are subsequently measured at amortised cost using
the effective interest method. Interest expense is recognised in profit or
loss. Any gain or loss on derecognition is also recognised in profit or
loss.
iii. Fair value measurement
When available, the Group measures the fair value of an instrument using the
quoted price in an active market for that instrument. A market is regarded
as 'active' if transactions for the asset or liability take place with
sufficient frequency and volume to provide pricing information on an ongoing
basis.
Where there is no quoted price in an active market, then the Group uses
valuation techniques that maximise the use of relevant observable inputs and
minimise the use of unobservable inputs. The chosen valuation technique
incorporates all of the factors that market participants would take into
account in a pricing transaction.
iv. Amortised cost measurement
The 'amortised cost' of a financial asset or financial liability is the amount
at which the financial asset or financial liability is measured on initial
recognition minus the principal repayments, plus or minus the cumulative
amortisation using the effective interest method of any difference between
that initial amount and the maturity amount and, for financial assets,
adjusted for any loss allowance.
v. Impairment
Measurement of ECLs
The Group recognises loss allowances for Expected Credit Losses ("ECLs") on
financial assets measured at amortised cost. Lifetime ECLs are the ECLs that
result from all possible default events over the expected life of a financial
instrument. 12-month ECLs are the portion of ECLs that result from default
events that are possible within the 12 months after the reporting date (or a
shorter period if the expected life of the instrument is less than 12 months).
The maximum period considered when estimating ECLs is the maximum contractual
period over which the Group is exposed to credit risk.
ECLs are a probability-weighted estimate of credit losses. Credit losses are
the present value of all cash shortfalls (i.e. the difference between the cash
flows due to the entity in accordance with the contract and the cash flows
that the Fund expects to receive). ECLs are discounted at the effective
interest rate of the financial asset.
Credit-impaired financial assets
At each reporting date, Financial assets that are carried at amortised cost
are reviewed to determine whether there is objective evidence of impairment.
If any such indication exists, an impairment loss is recognised in the profit
or loss as the difference between the asset's carrying amount and the present
value of estimated future cash flows discounted at the financial asset's
original effective interest rate.
vi. Derecognition
A financial asset is derecognised when the contractual rights to the cash
flows from the asset expire, or the Group transfers the rights to receive the
contractual cash flows in a transaction in which substantially all of the
risks and rewards of ownership of the financial asset are transferred or in
which the Group neither transfers nor retains substantially all of the risks
and rewards of ownership and does not retain control of the financial asset.
On derecognition of a financial asset, the difference between the carrying
amount of the asset (or the carrying amount allocated to the portion of the
asset that is derecognised) and the consideration received (including any new
asset obtained less any new liability assumed) is recognised in profit or
loss. Any interest in such transferred financial assets that is created or
retained by the Group is recognised as a separate asset or liability.
The Group derecognises a financial liability when its contractual obligations
are discharged or cancelled or expire. On derecognition of a financial
liability, the difference between the carrying amount extinguished and the
consideration paid (including any non-cash assets transferred or liabilities
assumed) is recognised in profit or loss.
3.8 Investments
Investments of the Group are categorised as at fair value through profit or
loss and are measured at fair value. Unrealised gains and losses arising from
revaluation are taken to the profit or loss.
The Group has taken advantage of an exemption in IAS 28, Investments in
Associates, which permits investments in associates held by venture capital
organisations, investment funds and similar entities to account for such
investments at fair value through profit or loss.
The fair value of unquoted securities is estimated by the Directors using the
most appropriate valuation techniques for each investment.
3.9 Assets held for sale
Non-current assets (or disposal groups) are classified as held for sale if
their carrying amount will be recovered principally through a sale transaction
rather than through continuing use and a sale is considered highly probable.
They are measured at fair value less costs to sell.
