Share Name Share Symbol Market Type Share ISIN Share Description
Pme Afr. LSE:PMEA London Ordinary Share IM00B1WSL611 ORD USD0.01
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +$0.00 +0.00% $0.105 $0.06 $0.15 $0.105 $0.105 $0.105 0 07:30:11
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Financial 0.0 0.4 1.0 10.5 10.76

PME African Infrastructure Opps PLC Final Results

05/05/2017 7:00am

UK Regulatory (RNS & others)


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TIDMPMEA

RNS Number : 2512E

PME African Infrastructure Opps PLC

05 May 2017

5 May 2017

PME African Infrastructure Opportunities plc

("PME" or the "Company")

(AIM: PMEA.L)

Final Results for the year ended 31 December 2016

PME African Infrastructure Opportunities plc, an investment company established to invest in sub-Saharan African infrastructure and infrastructure related industries, announces its audited results for the year ended 31 December 2016.

Financial Highlights

   --      Net Asset Value of US$9.5 million (2015: US$9.1 million) 
   --      Net Asset Value per share of US$0.23 (2015: US$0.22) 

-- Profit attributable to shareholders for the year ended 31 December 2016 was US$0.4 million (2015: loss of US$2.1 million)

   --      Basic and diluted profit per share of US$0.0100 (2015: loss per share of US$0.0284) 

For further information please contact:

 
 
   Smith & Williamson Corporate Finance Limited 
   Nominated Adviser 
   Azhic Basirov / Ben Jeynes                        +44 20 7131 4000 
 Stifel Nicolaus Europe Limited 
  Broker 
  Neil Winward / Tom Yeadon                        +44 20 7710 7600 
 

Chairman's Statement

On behalf of the Board of Directors (the "Board"), I am pleased to present the annual results for PME African Infrastructure Opportunities plc ("PME" or the "Company" and together with its subsidiaries the "Group") for the year ended 31 December 2016.

The remit of the Company's directors (the "Directors") under the Company's investing policy is to seek to realise the remaining assets of the Company and to return both existing cash reserves and the proceeds of realisation of the remaining assets to shareholders.

Investments

The Company currently has two assets, namely, three C30 locomotives and a building in Dar-es-Salaam, Tanzania (the "Dar-es-Salaam Property"). A subsidiary of the Company, PME Locomotives (Mauritius) Limited ("PME Locomotives") has a put option requiring Sheltam (Mauritius) Limited ("Sheltam") (formerly known as "PME RSACO (Mauritius) Limited") to purchase any one or more of the three C30 locomotives that it owns at exercise of the option for US$1,416,666 per locomotive (the "Option"). The Option was exercisable at any point during a 90 day period commencing on 6 November 2016 (the "Option Period").

Under the Option, completion and settlement of the sale of any one or more C30 locomotives which is or was the subject of an exercise notice by PME ("Completion") was required to occur within five business days of the exercise notice.

Subsequent to the year end, on 2 February 2017, the Company confirmed that it had exercised the Option in respect of all three C30 locomotives (the "Option Exercise").

The Company announced that alongside the Option Exercise, and following discussions with the Sheltam group, PME Locomotives had entered into a deed of variation to the Option agreement with Sheltam (the "Deed of Variation") pursuant to which Completion will now occur on the earlier of: (a) the fifth business day after completion of a Sheltam corporate fundraising currently in progress; (b) 15 June 2017; and (c) the date specified in writing by PME Locomotives on the occurrence of any of: (i) a change of control of Sheltam; (ii) the Sheltam corporate fundraising currently in progress not proceeding; (iii) the sale, divestment or transfer to a third party of a material part of the Sheltam group's business; (iv) the insolvency of the Sheltam group or the Sheltam group entering into any arrangement with creditors; or (v) any event of default under the Sheltam group's existing debt facilities.

Interest is accruing on the US$4.25 million cash consideration payable to PME in accordance with the Deed of Variation at a rate of 10% per annum from and including the fifth business day following the Option Exercise and up to Completion. The three C30 locomotives are currently being used in South Africa on short term contracts and this will produce additional rental income for the Group prior to Completion.

The Company continues to expect that Completion will occur by 15 June 2017.

The Dar-es-Salaam Property, which is managed by a local Tanzanian managing agent, was 54% let as at 31 December 2016 (increasing to 63% from 15 February 2017) and continues to trade profitably - notwithstanding that further renovations to the building have been carried out during the period.

In 2010 PME Properties Limited acquired the Dar-es-Salaam Property from Dovetel (T) Limited ("Dovetel"), the Company's former telecommunication investment in Tanzania. Dovetel were also a tenant of part of the Dar-es-Salaam Property but were in default on the payment of rent. As previously reported to shareholders, the Company has followed various legal steps to correct the situation and recover the unpaid rent. On 24 May 2016 Dovetel's lease on the property expired and the Directors have appointed an experienced operator to carry out the eviction process. This process is ongoing.

