REG - Infrastructure India Infrastructure Ind W - Half-year Report
21/12/2022 07:15
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RNS Number : 3868K Infrastructure India plc 21 December 2022
21 December 2022
Infrastructure India plc
("IIP" or the "Company" and together with its subsidiaries, the "Group")
Interim results for the six months ended 30 September 2022
Infrastructure India plc, an AIM quoted infrastructure fund investing directly
into assets in India, announces its unaudited interim results for the six
months ended 30 September 2022.
Financial performance
· As at 30 September 2022, the value of the Group's investments was
£194.1 million (£168.7 million as at 31 March 2022; £263.1 million as at 30
September 2021). The value increased against the previous period as a result
of foreign exchange rates, principally GBP:USD. The comparable rates were
GBP:USD 1.12 as at 30 September 2022 against GBP:USD 1.31 as at 31 March 2022.
· Net liabilities were £85.7 million as at 30 September 2022 (net
liabilities of £46.8 million as at 31 March 2022 and net assets of £72.1
million as at 30 September 2021). The value increased against the previous
period due to the effect of changes in foreign exchange rates on the Group's
borrowings, which are primarily USD denominated.
· As announced in the annual results on 21 December 2022, the net
liability position is based on agreed preliminary terms with a third party and
the ascribed net minimum consideration for IIP's largest holding, Distribution
Logistics Infrastructure Limited ("DLI"). The proposed transaction is
structured in two parts, with a deferred consideration - not included in the
valuation - which the Directors expect to have a positive impact on net assets
in due course. The Board will be making further announcements as and when
appropriate.
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 Spinney / James Dance
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", the "Company" and
together with its subsidiaries, the "IIP Group") unaudited interim results for
the six-month period ended 30 September 2022.
Net liabilities were £85.7 million as at 30 September 2022, compared to
£46.8 million as at 31 March 2022 and net assets of £72.1 million as at 30
September 2021. The net liability position was based on agreed preliminary
terms with a third party and the ascribed net minimum consideration for IIP's
largest holding, Distribution Logistics Infrastructure Limited ("DLI"). The
proposed transaction is structured in two parts, with a deferred consideration
which the Directors expect to have a positive impact on net assets in due
course. The increase in Group net debt was also a contributor to the net
liabilities.
The first half of the fiscal year was dominated by discussions and due
diligence around the sale of both Indian Energy Limited ("IEL") and DLI. Both
assets have interest from multiple buyers and further announcements will be
made as and when appropriate.
Company liquidity and financing
As at 30 September 2022, the Group had gross cash resources of £3.0 million
(£0.3 million as at 31 March 2022; £2.0 million as at 30 September 2021).
On 31 August, IIP announced that the term loan provided by IIP Bridge Facility
was increased by US$6 million to meet urgent operational overheads at DLI as
well as Group working capital needs.
As announced in the Group's Annual Results published 21 December 2022, the
Board have been active in securing sources of financing to ensure the Group
has adequate funding to continue to meet liabilities as they fall due. The
sale of IEL is expected to complete, although AVSR Constructions, who have
unconditionally agreed to purchase IEL, has requested some additional time.
Consequently, there are other potential buyers for IEL undertaking due
diligence. IIP has also agreed preliminary terms for the sale of DLI in a dual
component transaction and further announcements with regard to this will be
made as and when appropriate. IIP has also commenced discussions with several
other potential buyers and due diligence in underway.
The Company's creditors remain supportive, and it is expected the
consideration due to the Company from the anticipated sale of IEL will be
partially utilised towards settlement of such creditors.
The Board will continue to update shareholders on discussions around the sale
of DLI and IEL as well as other developments across IIP's portfolio.
Tom Tribone & Sonny Lulla
20 December 2022
Consolidated Statement of Comprehensive Income
for the period ended 30 September 2022
(Unaudited) (Unaudited) (Audited)
6 months 6 months Year
ended ended ended
30 September 2022 30 September 2021 31 March
2022
Continuing operations Note £'000 £'000 £'000
Movement in fair value on investments at fair value through profit or loss 11 - 661
(2,202)
Foreign exchange (loss)/ gain (40,832) (4,566) (9,839)
Asset management and valuation services 9 (2,760) (2,962) (5,520)
Other administration fees and expenses 8 (1,006) (2,840) (3,246)
Operating loss (44,598) (9,707) (20,807)
Finance costs 16 (17,612) (11,451) (27,617)
Loss before taxation (62,210) (21,158) (48,424)
Taxation - - -
Loss for the period (62,210) (21,158) (48,424)
Other comprehensive income - - -
Total comprehensive loss - continuing operations (62,210) (21,158) (48,424)
Total comprehensive income/(loss) - discontinued operations 23,234 - (91,601)
Total comprehensive loss (38,976) (21,158) (140,025)
Basic and diluted loss per share (pence) 10 (5.72)p (3.10)p (21.54)p
The accompanying notes form an integral part of the financial statements.