An impairment loss is recognised for any initial or subsequent write-down of
the asset (or disposal group) to fair value less costs to sell. A gain is
recognised for any subsequent increases in fair value less costs to sell of an
asset (or disposal group), but not in excess of any cumulative impairment loss
previously recognised. A gain or loss not previously recognised by the date of
the sale of the non-current asset (or disposal group) is recognised at the
date of derecognition.
Non-current assets (including those that are part of a disposal group) are not
depreciated or amortised while they are classified as held for sale. Interest
and other expenses attributable to the liabilities of a disposal group
classified as held for sale continue to be recognised.
Non-current assets classified as held for sale and the assets of a disposal
group classified as held for sale are presented separately from the other
assets in the balance sheet. The liabilities of a disposal group classified as
held for sale are presented separately from other liabilities in the balance
sheet.
3.10 Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangement entered into. An equity instrument is
any contract that evidences a residual interest in the assets of the Group
after deducting all of its liabilities.
Equity instruments are recorded at proceeds received net issue costs.
3.11 Provisions
A provision is recognised when the Group has a present legal or constructive
obligation as a result of a past event, and it is probable that an outflow of
economic benefits will be required to settle the obligation, and the
obligation can be reliably measured. If the effect is material, provisions are
determined by discounting the expected future cash flows at a pre-tax rate
that reflects current market assessments of the time value of money and, where
appropriate, the risks specific to the liability.
3.12 Share issue costs
The share issue costs of the Company directly attributable to the placing that
would otherwise have been avoided have been taken to the share premium
account.
3.13 Dividend distribution
Dividend distribution to the Company's shareholders is recognised as a
liability in the financial statements in the period in which the dividends are
approved.
3.14 Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held at call with
banks, other short-term highly liquid investments with original maturities of
three months or less, and bank overdrafts.
3.15 Interest expense
Interest expenses for borrowings are recognised within finance costs in the
profit or loss using the effective interest rate method.
3.16 Changes in accounting policies
Adoption of new and revised standards and interpretations
As from 1 April 2022, the Group adopted all changes to IFRS which are relevant
to its operations. This adoption did not have a material effect on the
consolidated financial statements of the Group.
The following standards, amendments to standards and interpretations have been
issued but are not yet effective for annual periods beginning on 1 April 2022
and earlier application is permitted; however, the Group has not early adopted
the new or amended standards in preparing these consolidated financial
statements.
The following amended standards and interpretations are not expected to have a
significant impact on the Group's consolidated financial statements:
· Disclosure of accounting policies (Amendments to IAS 1 and IFRS
Practice Statement 2) - effective for annual period beginning on or after 1
January 2023
· Definition of Accounting Estimate (Amendments to IAS 8) -
effective for annual period beginning on or after 1 January 2023
· Deferred Tax Related to Assets and Liabilities Arising from a
Single Transaction - Amendments to IAS 12 Income Taxes - effective for annual
period beginning on or after 1 January 2023
· Initial Application IFRS 17 and IFRS 9 - Comparative Information
(Amendments to IFRS 17) - effective for annual period beginning on or after 1
January 2023
· Classification of liabilities as current or non-current
(Amendments to IAS 1) - effective for annual period beginning on or after 1
January 2024
· Lease Liability in a Sale and Leaseback (Amendments to IFRS 16) -
effective for annual period beginning on or after 1 January 2024
· Non-current Liabilities with Covenants (Amendments to IAS 1) -
effective for annual period beginning on or after 1 January 2024
· Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture (Amendments to IFRS 10 and IAS 28) - effective for
annual period beginning on or after January 2024
4. Capital and financial risk management
Capital management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the
amount of dividends paid to shareholders, return capital to shareholders,
issue new shares, or sell assets to reduce debt.
Consistent with others in the industry, the Group monitors capital on the
basis of the gearing ratio. This ratio is calculated as net debt divided by
total capital. Net debt is calculated as total borrowings and other long term
loans as shown in the consolidated statement of financial position, less cash
and cash equivalents.