The Dar-es-Salaam Property currently has three tenants (not including Dovetel). One tenant reduced the space occupied in November 2016 from 1,702 square meters to 809 square meters, but extended its lease on the remaining part of the building at a higher rate for a further three years. The lease with the second tenant to rent 628 square meters has been extended for five years with rental increases built into the agreement. The third tenant had originally rented 310 square meters but has since the year end increased this to 603 square meters and has also extended the duration of the lease for a further three years, but at rents lower than had previously been achieved.

The Tanzanian government in place since November 2015 continues to make significant changes in the country and there remains uncertainty as to the direction of further change. As a result investors are delaying investment decisions which has in turn curtailed the demand for high end offices. Some progress has been made in replacing tenants but at lower rents, as described above. The prospect of selling the building in the short term for a reasonable price has not improved since my last report on 13 September 2016.

The Directors have increased the carrying value of the Dar-es-Salaam Property from US$3.8 million as at 31 December 2015 (reflecting the legal uncertainty regarding Dovetel's occupation) to US$5.0 million as at 31 December 2016. Whilst demand for Tanzanian high end offices is currently subdued, this valuation is in line with the Dar-es-Salaam Property value assessed by the local expert as at 31 December 2016 accounting for both current vacancy levels and the current economic climate, of US$5.0 million (31 December 2015 appraised unencumbered market value of US$6.5 million).

Financial Results

The profit for the year to 31 December 2016 was US$0.4 million (2015: loss of US$2.1 million), representing a US$0.0100 profit per ordinary share (2015: loss per ordinary share of US$0.0284). The profit for the year was made up of a net gain in the fair value of assets less ongoing operating and administrative costs.

The Directors, having considered the value of the Option and the latest valuation of the Dar-es-Salaam Property are of the opinion that the rail assets and the Dar-es-Salaam Property are reflected in the balance sheet at fair value.

As at 31 December 2016, PME's Net Asset Value attributable to ordinary shareholders in accordance with IFRS was US$9.5 million (US$0.23 per ordinary share), compared to the US$9.1 million (US$0.22 per ordinary share) that was reported as at 31 December 2015.

As at 31 December 2016, PME had cash balances of US$261,333.

Return of Cash and Outlook

The Directors expect to receive the proceeds from Completion of the Option for the three remaining C30 locomotives by 15 June 2017.

In addition, the Directors will start the marketing process for the sale of the Dar-es-Salaam Property in the second half of 2017, provided prevailing local economic uncertainty has receded and the vacant space has been relet. The sale will incur costs which cannot currently be reflected in the fair value of the investment in accordance with IFRS.

Based on the results of these actions, the Directors continue to anticipate that another tender offer will be proposed to shareholders immediately following the receipt of the proceeds from the Option for the three remaining C30 locomotives. A further and final tender will be proposed thereafter once the building has been sold.

Paul Macdonald

Chairman

4 May 2017

Statement of Comprehensive Income

 
                                                                                        Year ended          Year ended 
                                                                                  31 December 2016    31 December 2015 
                                                                   Note                    US$'000             US$'000 
 
 Net gains/(losses) on financial assets at fair value through 
  profit or loss                                                    3                        1,230               (441) 
 Operating and administration expenses                              9                        (802)             (1,110) 
 Project related expenses                                                                        -               (594) 
 Foreign exchange (loss)/gain                                                                 (17)                  65 
----------------------------------------------------------------  -----  -------------------------  ------------------ 
 Operating profit/(loss)                                                                       411             (2,080) 
 
 Finance income                                                                                  -                  15 
 Finance costs                                                      13                           -                (36) 
 Profit/(loss) before income tax                                                               411             (2,101) 
 
 Income tax                                                         14                           -                   - 
----------------------------------------------------------------  -----  -------------------------  ------------------ 
 Profit/(loss) and total comprehensive income/(expense) for the 
  year                                                                                         411             (2,101) 
 
 Basic and diluted profit/(loss) per share (cents) attributable 
  to the equity holders of the 
  Company during the year                                           5                         1.00              (2.84) 
----------------------------------------------------------------  -----  -------------------------  ------------------ 
 

Balance Sheet

 
                                                          Note   As at 31 December 2016   As at 31 December 2015 
                                                                                US$'000                  US$'000 
-------------------------------------------------------  -----  -----------------------  ----------------------- 
 Assets 
 Current assets 
 Financial assets at fair value through profit or loss     3                      9,260                    7,856 
 Trade and other receivables                                                         69                       32 
 Cash and cash equivalents                                                          261                    1,331 
-------------------------------------------------------  -----  -----------------------  ----------------------- 
 Total current assets                                                             9,590                    9,219 
-------------------------------------------------------  -----  -----------------------  ----------------------- 
 Total assets                                                                     9,590                    9,219 
-------------------------------------------------------  -----  -----------------------  ----------------------- 
 
 Equity and liabilities 
 Equity 
 Issued share capital                                      6                        410                      410 
 Capital redemption reserve                                7                      1,395                    1,395 
 Retained earnings                                                                7,682                    7,271 
-------------------------------------------------------  -----  -----------------------  ----------------------- 
 Total equity                                                                     9,487                    9,076 
-------------------------------------------------------  -----  -----------------------  ----------------------- 
 