Consolidated Statement of Financial Position
as at 30 September 2022
(Unaudited) (Unaudited) (Audited)
6 months ended 6 months Year
30 September 2022 ended ended
30 September 2021 31 March
2022
Note £'000 £'000 £'000
Non-current assets
Investments at fair value through profit or loss 11 18,537 263,120 18,537
Property, Plant and Equipment - 6,140 -
Total non-current assets 18,537 269,260 18,537
Current assets
Debtors and prepayments 55 203 229
Cash and cash equivalents 3,032 2,006 347
Assets held for sale 12 181,747 - 156,474
Total current assets 184,834 2,209 157,050
Total assets 203,371 271,469 175,587
Current liabilities
Trade and other payables (6,291) (1,857) (3,129)
Total current liabilities (6,291) (1,857) (3,129)
Long term liabilities
Loans and borrowings 16 (282,828) (197,517) (219,230)
Total long-term liabilities (282,828) (197,517) (219,230)
Total liabilities (289,119) (199,374) (222,359)
Net assets (85,748) 72,095 (46,772)
Equity
Ordinary shares 6,821 6,821 6,821
Share premium 13 282,808 282,808 282,808
Retained earnings 13 (375,377) (217,534) (336,401)
Total equity (85,748) 72,095 (46,772)
These financial statements were approved by the Board on 20 December 2022 and
signed on their behalf by
Sonny
Lulla
Graham Smith
Chief
Executive
Director
Consolidated Statement of Cash Flows
for the period ended 30 September 2022
(Unaudited) (Unaudited) (Audited)
6 months ended 6 months Year
30 September 2022 ended ended
30 September 2021 31 March
2022
Note £'000 £'000 £'000
Cash flows from operating activities
(Loss)/profit for the period (38,976) (21,158) (140,025)
Adjustments:
Movement in fair value on investments at FV through profit or loss 11 - (661) 2,202
Finance costs 16 17,612 11,451 27,617
Foreign exchange loss 40,832 4,566 9,839
19,468 (5,802) (100,367)
Increase/(decrease) in creditors and accruals 3,162 (50) 1,416
Decrease/(increase) in debtors and prepayments 174 144 (76)
Net cash generated from/ (utilised by) operating activities - continuing 22,804 (5,708) (99,027)
operations
Net cash (utilised by)/generated from operating activities - discontinued 12 (23,234) - 91,601
operations
Net cash utilised by operating activities (430) (5,708) (7,426)
Cash flows from investing activities
Purchase of investments - (3,223) -
Purchase of Fixed Assets - (2,533) -
Cash utilised by investing activities - continuing operations - (5,756) -
Cash utilised by investing activities - discontinued operations 12 (2,039) - (5,971)
Cash utilised by investing activities (2,039) (5,756) (5,971)
Cash flows from financing activities
Loans advanced 5,162 - -
Net cash generated from financing activities 5,162 - -
Increase/(decrease) in cash and cash equivalents 2,693 (11,464) (13,397)
Cash and cash equivalents at the beginning of the period 347 13,656 13,656
Effect of exchange rate fluctuations on cash held (8) (186) 88
Cash and cash equivalents at the end of the period 3,032 2,006 347
The accompanying notes form an integral part of the financial statements.
Selected notes to the interim consolidated financial statements
for the six months ended 30 September 2022
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.
The Company has no employees.
2. Basis of Preparation
These condensed consolidated interim financial statements for the six-month
period ended 30 June 2022 have been prepared in a form consistent with that
which will be adopted in the Group's annual accounts having regard to the
accounting standards applicable to such annual accounts namely International
Financial Reporting Standards ('IFRS') and should be read in conjunction with
the Group's last annual consolidated financial statements as at and for the
year ended 31 March 2022 ('last annual financial statements'). They do not
include all of the information required for a complete set of financial
statements prepared in accordance with IFRS Standards. However, selected
explanatory notes are included to explain events and transactions that are
significant to an understanding of the changes in the Group's financial
position and performance since the last annual financial statement.