The following table summarises the capital of the Group:
2023 2022
£'000 £'000
Long and short term loans and borrowings 274,926 219,230
Less: cash and cash equivalents (322) (347)
Net debt 274,604 218,883
Total equity (184,925) (46,772)
Total capital 89,679 172,111
Gearing ratio 306.21% 127.18%
Financial risk management
The Group's activities expose it to a variety of financial risks: market risk
(including currency risk and price risk), credit risk, liquidity risk and cash
flow interest rate risk.
Risk management is carried out by the Board of Directors. The Board identifies
and evaluates financial risks in close co-operation with the Asset Manager.
(a) Market risk
(i) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily with respect to the Indian
Rupee ("INR"). Foreign exchange risk arises from future commercial
transactions, recognised monetary assets and liabilities and net investments
in foreign operations.
Net assets denominated in Indian Rupee at the year-end amounted to £99.1
million (2022: £161.9 million), representing the Group's investments in
Indian Companies. At 31 March 2023, had the exchange rate between the Indian
Rupee and Sterling increased or decreased by 10% with all other variables held
constant, the increase or decrease respectively in net assets would amount to
approximately £9.9 million (2022: £16.19 million). This exposure is
unhedged.
Total liabilities denominated in US$ at the year-end amounted to £274.9
million (2022: £218.9 million), principally comprising loans and borrowings
less cash and cash equivalents. At 31 March 2023, had the exchange rate
between the US$ and Sterling increased or decreased by 10% with all other
variables held constant, the increase or decrease respectively in total
liabilities would amount to approximately £27.5 million (2022: £21.9
million). This exposure is unhedged.
(ii) Market price risk
The Group is exposed to market risk arising from its investment in unlisted
Indian infrastructure companies due to factors that affect the overall
performance of the financial markets. These investments present a risk of
capital loss. The Board is responsible for the selection of investments and
monitoring exposure to market price risk. All investments are in Indian
infrastructure projects.
If the value of the Group's investment portfolio had increased by 10%, the
Group's net assets would have increased by £7.9 million (2022: £16.2
million). A decrease of 10% would have resulted in an equal and opposite
decrease in net assets.
(iii) Cash flow and fair value interest rate risk and
sensitivity
The Group's cash and cash equivalents are invested at short term market
interest rates. Loans and borrowings attract fixed interest rates as detailed
in note 15.
The table below summarises the Group's exposure to interest rate risks. It
includes the Groups' financial assets and liabilities at the earlier of
contractual re-pricing or maturity date, measured by the carrying values of
assets and liabilities.
Under 1 1 month 1 to 5 Over 5 Non-interest
to 1 year
month years years bearing Total
31 March 2023 £'000 £'000 £'000 £'000 £'000 £'000
Financial assets
Investments at fair value through profit or loss - - - - 17,334 17,334
Trade receivables and prepayments - - - - 40 40
Cash and cash equivalents 322 - - - - 322
Assets held for sale - - - - 81,779 81,779
Total financial assets 322 - - - 99,153 99,475
Financial liabilities
Trade and other payables - - - - (9,474) (9,474)
Loans and borrowings - - (274,926) - - (274,926)
Total financial liabilities - - (274,926) - (9,474) (284,400)
Under 1 1 month 1 to 5 Over 5 Non-interest
to 1 year
month years years bearing Total
31 March 2022 £'000 £'000 £'000 £'000 £'000 £'000
Financial assets
Investments at fair value through profit or loss - - - - 18,537 18,537
Trade receivables and prepayments - - - - 229 229
Cash and cash equivalents 347 - - - - 347
Assets held for sale - - - - 143,351 143,351
Total financial assets 347 - - - 162,117 162,464
Financial liabilities
Trade and other payables - - - - (3,146) (3,146)
Loans and borrowings - - (219,230) - - (219,230)
Total financial liabilities - - (219,230) - (3,146) (222,376)
(b) Credit risk
Credit risk may arise from a borrower failing to make required payments on
investments, cash balances and debtor balances. The amount of credit risk is
equal to the amounts stated in the statement of financial position for each of
these assets. All the cash balances are held with various Barclays bank
accounts. The Standard & Poor's credit rating of Barclays Bank plc is A-1.