 Current liabilities 
 Trade and other payables                                  8                        103                      143 
                                                         ----- 
 Total current liabilities                                                          103                      143 
-------------------------------------------------------  -----  -----------------------  ----------------------- 
 Total liabilities                                                                  103                      143 
-------------------------------------------------------  -----  -----------------------  ----------------------- 
 Total equity and liabilities                                                     9,590                    9,219 
-------------------------------------------------------  -----  -----------------------  ----------------------- 
 

The financial statements were approved and authorised for issue by the Board of Directors on 4 May 2017 and signed on its behalf by:

   Paul Macdonald                                                    Lawrence Kearns 
   Director                                                                   Director 

Statement of Changes in Equity

 
                            Share capital     Capital redemption reserve   Retained earnings     Total 
                                  US$'000                        US$'000             US$'000   US$'000 
 ----------------------------------------  -----------------------------  ------------------  -------- 
 
 Balance at 1 January 2015                            768          1,037              16,528    18,333 
-----------------------------------------  --------------  -------------  ------------------  -------- 
 Comprehensive expense 
 Loss for the year                                      -              -             (2,101)   (2,101) 
-----------------------------------------  --------------  -------------  ------------------  -------- 
 Total comprehensive expense for the year               -              -             (2,101)   (2,101) 
-----------------------------------------  --------------  -------------  ------------------  -------- 
 Transactions with owners 
-----------------------------------------  --------------  -------------  ------------------  -------- 
 Tender offer (note 6)                              (358)            358             (7,156)   (7,156) 
-----------------------------------------  --------------  -------------  ------------------  -------- 
 Total transactions with owners                     (358)            358             (7,156)   (7,156) 
-----------------------------------------  --------------  -------------  ------------------  -------- 
 Balance at 31 December 2015                          410          1,395               7,271     9,076 
-----------------------------------------  --------------  -------------  ------------------  -------- 
 
 
 
 
 Balance at 1 January 2016                  410   1,395   7,271   9,076 
-----------------------------------------  ----  ------  ------  ------ 
 Comprehensive income 
 Profit for the year                          -       -     411     411 
-----------------------------------------  ----  ------  ------  ------ 
 Total comprehensive income for the year      -       -     411     411 
-----------------------------------------  ----  ------  ------  ------ 
 Balance at 31 December 2016                410   1,395   7,682   9,487 
-----------------------------------------  ----  ------  ------  ------ 
 
 

Cash Flow Statement

 
                                                                Note          Year ended          Year ended 
                                                                        31 December 2016    31 December 2015 
                                                                                 US$'000             US$'000 
-------------------------------------------------------------  -----  ------------------  ------------------ 
 Cash flows from operating activities 
 Purchase of financial assets - loans to investee companies      3                 (174)               (237) 
 Proceeds from sale of financial assets - return of capital      3                     -              11,500 
 Interest received                                                                     -                  15 
 Interest paid                                                   13                    -                (36) 
 Dividends received                                                                    -                   - 
 Operating, administrative and project related expenses paid                       (891)             (2,219) 
                                                                      ------------------  ------------------ 
 Net cash (used in)/generated from operating activities                          (1,065)               9,023 
-------------------------------------------------------------  -----  ------------------  ------------------ 
 
 Financing activities 
 Tender offer                                                    6                     -             (7,156) 
 Loan from third party                                           13                    -                 486 
 Repayment of loan from third party                              13                    -             (1,137) 
 Net cash used in financing activities                                                 -             (7,807) 
-------------------------------------------------------------  -----  ------------------  ------------------ 
 
 Net (decrease)/increase in cash and cash equivalents                            (1,065)               1,216 
 Cash and cash equivalents at beginning of year                                    1,331                 144 
 Foreign exchange losses on cash and cash equivalents                                (5)                (29) 
-------------------------------------------------------------  -----  ------------------  ------------------ 
 Cash and cash equivalents at end of year                                            261               1,331 
-------------------------------------------------------------  -----  ------------------  ------------------ 
 

Notes to the Financial Statements

   1    General Information 

PME African Infrastructure Opportunities plc (the "Company") was incorporated and is registered and domiciled in the Isle of Man under the Isle of Man Companies Acts 1931 to 2004 on 19 June 2007 as a public limited company with registered number 120060C. The investment objective of PME African Infrastructure Opportunities plc and its subsidiaries (the "Group") was to achieve significant total return to investors through investing in various infrastructure projects and related opportunities across a range of countries in sub-Saharan Africa. On 19 October 2012 the shareholders approved the revision of the Company's investing policy which is now to realise the remaining assets of the Company and to return both existing cash reserves and the proceeds of realisation of the remaining assets to shareholders.

The Company's investment activities were managed by PME Infrastructure Managers Limited (the "Investment Manager") to 6 July 2012. No alternate has been appointed and the Board of Directors has assumed responsibility for the management of the Company's remaining assets. The Company's administration is delegated to Galileo Fund Services Limited (the "Administrator"). The registered office of the Company is Millennium House, 46 Athol Street, Douglas, Isle of Man, IM1 1JB.