These interim consolidated financial statements were approved by the Board of
Directors on 20 December 2022.
3. Going Concern
As disclosed within the 31 March 2022 consolidated financial statements, the
Board has concluded that the Group cannot be considered a going concern and as
a result a basis other than that of going concern has been adopted. The
investments holdings in DLI and IEL have been moved to available for sale and
carried at the expected realisable amounts as per IFRS 5. Other than this,
there is no impact to the financial information as 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 of
except to the extent that such costs were committed at the end of the
reporting period.
4. 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 Company 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 Company is not permitted to consolidate
its controlled portfolio entities.
5. Significant accounting policies
The accounting policies applied by the Group in these interim consolidated
financial statements are the same as those applied by the Group in its
consolidated financial statements as at and for the year ended 31 March 2022.
6. Critical accounting estimates and assumptions
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense.
Actual results may differ from these estimates. In preparing these interim
consolidated financial statements, the significant judgements made by
management in applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the consolidated
financial statements as at and for the year ended 31 March 2022.
During the six months ended 30 September 2022 management reassessed its
estimates in respect of:
Valuation of financial instruments
The Group holds investments in several unquoted Indian infrastructure
companies. The Directors' valuations of these investments, as shown in note 11
and note 12, are based on a discounted cash flow methodology or recent
transaction prices, prepared by the Company'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.
7. Financial risk management policies
The Group's financial risk management objectives and policies are consistent
with those disclosed in the consolidated financial statements as at and for
the year ended 31 March 2022.
8. Other administration fees and expenses
6 months ended 6 months ended Year ended
30 September 2022
30 September 2021
31 March
2022
£'000 £'000 £'000
Audit fees 51 46 82
Legal fees 534 253 310
Corporate advisory fees 75 79 147
Other professional costs 84 2,173 2,323
Administration fees 82 101 216
Directors' fees 88 53 119
Insurance costs 6 5 5
Travel and entertaining - - -
Other costs 86 130 44
1,006 2,840 3,246
9. Investment management, advisory and valuation fees
On 14 September 2016, the Company entered into a revised and restated
management, valuation and portfolio services agreement (the "New Management
Agreement") with Franklin Park Management, LLC ("Franklin Park" or the "Asset
Manager"), the Company's existing asset manager, to effect a reduction in
annual cash fees payable by IIP to the Asset Manager as at that time. The
other terms of the New Management Agreement are unchanged from those of the
prior agreement between the parties.
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. In addition to the Annual Management Fee, the
Asset Manager was issued with 605,716 new ordinary shares in the Company
annually (the "Fee Shares"). The Fee Shares were issued free of charge, on 1
July of each calendar year for the duration of the New Management Agreement,
which had an effective termination date of 30 September 2020.
Fees including the accrued Fee Shares and consulting fees for the period ended
30 September 2022 were £2,760,000 (30 September 2021: £2,962,000).
10. Basic and diluted earnings 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.
Group Group Group
30 September 2022 30 September 2021 31 March
2022
Loss for the period (£ thousands) (38,976) (21,158) (140,025)
Weighted average number of shares (thousands) 681,882 681,882 681,882
Basic and diluted loss per share (pence) (5.72)p (3.10)p (21.54)p
There is no difference between basic and diluted earnings/(loss) per share.
11. Investments - designated at fair value through profit or loss
Investments, consisting of unlisted equity securities, 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 - - -
Balance as at 30 September 2022 - 18,537 18,537
(i) Shree Maheshwar Hydel Power Corporation Ltd ("SMH")
(ii) India Hydropower Development Company LLC ("IHDC")
As noted in the 31 March 2022 financial statements, it is assumed that SMH has
no contribution to IIP's valuation.
The investments in IHDC has been fair valued by the Directors as at 31 March
2022 using discounted cash flow techniques, as described in note 6. The
discount rate adopted for the investments is the risk free rate (based on the
Indian government 10-year bond yields) plus a risk premium of 2.67% for IHDC
(2021: 3.02%)
All the investments valued using discounted cash flow techniques are
inherently difficult to value due to the individual nature of each investment
and as a result, valuations may be subject to substantial uncertainty. 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.