(c) Liquidity risk
Liquidity risk is the risk that the Group may be unable to meet short term
financial demands. Prudent liquidity risk management implies maintaining
sufficient cash and marketable securities, the availability of funding through
an adequate amount of committed credit facilities and the ability to close out
market positions. The Group aims to maintain flexibility in funding.
Residual undiscounted contractual maturities of financial liabilities:
31 March 2023 Less than 1 to 3 3 months 1 to 5 years Over 5 No stated maturity
1 month months to 1 year years
£'000 £'000 £'000 £'000 £'000 £'000
Financial liabilities
Trade and other payables 9,474
- - - - -
Loans and borrowings - - - 274,926 - -
Total - - 9,474 274,926 - -
31 March 2022 Less than 1 to 3 3 months 1 to 5 years Over 5 No stated maturity
1 month months to 1 year years
£'000 £'000 £'000 £'000 £'000 £'000
Financial liabilities
Trade and other payables 3,129
- - - - -
Loans and borrowings - - - 219,230 - -
Total - - 3,129 219,230 - -
5. Critical accounting estimates and assumptions
These disclosures supplement the commentary on financial risk management (see
note 4).
Key sources of estimation uncertainty
Determining fair values
The determination of fair values for financial assets for which there is no
observable market prices requires the use of valuation techniques as described
in accounting policy 3.8. For financial instruments that trade infrequently
and have little price transparency, fair value is less objective, and requires
varying degrees of judgement depending on liquidity, concentration,
uncertainty of market factors, pricing assumptions and other risks affecting
the specific instrument. See also "Valuation of financial instruments" below.
Critical judgements in applying the Group's accounting policies
Valuation of financial instruments
The Group's accounting policy on fair value measurements is discussed in
accounting policy 3.8. The Group measures fair value using the following
hierarchy that reflects the significance of inputs used in making the
measurements:
· Level 1: Quoted market price (unadjusted) in an active market for an
identical instrument.
· Level 2: Valuation techniques based on observable inputs, either directly
(i.e., as prices) or indirectly (i.e., derived from prices). This category
included instruments valued using: quoted market prices in active markets for
similar instruments: quoted market prices for identical or similar instruments
in markets that are considered less than active; or other valuation techniques
where all significant inputs are directly or indirectly observable from market
data.
· Level 3: Valuation techniques using significant unobservable inputs. This
category includes all instruments where the valuation technique includes
inputs not based on observable data and the unobservable inputs have a
significant effect on the instrument's valuation. This category includes
instruments that are valued based on quoted prices for similar instruments
where significant unobservable adjustments or assumptions are required to
reflect differences between the instruments.
Fair values of financial assets and financial liabilities that are traded in
active markets are based on quoted market prices or dealer price quotations.
For all other financial instruments, the Group determines fair values using
valuation techniques.The Group holds investments in several unquoted Indian
infrastructure companies. The Directors' valuations of these investments, as
shown in note 12, are based on a discounted cash flow methodology or recent
transaction prices, prepared by the Group's Asset Manager (Franklin Park
Management). The valuations are inherently uncertain and realisable values may
be significantly different from the carrying values in the financial
statements.
The methodology is principally based on company-generated cash flow forecasts
and observable market data on interest rates and equity returns. The discount
rates are determined by market observable risk free rates plus a risk premium
which is based on the phase of the project concerned.