Pursuant to its AIM admission document dated 6 July 2007, there was an original placing of up to 180,450,000 Ordinary Shares with Warrants attached on the basis of 1 Warrant for every 5 Ordinary Shares. Following the close of the placing on 12 July 2007, 180,450,000 Shares and 36,090,000 Warrants were issued. The Warrants lapsed in July 2012. The Shares of the Company were admitted to trading on AIM, a market of the London Stock Exchange, on 12 July 2007 when dealings also commenced.

Financial year end

The financial year end for the Company is 31 December in each year.

Dividends

In the year to 31 December 2016 the Company declared and paid dividends of US$nil (2015: US$nil).

Going concern

In assessing the going concern basis of preparation of the financial statements for the year ended 31 December 2016, the Directors have taken into account the status of current negotiations on the realisation of the remaining assets. The Directors consider that the Group has sufficient funds for its ongoing operations and therefore have continued to adopt the going concern basis in preparing these financial statements.

   2    Summary of Significant Accounting Policies 

This note provides a list of the significant accounting policies adopted in the preparation of these financial statements to the extent that they have not already been disclosed in the other notes below. These policies have been consistently applied to all years presented unless otherwise stated.

   2.1   Basis of preparation 

The financial information contained in this announcement does not constitute the Company's statutory accounts for 2015 or 2016. Statutory accounts for the year ended 31 December 2015 and for the year ended 31 December 2016 have been reported on by the independent Auditors. The Auditors' Reports for both years were unqualified and did not include references to any matters by way of emphasis.

The financial information contained in this announcement has been prepared in accordance with IFRS as adopted by the European Union. The principal accounting policies adopted in the preparation of the financial information contained in this announcement are set out in the Group's full annual report and accounts for the year ended 31 December 2016.

   2.2    Foreign currency translation 

a) Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). These financial statements are presented in US Dollars, which is the Company's functional and presentation currency.

b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.

   2.3    Revenue and expense recognition 

Interest income is recognised in the financial statements on a time-proportionate basis using the effective interest method. Interest expense for borrowings is recognised in the financial statements using the effective interest method.

Dividend income is recognised when the right to receive payment is established.

Expenses are accounted for on an accruals basis.

   2.4    Financial assets and financial liabilities 

The Company classifies its financial assets in the following categories: at fair value through profit or loss, and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

The Company designates its investments, including equity, related loans and similar instruments (note 3), as at fair value through profit or loss on initial recognition if they are not classified as held for trading but are managed, and their performance is evaluated on a fair value basis in accordance with the Company's investing policy.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date which are classified as non-current assets. The Company's loans and receivables comprise 'trade and other receivables' and 'cash at bank' in the balance sheet. Loans and receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables.

The Company classifies its financial liabilities as other liabilities. Other liabilities are 'trade and other payables' in the balance sheet (note 8).

   2.5   Cash and cash equivalents 

Cash and cash equivalents comprise cash deposited with banks held with original maturities of less than three months.

   3    Financial Assets at Fair Value through Profit or Loss 

Investments are designated at fair value through profit or loss on initial recognition. Such investments are initially recorded at fair value, and transaction costs for all financial assets and financial liabilities carried at fair value through profit or loss are expensed as incurred. Gains and losses arising from changes in the fair value of financial assets, including foreign exchange movements, are recognised in the statement of comprehensive income.

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are in relation to the financial assets at fair value through profit or loss.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of financial assets and liabilities that are not traded in an active market is determined using valuation techniques. The Company uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Valuation techniques used include the use of comparable recent or proposed arm's length transactions, discounted cash flow analysis and other valuation techniques commonly used by market participants.

Regular purchases and sales of investments are recognised on the trade date, being the date on which the Company commits to purchase or sell the investment. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or the Company has transferred substantially all risks and rewards of ownership.

The following subsidiaries of the Company are held at fair value in accordance with IFRS 10:

 
                                         Country of incorporation   Percentage of shares held 
-------------------------------------  --------------------------  -------------------------- 
 PME Locomotives (Mauritius) Limited                    Mauritius                        100% 
 PME TZ Property (Mauritius) Limited                    Mauritius                        100% 
-------------------------------------  --------------------------  -------------------------- 
 

The Company's wholly owned subsidiary PME Tanco (Mauritius) Limited appointed a liquidator on 28 June 2016.

The following company is an indirect investment of the Company and is included within the fair value of the direct investments:

 
                          Country of incorporation   Percentage of shares held                        Parent company 
-----------------------  -------------------------  --------------------------  ------------------------------------ 
 PME Properties Limited                   Tanzania                        100%   PME TZ Property (Mauritius) Limited 
-----------------------  -------------------------  --------------------------  ------------------------------------ 
 

The following table shows a reconciliation of the opening balances to the closing balances for fair value measurements:

 
                                               31 December 2016   31 December 2015 
                                                        US$'000            US$'000 
--------------------------------------------  -----------------  ----------------- 
 Start of the year                                        7,856             19,560 
 Increase in loans to investee companies                    174                237 
 Return of capital*                                           -           (11,500) 
 Movement in fair value of financial assets               1,230              (441) 
 End of the year                                          9,260              7,856 
--------------------------------------------  -----------------  ----------------- 
 

* The return of capital relates to a share buyback conducted by PME Locomotives (Mauritius) Limited in May 2015.