12. Assets held for sale
DLI Disposal Group DLI Disposal Group DLI Disposal Group
£'000 £'000 £'000
Balance at 1 April 2022 150,974 5,500 156,474
Additions 2,039 - 2,039
Fair value adjustment 23,234 - 23,234
Balance as at 30 September 2022 176,247 5,500 181,747
The disposal groups are made up of the following:
DLI Disposal Group DLI Disposal Group DLI Disposal Group
£'000 £'000 £'000
Investments 170,107 5,500 175,607
Property, plant and equipment 6,140 - 6,140
Total 176,247 5,500 181,747
13. Share capital and share premium
No. of shares Share capital Share premium
Ordinary shares
of £0.01 each £'000 £'000
Balance at 30 September 2022 682,084,189 6,821 282,808
As detailed in note 9, the Asset Manager was entitled 605,716 new ordinary
shares in the Company annually (the "Fee Shares"). The Fee Shares were issued
free of charge, on 1 July of each calendar year for the duration of the New
Management Agreement up to the effective termination date of 30 September
2020. The Company has issued a total of 1,817,148 ordinary shares to the Asset
Manager.
14. Net asset value per share
The NAV per share is calculated by dividing the net assets attributable to the
equity holders at the end of the period by the number of shares in issue.
Group Group Group
30 September 2022 30 September 2021 31 March
2022
Net assets (£'000) (85,748) 72,095 (47,772)
Number of shares in issue 682,084,189 682,084,189 682,084,189
NAV per share (pence) 0.0p 10.6p 0.0p
15. Group entities
Since incorporation, for efficient portfolio management purposes, the Company
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:
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%
16. 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 period - 17,612 17,612
Capitalised loan interest 7,263 (7,263) -
Increase in Loan 5,163 - 5,163
Foreign currency (gain)/loss 32,723 8,100 40,823
Balance as at 30 September 2022 221,881 60,947 282,828
The Group has three fully drawn facilities. A working capital facility
provided to the Company by GGIC Ltd. ("GGIC") (the "Working Capital Loan"); an
unsecured bridging loan facility provided to the Company by Cedar Valley
Financial (the "Bridging Loan"); and a secured term loan provided to IIP's
wholly owned Mauritian subsidiary, Infrastructure India Holdco, by IIP Bridge
Facility LLC (the "IIP Bridge Facility").
The Working Capital Loan was provided to the Company 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 originally carried an interest rate of 7.5% per annum
on its principal amount. From 1 April 2019, the loan carries an interest rate
of 15% per annum and matures on 30 June 2023.
The Bridging Loan was provided to the Company in June 2017 by Cedar Valley
Financial in an amount of US$8.0 million and was subsequently increased in
multiple tranches to US$64.1 million in March 2019. The Bridging Loan
originally carried an interest rate of 12% per annum on its principal. From 1
April 2019, the loan carries an interest rate of 15% per annum and matures on
30 June 2023.
The IIP Bridge Facility LLC was originally provided to IIP's wholly owned
Mauritian subsidiary, Infrastructure India Holdco in April 2019 in multiple
tranches totalling US$105 million, of which $7.5 million was used to repay the
Bridging Loan in accordance with its terms. The IIP Bridge Facility is a
secured four-year term loan. The loan accrues interest daily in a manner that
yields a 15% IRR to the Lender and matures on 1 April 2023.
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.
17. 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 9.
Loans and borrowings
See note 16 regarding loans from GGIC and Cedar Valley Financial, including
interest charged in the year and accrued at the year-end.
18. Subsequent events
IIP agreed preliminary terms with a third party and the ascribed net minimum
consideration for Distribution Logistics Infrastructure Limited ("DLI") has
been the valuation applied for DLI in the accounts for the period. The
proposed transaction is structured in two parts, with a deferred,
performance-based, and contingent consideration, which does not contribute to
the assigned DLI asset value and which the Directors expect to have a positive
impact on net assets in due course. IIP has also commenced discussions with
several other potential buyers of DLI and due diligence in underway.
The sale of IEL is expected to complete, and although the buyer, AVSR, has
requested some additional time, there are other potential buyers for IEL
undertaking due diligence
19. 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.
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