The tables below analyses financial instruments measured at fair value at the
end of the reporting period, by the level in the fair value hierarchy into
which the fair value measurements are categorised:
31 March 2023 Level 1 Level 2 Level 3
£'000 £'000 £'000
Financial assets at fair value through profit or loss (note 12)
India Hydropower Development Company, LLC - - 17,334
Assets held for sale (Note 13)
Distribution Logistics Infrastructure Private Limited - - 78,579
Indian Energy Limited - - 3,200
Fair value at year end - - 99,113
31 March 2022 Level 1 Level 2 Level 3
£'000 £'000 £'000
Financial assets at fair value through profit or loss (note 12)
India Hydropower Development Company, LLC - - 18,537
Assets held for sale (Note 13)
Distribution Logistics Infrastructure Private Limited - - 144,619
Indian Energy Limited - - 5,500
Fair value at year end - - 168,656
The following table shows a reconciliation from the beginning balances to the
ending balances for fair value measurements in level 3 of the fair value
hierarchy:
£'000
Fair value brought forward 168,656
Additional capital injected 4,216
Movement in fair value (73,759)
Fair value at year end 99,113
If the determined discount rates were increased by 1% per annum, the value of
unlisted equity securities would fall by £1 million (2022: £2 million).
6. Other administration fees and expenses
2023 2022
£'000 £'000
Audit fees 29 82
Legal fees 955 310
Corporate advisory fees 152 147
Other professional costs 400 2,323
Administration fees 165 216
Directors' fees (note 17) 168 119
Insurance costs 9 5
Share based payments (9) -
Other costs 333 44
2,202 3,246
7. Investment management, advisory and valuation fees
On 14 September 2016, the Group entered into a revised and restated management
and valuation and portfolio services agreement (the "New Management
Agreement") with Franklin Park Management, LLC ("Franklin Park" or the "Asset
Manager"), the Group's existing asset manager, to effect a reduction in annual
cash fees payable by IIP to the Asset Manager. The other terms of the New
Management Agreement were unchanged from those of the prior agreement between
the parties. A further revision was made in June 2019.
Under the New Management Agreement, the Asset Manager is entitled to a fixed
annual management fee of £5,520,000 per annum (the "Annual Management Fee"),
payable quarterly in arrears. The Fee Shares will be issued free of charge, on
1 July of each calendar year for the duration of the New Management Agreement.
Fees for the year ended 31 March 2023 were £5,520,000 (31 March 2022:
£5,520,000). The amount of outstanding as at 31 March 2023 amounted to
£8,280,000 (2022: £2,760,000).
8. Finance costs
2023 2022
£'000 £'000
Loan interest expense (note 15) 37,277 27,617
37,277 27,617
9. Taxation
There is no liability for income tax in the Isle of Man. The Company is
subject to tax at a rate of 0%.
The Group is subject to income tax in Mauritius at the rate of 15% on the
chargeable income of Mauritian subsidiaries. They are, however, entitled to a
tax credit equivalent to the higher of the foreign tax paid and a deemed
credit of 80% of the Mauritian tax on their foreign source income. No
provision has been made in the accounts due to the availability of tax
losses.
10. Basic and diluted earnings/(loss) per share
Basic earnings/(loss) per share are calculated by dividing the loss
attributable to shareholders by the weighted average number of ordinary shares
outstanding during the year.
2023 2022
Loss attributable to shareholders (£ thousands) (138,153) (140,025)
Weighted average number of ordinary shares in issue (thousands) 681,882 681,882
Basic loss per share (20.26)p (20.54)p
There is no difference between basic and diluted earnings/(loss) per share.