Assets carried at amounts based on fair value are defined as follows:

   --      Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). 

-- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).

-- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

The fair values of all financial assets at fair value through profit or loss are determined using valuation techniques using significant unobservable inputs. Accordingly, the fair values are classified as level 3. There were no transfers between levels during the year. The valuation techniques and the significant unobservable inputs are shown below.

 
                     Fair value as at   Fair value as at   Valuation           Significant         Sensitivity to 
                     31 December 2016   31 December 2015   techniques and      unobservable        significant 
                                                           inputs              inputs              unobservable inputs 
                              US$'000            US$'000 
------------------  -----------------  -----------------  ------------------  ------------------  -------------------- 
 Rail assets (PME               4,270              3,988   Agreed/ proposed    Estimated           N/A 
 Locomotives                                               transaction terms   recovery value 
 (Mauritius)                                               plus value of 
 Limited                                                   other net assets 
 Real estate                    4,990              3,868   Adjusted            Discount rate       If the discount 
 investments (PME                                          discounted cash                         rate were 1% 
 TZ Property                                               flow property                           higher/lower the 
 (Mauritius)                                               valuation (inputs                       estimated fair 
 Limited)                                                  including rental                        value would 
                                                           income, operating                       (decrease)/increase 
                                                           costs, vacancy                          by US$38,000 
                                                           and discount 
                                                           rate) 
                                                           plus value of 
                                                           other net assets 
------------------  -----------------  -----------------  ------------------  ------------------  -------------------- 
 Total                          9,260              7,856 
------------------  -----------------  -----------------  ------------------  ------------------  -------------------- 
 

Commitments under operating leases relating to PME Properties Limited are disclosed in note 12.

   4    Net Asset Value per Share 
 
                                                                                     As at                       As at 
                                                                          31 December 2016            31 December 2015 
--------------------------------------------------------------  --------------------------  -------------------------- 
 Net assets attributable to equity holders of the Company 
  (US$'000)                                                                          9,487                       9,076 
 Shares in issue (thousands)                                                        40,973                      40,973 
--------------------------------------------------------------  --------------------------  -------------------------- 
 NAV per share (US$)                                                                  0.23                        0.22 
--------------------------------------------------------------  --------------------------  -------------------------- 
 

The NAV per share is calculated by dividing the net assets attributable to equity holders of the Company by the number of Ordinary Shares in issue.

   5    Basic and Diluted Profit/(Loss) per Share 

Basic profit/(loss) per share is calculated by dividing the profit/(loss) attributable to equity holders of the Company by the weighted average number of Ordinary Shares in issue during the year.

 
                                                                                 Year ended     Year ended 
                                                                           31 December 2016    31 December 
                                                                                                      2015 
-----------------------------------------------------------------------  ------------------  ------------- 
 Profit/(loss) attributable to equity holders of the Company (US$'000)                  411        (2,101) 
 Weighted average number of Ordinary Shares in issue (thousands)                     40,973         74,009 
-----------------------------------------------------------------------  ------------------  ------------- 
 Basic profit/(loss) per share (cents) for the year                                    1.00         (2.84) 
-----------------------------------------------------------------------  ------------------  ------------- 
 

There is no difference between basic and diluted Ordinary Shares as there are no potential dilutive Ordinary Shares.

   6    Share Capital 

Ordinary Shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

 
 Ordinary Shares of US$0.01 each    31 December 2016 and 2015   31 December 2016 and 2015 
                                                       Number                     US$'000 
---------------------------------  --------------------------  -------------------------- 
 Authorised                                       500,000,000                       5,000 
---------------------------------  --------------------------  -------------------------- 
 
 
 C Shares of US$1 each    31 December 2016 and 2015 Number   31 December 2016 and 2015 US$'000 
-----------------------  ---------------------------------  ---------------------------------- 
 Authorised                                      5,000,000                               5,000 
 Issued                                                  -                                   - 
-----------------------  ---------------------------------  ---------------------------------- 
 
 
 Ordinary Shares of US$0.01 each                                                   31 December 2016   31 December 2015 
                                                                                            US$'000            US$'000 
--------------------------------------------------------------------------------  -----------------  ----------------- 
 40,973,236 (31 December 2015: 40,973,236) Ordinary Shares in issue, with full 
  voting rights                                                                                 410                410 
                                                                                                410                410 
--------------------------------------------------------------------------------  -----------------  ----------------- 
 

At incorporation the authorised share capital of the Company was US$10,000,000 divided into 500,000,000 Ordinary Shares of US$0.01 each and 5,000,000 C Shares of US$1.00 each. The holders of Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

The holders of C Shares would be entitled to one vote per share at the meetings of the Company. The C Shares can be converted into Ordinary Shares on the approval of the Directors. On conversion each C share would be sub-divided into 100 C Shares of US$0.01 each and will be automatically converted into New Ordinary Shares of US$0.01 each.