11. Investments in subsidiaries
Since incorporation, for efficient portfolio management purposes, the Group
has established or acquired the following subsidiary companies, with certain
companies being consolidated and others held at fair value through profit or
loss in line with the Amendments to IFRS 10 Consolidated Financial Statements
(see note 3.1):
Consolidated subsidiaries Country of incorporation Ownership interest
Infrastructure India HoldCo Mauritius 100%
Power Infrastructure India Mauritius 100%
Power Infrastructure India (Two) Mauritius 100%
Distribution and Logistics Infrastructure India Mauritius 100%
Hydropower Holdings India Mauritius 100%
India Hydro Investments Mauritius 100%
Indian Energy Mauritius Mauritius 100%
Non-consolidated subsidiaries held at fair value through profit or loss
Distribution & Logistics Infrastructure sub group:
Distribution and Logistics Infrastructure Private Limited India 100.00%
Freightstar India Private Limited India 100.00%
Freightstar Private Limited India 99.79%
Deshpal Realtors Private Limited India 99.76%
Bhim Singh Yadav Property Private India 99.86%
Indian Energy Limited sub group (IEL):
Belgaum Wind Farms Private Limited India 99.99%
iEnergy Wind Farms (Theni) Private Limited India 73.99%
iEnergy Renewables Private Limited India 99.99%
India Hydropower Development Company sub group (IHDC):
Franklin Park India LLC Delaware 100.00%
India Hydropower Development Company LLC Delaware 50.00%
12. Investments - designated at fair value through profit or loss
At 31 March 2023, the Group held two investments in unlisted equity securities
through its wholly owned subsidiaries in Mauritius.
The investments are recorded at fair value as follows:
SMH IHDC Total
£'000 £'000 £'000
Balance at 1 April 2022 - 18,537 18,537
Additions - - -
Fair value adjustment - (1,203) (1,203)
Balance as at 31 March 2023 - 17,334 17,334
(i) Shree Maheshwar Hydel Power Corporation Ltd ("SMH")
(ii) India Hydropower Development Company LLC ("IHDC")
As noted in the Joint Statement from the Chairman and the Chief Executive, the
promoter of SMH has not secured the required funding and SMH received a
termination order with regard to the historically entered Power Purchase
Agreement ("PPA") and Resettlement & Rehabilitation Agreement ("R&R
Agreement") from M.P. Power Management Company Limited, a company owned by the
Government of Madya Pradesh. The PPA was signed in 1994 and amended in 1996
and the R&R Agreement was signed in 1997. Without a valid PPA and
visibility into availability of completion financing, it is impossible to
prepare reasonable forecasts. Although IIP retains legal options to extract
value for its investment, until further clarity emerges, it is assumed that
SMH has no contribution to IIP's valuation.
The investment in IHDC has been fair valued by the Directors as at 31 March
2023 using discounted cash flow techniques, as described in note 5. The
discount rate adopted for the investment is the risk free rate (based on the
Indian government 10-year bond yields) plus a risk premium of 2.67% for IHDC
(2022: 2.67%).
There is no assurance that the estimates resulting from the valuation process
will reflect the actual sales price even where such sales occur shortly after
the valuation date.
The following table shows the sensitivities of the valuation to discount rates
and exchange rates:
IHDC Discount Rate
9.1% 9.6% 10.0% 10.6% 11.1%
INR/£ Exchange Rate 105.7 18.1 17.3 16.7 15.7 15.0
103.7 18.5 17.6 17.0 16.0 15.3
101.7 18.9 17.9 17.3 16.3 15.6
99.7 19.2 18.3 17.7 16.6 15.9
97.7 19.6 18.7 18.0 17.0 16.2
13. Assets held for sale
DLI IEL Total
£'000 £'000 £'000
Balance at 1 April 2022 150,974 5,500 156,474
Additions 4,216 - 4,216
Fair value adjustment (76,611) (2,300) (78,911)
Balance as at 31 March 2023 78,579 3,200 81,779
(i) Distribution Logistics Infrastructure ("DLI")
(ii) Indian Energy Limited ("IEL")
As at 31 March 2023, the Group had pledged 51% of the shares in DLI, totalling
66,677,000 shares of INR 10 each, as part of the terms of a term loan within
the underlying investment entity. In addition, the Group had provided a
non-disposal undertaking of 51% of the shares in IEL, totalling 25,508,980
shares of 1 penny each, as part of the terms of a loan agreement within the
underlying investment entity. As a result these investments have been
reclassified as assets held for sale.
The principal investment in Distribution Logistics Infrastructure Limited
('DLI') is valued at £78.6 million (before adjustments to arrive at equity
value). This valuation was determined through initial non-binding talks with
an independent third party regarding DLI's potential sale. This valuation
reflects the offer price and the value of non-core assets which are not
included within the offer. The offer is subject to due diligence and further
negotiation and if a sale is agreed the final value including the valuation of
the non-core assets which are not included in the offer may be higher or lower
than the amount presented in the financial statements. The company is
assessing the potential transaction and associated timelines, but definitive
agreements for DLI's sale are not assured from these discussions.
The Group has committed to the sale of two of the investments, DLI and IEL.
Accordingly the investment holding value has been reclassified as Assets held
for sale.
The financial performance and cashflow information presented in respect of the
year relating to discontinued operations are set out below.
2023 2022
£'000 £'000
Movement in fair value on investments at fair value through (78,909) (91,601)
profit or loss
Total comprehensive loss - discontinued operations (78,909) (91,601)
2023 2022
£'000 £'000
Purchase of investments (4,216) (3,223)
Purchase of fixed assets - (2,748)
Cash utilised by investing activities - discontinued operations (4,216) (5,971)
14. Trade and other payables
2023 2022
£'000 £'000
Trade payables 9,373 1,674
Accruals and other payables 101 1,455
9,474 3,129
15. Loans and borrowings
Capital Interest Total
£'000 £'000 £'000
Balance as at 1 April 2022 176,732 42,498 219,230
Interest charge for the year - 37,277 37,277
Capitalised loan interest 15,637 (15,637) -
Additional Capital 5,162 - 5,162
Foreign currency effects 11,677 1,580 13,257
Balance as at 31 March 2023 209,208 65,718 274,926
On 8 April 2013, the Group entered into a working capital loan facility
agreement with GGIC Ltd ("GGIC") for up to US$17.0 million. The loans
increased to US$21.5 million in September 2017. The working capital loan has
an interest rate of 7.5% per annum, payable semi-annually during the facility
period. The Group's ultimate controlling party during the year was GGIC and
affiliated parties.
In addition, and on 30 June 2017, the Group entered into an US$8.0 million
unsecured bridging loan facility with Cedar Valley Financial ("Cedar Valley"),
an affiliate of GGIC and the loan was subsequently increased in multiple
tranches to US$64.1 million. The bridging loan has an interest rate of 12% per
annum, payable semi-annually during the facility period. Cedar Valley's
ultimate controlling party during the year was GGIC and affiliated parties.
From 2 April 2019 both the GGIC and the Cedar Valley loans carried an interest
rate of 15% per annum
The Group arranged further debt facility of up to US$105 million
(approximately £87.5 million) with IIP Bridge Facility LLC (the "Lender"), an
affiliate of GGIC originally on 2 April 2019. A further £6 million was drawn
down in August 2022. At 31 March 2023, the US$111 million loan facility had
been fully drawn down. The Loan is a secured term loan provided to the Group's
wholly owned Mauritian subsidiary, Infrastructure India Holdco. The loan
accrues interest daily in a manner that yields a 15% IRR to the Lender
(increasing to 18% IRR in the event of default) and payable at maturity, and
is secured on all assets of Infrastructure India Holdco, including 100% of the
issued share capital of Distribution Logistics Infrastructure India ("DLII"),
DLI's Mauritian parent company.
As at 31 March 2023 both the GGIC and Cedar Valley loans had a maturity date
of 30 June 2023. While the IIP Bridge Facility LLC loan had a maturity date of
1 April 2023. Although, the loan maturity has been extended until 15 May 2024
post year end (see note 20) it was considered that these be reclassified as
Current Liabilities.