A tender offer took place in November 2015. Up to 38,376,948 Ordinary Shares were available for tender at a price of US$0.20 per share. A total of 35,780,661 Ordinary Shares with an aggregate nominal value of US$357,807 were validly tendered and were cancelled upon completion on 4 December 2015. Retained earnings were reduced by US$7,156,132, being the consideration paid for these shares.

Dividends and tender offers are recognised as a liability in the year in which they are declared and approved.

   7    Capital Redemption Reserve 

The capital redemption reserve is created on the cancellation of shares equal to the par value of shares cancelled. This reserve is not distributable.

   8    Trade and Other Payables 

Trade and other payables are recognised initially at fair value and subsequently at amortised cost using the effective interest method.

 
                                       31 December 2016   31 December 2015 
                                                US$'000            US$'000 
------------------------------------  -----------------  ----------------- 
 Administration fees payable                         20                 24 
 Audit fee payable                                   53                 69 
 CREST service provider fee payable                   5                 10 
 Legal fees payable                                   -                 15 
 Other sundry creditors                              25                 25 
                                                    103                143 
------------------------------------  -----------------  ----------------- 
 

The fair value of the above financial liabilities approximates their carrying amounts.

   9    Operating and Administration Expenses 
 
                                                                                                                  Year 
                                                        Year                                                     ended 
                                                       ended                                               31 December 
                                            31 December 2016                                                      2015 
                                                     US$'000                                                   US$'000 
---------------------------------------  -------------------  -------------------------------------------------------- 
 Administration expenses                                 148                                                       183 
 Administrator and Registrar fees                         86                                                        97 
 Audit fees                                               56                                                        72 
 Directors' fees                                         219                                                       288 
 Professional fees                                       255                                                       404 
 Other                                                    38                                                        66 
---------------------------------------  -------------------  -------------------------------------------------------- 
 Operating and administration expenses                   802                                                     1,110 
---------------------------------------  -------------------  -------------------------------------------------------- 
 

Administrator and Registrar fees

The Administrator receives a fee of 10 basis points per annum of the net assets of the Company between GBP0 and GBP50 million; 8.5 basis points per annum of the net assets of the Company between GBP50 and GBP100 million and 7 basis points per annum of the net assets of the Company in excess of GBP100 million, subject to a minimum monthly fee of GBP4,000 and a maximum monthly fee of GBP12,500 payable quarterly in arrears.

Administration fees expensed by the Company for the year ended 31 December 2016 amounted to US$77,842 (31 December 2015: US$87,929).

The Administrator provides general secretarial services to the Company, for which it receives a minimum annual fee of GBP5,000. Additional fees, based on time and charges, will apply where the number of Board meetings exceeds four per annum. For attendance at meetings not held in the Isle of Man, an attendance fee of GBP750 per day or part thereof will be charged. The fees payable by the Company for general secretarial services for the year ended 31 December 2016 amounted to US$7,722 (31 December 2015: US$9,159).

Administration fees of the Mauritian subsidiaries for the year ended 31 December 2016 amounted to US$23,845 (31 December 2014: US$42,266).

Administration fees of PME Properties Limited for the year ended 31 December 2016 amounted to US$42,538 (31 December 2015: US$24,010).

Directors' remuneration

The maximum amount of basic remuneration payable by the Company by way of fees to the Directors permitted under the Articles of Association is GBP200,000 per annum. The Directors are each entitled to receive reimbursement of any expenses incurred in relation to their appointment. The Executive Directors are entitled to receive annual basic salaries of GBP75,000.

Total fees and basic remuneration (including VAT where applicable) and expenses payable by the Company for the year ended 31 December 2016 amounted to US$218,546 (31 December 2015: US$288,282) and was split as below. Directors' insurance cover payable amounted to US$30,028 (31 December 2015: US$29,972).

 
                                 Year ended          Year ended 
                           31 December 2016    31 December 2015 
                                    US$'000             US$'000 
-----------------------  ------------------  ------------------ 
 Paul Macdonald                          97                 114 
 Lawrence Kearns                        108                 128 
 Expense reimbursement                   14                  46 
                                        219                 288 
-----------------------  ------------------  ------------------ 
 
   10    Operating Segments 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is the person or group that allocates resources to and assesses the performance of the operating segments of an entity. The chief operating decision-makers have been identified as the Board of Directors.

The Board reviews the Company's internal reporting in order to assess performance and allocate resources. It has determined the operating segments based on these reports. The Board considers the business on a project by project basis by type of business. The type of business is transport (railway) and leasehold property.

 
 Year ended 31 December 2016                                           Transport         Leasehold    Other*     Total 
                                                                                          Property 
                                                                 PME Locomotives   PME TZ Property 
                                                                         US$'000           US$'000   US$'000   US$'000 
---------------------------------------------------------   --------------------  ----------------  --------  -------- 
 Net gains/(losses) on financial assets at fair value 
  through profit or loss                                                     184             1,058      (12)     1,230 
 Profit/(loss) for the year                                                  184             1,058     (831)       411 
 Segment assets                                                            4,270             4,990       330     9,590 
 Segment liabilities                                                           -                 -     (103)     (103) 
----------------------------------------------------------  --------------------  ----------------  --------  -------- 
 
 

* Other refers to income and expenses of the Company not specific to any specific sector such as income on un-invested funds and corporate expenses. Other assets comprise cash and cash equivalents US$261,333 and other assets US$69,479.