16. Share capital
No. of shares Share capital Share premium
Ordinary shares
of £0.01 each £'000 £'000
Balance at 31 March 2023 682,084,189 6,821 282,808
17. Directors' fees and Directors' interests
The Directors had the following interests in the shares of the Company at 31
March 2023:
Sonny Lulla 1,500,000 Ordinary Shares
Details of the Directors' remuneration in the year are as follows:
2023 2022
£'000 £'000
Madras Seshamani Ramachandran 90 90
Graham Smith 60 15
150 105
Subsidiary board members 18 14
168 119
18. Related party transactions
Management services and Directors' fees
Franklin Park Management LLC ("FPM") is beneficially owned by certain
Directors of the Company, namely Messrs Tribone, Lulla and Venerus, and
receives fees in its capacity as Asset Manager as described in note 7.
As detailed in note 7, fees payable to FPM in respect of management and
consulting services for the year ending 31 March 2023 amounted to £5,520,000
(31 March 2022: £5,520,000). The amount of management and consulting fees
outstanding as at 31 March 2023 amounted to £8,280,000 (2022: £2,760,000).
Loans and borrowings
See note 15 regarding loans from GGIC and Cedar Valley Financial, including
interest charged in the year and accrued at the year-end.
Administrator
FIM Capital Limited provides administration services including financial
accounting services to the Group. The fees paid to the Administrator for the
year amounted to £120,000 (2022: £120,000). The amount outstanding as at
year end is £108,703 (2022: £54,000).
19. Net Asset Valuation (NAV) per share
The NAV per share is calculated by dividing the net assets attributable to the
equity holders of the Company at the end of the period by the number of shares
in issue.
2023 2022
Net assets (£'000) (184,925) (46,772)
Number of shares in issue (note 16) 682,084,189 682,084,189
NAV per share 0.0p 0.0p
NAV per share in 2023 and 2022 is shown as nil due to net liabilities at 31
March 2023 (31 March 2022: nil) There is no difference between basic and
diluted NAV per share.
20. Subsequent events
On 4 April 2023, IIP announced that the transaction originally executed with
AVSR Constructions ("AVSR") has been cancelled due to AVSR's inability to
settle the consideration due in respect of the transaction. As previously
announced, IIP had commenced discussions with other interested parties for the
sale of IEL.
On 17 April 2023, IIP announced that the term loan provided by IIP Bridge
Facility was being increased by US$8 million to US$119 million to meet urgent
operational overheads at DLI as well as Group working capital needs.
On 29 February 2024, the company announced that it was in early discussions
with a third party with regard to the proposed sale of DLI following the
termination of the conditional share purchase and shareholders' agreement with
the Pristine Malwa Logistics Private Limited. The company is evaluating
potential transaction and related timeliness, although there can be no
guarantee that discussions will lead to definitive agreements for the sale of
DLI.
IIP is in discussions with the Lenders with regard to a further extension to
the maturity date of the Debt Facilities and the principal lender has agreed
to an extension until 15 May 2024. The Company's expectation of timelines in
respect of the potential DLI transaction is relevant to these discussions.
21. Ultimate controlling party
The ultimate controlling party during the year was GGIC and affiliated
parties.
22. Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have been deemed
inside information for the purposes of Article 7 of Regulation (EU) No
596/2014 until the release of this announcement.
Company Information
Registered Office
55 Athol Street
Douglas
Isle of Man
IM1 1LA
Incorporated in the Isle of Man. Company No. 002457V
Directors
Tom Tribone (Chairman)
Rahul Sonny Lulla
Graham Smith
Robert Venerus
Madras Seshamani Ramachandran
Company Secretary
Grainne Devlin
Administrator and Registrar
FIM Capital Limited
55 Athol Street
Douglas
Isle of Man
IM1 1LA
Auditors
Baker Tilly Isle of Man LLC
2a Lord Street
Isle of Man
IM99 1HP
Asset Manager
Franklin Park Management LLC
2711 Centerville Road
Suite 400
Wilmington
DE 19808
United States of America
Nominated Adviser (NOMAD) and Financial Adviser
Strand Hanson
26 Mount Row
Mayfair
London
W1K 3SQ
United Kingdom
Joint Broker
N+1 Singer
One Bartholomew Lane
London
EC2N 2AX
Website www.iiplc.com
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