 
 Year ended 31 December 2015                                  Transport                  Leasehold   Other**     Total 
                                                                                          Property 
                                                     PME RSACO   PME Locomotives   PME TZ Property 
                                                       US$'000           US$'000           US$'000   US$'000   US$'000 
--------------------------------------------------  ----------  ----------------  ----------------  --------  -------- 
 Net gains/(losses) on financial assets at fair 
  value through profit or loss                            (34)             (738)               346      (15)     (441) 
 Finance income                                              -                 -                 -        15        15 
 Finance costs                                               -                 -                 -      (36)      (36) 
 Profit/(loss) for the year                               (34)             (738)               346   (1,675)   (2,101) 
 Segment assets                                              -             3,988             3,868     1,363     9,219 
 Segment liabilities                                         -                 -                 -     (143)     (143) 
--------------------------------------------------  ----------  ----------------  ----------------  --------  -------- 
 

** Other refers to income and expenses of the Company not specific to any specific sector such as income on un-invested funds and corporate expenses. Other assets comprise cash and cash equivalents US$1,330,692 and other assets US$31,655.

   11    Risk Management 

The Company's activities expose it to a variety of financial risks: market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk. The financial risks relate to the following financial instruments: financial assets at fair value through profit or loss, trade and other receivables, cash and cash equivalents and trade and other payables. The accounting policies with respect to the significant financial instruments are described in notes 2, 3 and 8.

Risk management is carried out by the Executive Directors

Foreign currency risk

Foreign currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. The Company's operations are conducted in jurisdictions which generate revenue, expenses, assets and liabilities in currencies other than US Dollars. As a result, the Company is subject to the effects of exchange rate fluctuations with respect to these currencies. The currencies giving rise to this risk are Euro and Pound Sterling.

The Company's policy is not to enter into any currency hedging transactions.

The table below summarises the Company's exposure to foreign currency risk:

 
 31 December 2016    Monetary Assets   Monetary Liabilities      Total 
                             US$'000                US$'000    US$'000 
------------------  ----------------  ---------------------  --------- 
 Euro                              -                    (6)        (6) 
 Pound Sterling                   66                   (97)       (31) 
                                  66                  (103)       (37) 
------------------  ----------------  ---------------------  --------- 
 
 
 31 December 2015    Monetary Assets   Monetary Liabilities      Total 
                             US$'000                US$'000    US$'000 
------------------  ----------------  ---------------------  --------- 
 Euro                              -                    (3)        (3) 
 Pound Sterling                   27                  (140)      (113) 
                                  27                  (143)      (116) 
------------------  ----------------  ---------------------  --------- 
 

The Board of Directors monitors and reviews the Company's currency position on a continuous basis and act accordingly.

At 31 December 2016, had the US Dollar weakened by 1% (2015: strengthened by 3%) in relation to Euro and Pound Sterling, with all other variables held constant, the shareholders' equity would have (decreased)/increased by the amounts shown below:

 
                              2016       2015 
                           US$'000    US$'000 
----------------------  ----------  --------- 
 Euro                            -          - 
 Pound Sterling                  -          3 
 Effect on net assets            -          3 
----------------------  ----------  --------- 
 

Interest rate risk

Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Company is not exposed to significant interest rate risk from the cash held in interest bearing accounts at floating rates or short term deposits of one month or less. The secured loan was at a fixed rate of interest. The Board of Directors monitor and review the interest rate fluctuations on a continuous basis and act accordingly.

During the year ended 31 December 2016 should interest rates have decreased by 100 basis points, with all other variables held constant, the shareholders' equity and the result for the year would have been US$nil (2015: 100 basis points US$7,000) lower as a result of the impact on bank balances.

Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company.

The carrying amounts of financial assets best represent the maximum credit risk exposure at the balance sheet date. This relates also to financial assets carried at amortised cost. Any change in credit quality of financial assets at fair value through profit or loss is reflected in the fair value of the asset.

At the reporting date, the Company's financial assets exposed to credit risk amounted to the following:

 
                                                          31 December 2016   31 December 2015 
                                                                   US$'000         (restated) 
                                                                                      US$'000 
-------------------------------------------------------  -----------------  ----------------- 
 Financial assets at fair value through profit or loss                 649                496 
 Trade and other receivables                                            43                  - 
 Cash and cash equivalents                                             261              1,331 
                                                                       953              1,827 
-------------------------------------------------------  -----------------  ----------------- 
 

The Company's financial assets at fair value through profit or loss are equity investments of the Company which would not usually be subject to credit risk. Portions of the underlying investments are in the form of loans and receivables, cash and cash equivalents or other instruments that are subject to credit risk, and therefore the value attributable to such instruments is provided in the credit risk table above. The comparative figures in the table above have been restated for consistency with the current year presentation.

The Company manages its credit risk by monitoring the creditworthiness of counterparties regularly. Cash transactions and balances are limited to high-credit-quality financial institutions (at least an Aa2 credit rating).

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company currently manages its liquidity risk by maintaining sufficient cash. The Company and the Group's liquidity positions are monitored by the Board of Directors.

The residual undiscounted contractual maturities of financial liabilities are as follows:

 
 31 December 2016    Less than 1 month   1-3 months       3 months to 1   1-5 years   Over 5 years           No stated 
                                                                   year                                       maturity 
                               US$'000      US$'000             US$'000     US$'000        US$'000             US$'000 
------------------  ------------------  -----------  ------------------  ----------  -------------  ------------------ 
 Financial 
 liabilities 
 Trade and other                   103            -                   -           -              -                   - 
 payables 
                                   103            -                   -           -              -                   - 
------------------  ------------------  -----------  ------------------  ----------  -------------  ------------------ 
 
 
 31 December 2015    Less than 1 month   1-3 months       3 months to 1   1-5 years   Over 5 years           No stated 
                                                                   year                                       maturity 
                               US$'000      US$'000             US$'000     US$'000        US$'000             US$'000 
------------------  ------------------  -----------  ------------------  ----------  -------------  ------------------ 
 Financial 
 liabilities 
 Trade and other                   143            -                   -           -              -                   - 
 payables 
                                   143            -                   -           -              -                   - 
------------------  ------------------  -----------  ------------------  ----------  -------------  ------------------ 
 

Capital risk management

The Company's primary objective when managing its capital base was to safeguard the Company's ability to continue as a going concern in order to realise the remaining assets of the Company at a time and under such conditions as the Directors may determine in order to maximise value on behalf of the shareholders of the Company and to return both existing cash reserves and the proceeds of realisation of the remaining assets to shareholders.

Company capital comprises share capital and reserves.

No changes were made in respect of the objectives, policies or processes in respect of capital management during the years ended 31 December 2015 and 2016.

   12    Contingent Liabilities and Commitments 

PME Properties Limited has entered into a number of operating lease agreements in respect of property. The lease terms are between one and ten years and the majority of the lease agreements are renewable at the end of the lease period at market rates.

The Groups' future aggregate minimum lease payments, by virtue of its indirect investment in PME Properties Limited, under operating leases are as follows:

 
                                                      31 December 2016             31 December 2015 
                                                               US$'000                      US$'000 
-----------------------------------------  ---------------------------  --------------------------- 
 Amounts payable under operating leases: 
 Within one year                                                    25                            - 
 In the second to fifth years inclusive                            300                          200 
 Beyond five years                                               1,220                        1,280 
-----------------------------------------  ---------------------------  --------------------------- 
                                                                 1,545                        1,480 
-----------------------------------------  ---------------------------  --------------------------- 
 
   13    Related Party Transactions 

Parties are considered to be related if one party has the ability to control the other party or to exercise significant influence over the other party in making financial or operational decisions. Key management is made up of the Board of Directors.

The Directors of the Company are considered to be related parties by virtue of their influence over making operational decisions. Directors' remuneration is disclosed in note 9.

Interest payable by the Company for the year ended 31 December 2015 under secured loan agreements with Helvetica Deutschland GmbH ("Helvetica") amounted to US$36,105. Paul Macdonald holds 40% of Helvetica's issued share capital, therefore Helvetica is deemed to be a related party of the Company and the loans were a related party transaction. The loans and all outstanding interest were settled in full on completion of the disposal of rail assets in May 2015.

   14    Income Tax Expense 

The Company is resident for taxation purposes in the Isle of Man and is subject to income tax at a rate of zero per cent (2015: zero per cent).

   15    Post Balance Sheet Events 

On 2 February 2017 the Company exercised the Option in respect of all three C30 locomotives.

Following discussions with the Sheltam group, PME Locomotives (Mauritius) Limited has entered into a deed of variation to the Option Agreement with Sheltam pursuant to which Completion will now occur on the earlier of: (a) the fifth business day after completion of a Sheltam corporate fundraising currently in progress; (b) 15(th) June 2017; and (c) the date specified in writing by PME Locomotives (Mauritius) Limited on the occurrence of any of: (i) a change of control of Sheltam; (ii) the Sheltam corporate fundraising currently in progress not proceeding; (iii) the sale, divestment or transfer to a third party of a material part of the Sheltam group's business; (iv) the insolvency of the Sheltam group or the Sheltam group entering into any arrangement with creditors; or (v) any event of default under the Sheltam group's existing debt facilities.

Interest shall accrue on the US$4.25 million cash consideration payable to the Company in accordance with the Deed of Variation at a rate of 10% per annum from and including the fifth business day following the exercise of the Option and up to Completion.

   16    Financial Statements 

The financial information set out in this announcement does not constitute statutory accounts but has been extracted from the Group's Financial Statements. The Group's annual report will be posted to shareholders shortly and will be available on the Company's website www.pmeinfrastructure.com.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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May 05, 2017 02:00 ET (06:00 GMT)

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