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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Prome. Ind. | LSE:PTHI | London | Ordinary Share | GB00B14VJG46 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 98.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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RNS Number:6204O
Promethean India PLC
25 February 2008
Promethean India plc
("Promethean" or the "Company")
Final results (audited) for the period ended 31 August 2007
The Company is pleased to announce its final results for the period from 16 May
2006 to 31 August 2007. The report and accounts will be sent to shareholders on
Monday, 25 February 2008 and will be made available on the Company's website. A
notice of the annual general meeting is included with the report and accounts,
which is to be held at 3rd Floor Exchange House, 54-62 Athol Street, Douglas,
Isle of Man on 20 March 2008 at 10 am.
Further enquiries:
Promethean India PLC
Gaurav Burman +44 7802 181811
Seymour Pierce Limited
Nandita Sahgal +44 20 7107 8000
Notes to Editors:
Promethean India PLC
Promethean India PLC, an investment company that focuses on businesses that are
established or operating in India, was admitted to trading on the AIM market of
London Stock Exchange plc, under the ticker symbol PTHI for the Ordinary Shares
and PTHW for the Warrants.
The Company raised £50 million (gross of expenses) via a Placing of new Ordinary
Shares and Warrants. The Company and its subsidiaries are advised by Promethean
Investments LLP (the 'Investment Manager') and by an Indian resident investment
adviser, Promethean India Advisors Pvt. Ltd (the 'Investment Adviser').
Promethean Investments LLP
Promethean Investments LLP is a specialist fund manager that focuses on activist
private equity investing in both quoted and private UK and Indian businesses.
Promethean Investments aims to acquire an interest in public and private
companies where it believes opportunities exist to create or unlock near-term
value. It combines active management, financial leverage and flexibility to
create bespoke deal structures for quoted and unquoted companies.
Promethean Investments LLP manages Promethean Plc, a £65 million AIM quoted
private equity fund and also manages Promethean India Plc, a £50 million AIM
quoted private equity fund that targets value and growth opportunities in India.
Chairman's Statement
Promethean India plc listed on 25 April 2007 and consequently the Report and
Accounts covers a relatively short period from inception to 31 August 2007.
However, we have made a good start with satisfactory progress.
We have successfully established two offices, one in Delhi and the other in
Mumbai and built a six person team led by Mohit and Gaurav Burman. Four
investments were made during the period in which we have invested £14.4 million.
A brief report on these investments follows this statement. Investments are
actually made through two Mauritian based funds, one for investments in public
companies, the other for investments in private companies. Although complicated,
this is the normal route for private equity investment in India.
India continues to grow rapidly and to attract substantial inward investment.
Not surprisingly the result has been a rapid increase in prices. Particularly
marked in the public markets, perhaps especially in the property sector, the
inflation in asset prices has been very significant. This obviously has made it
more difficult to find attractive investments at a reasonable price. Regulatory
changes both before and subsequent to our period end have not helped. For
regulatory reasons, it has been necessary to make a change to our proposed
original structure. The Burman family, our Indian partners, were unable to get
Reserve Bank of India (RBI) approval to make a direct offshore investment
directly in Promethean India plc. Consequently we now have a co-investment
arrangement, whereby Burman family vehicles will invest £7.5 million pro rata
with Promethean India plc on the same terms and conditions. This has had the
additional benefit that we had a larger investment pool than expected of £57.5
million before deducting listing expenses.
The Group faces challenges due to changes introduced in November by the RBI in
regard to offshore companies investing in public companies. There are two
routes: either one invests via 'P' notes issued by an authorised bank or one
seeks approval as a Foreign Institutional Investor (FII) under the SEBI (Foreign
Institutional Investor) Regulations. 'P' notes are a simple depository receipt:
a bank buys the shares but the economic interest in those shares belongs to the
investor. Although we have applied for FII status, we have yet to receive it and
indeed there is no certainty that we shall receive it. So our public company
investments to date have been made via 'P' notes.
The RBI also decided in November 2007 to cap 'P' notes at their then level. In
other words, banks can now only issue new 'P' notes when the sale of an
investment releases an existing 'P' note. As the 'P' note capacity belongs to
the issuing bank, there is no guarantee that the bank which releases 'P' note
capacity as a result of an offshore investor selling an investment will give
that investor use of the released 'P' note capacity - the bank can use it for
another client.
While one understands the RBI's concern about the inflow of substantial amounts
of overseas capital, it is unfortunate that long-term investors such as
ourselves are potentially restricted in our dealings in the public market.
However, this perhaps is a less obvious problem given the current level of
prices in the public market in India.
In short, I think it is fair to say that we have made a solid start. It is early
days and there are a number of challenges which we have to overcome. We
obviously will be producing an Interim Report for the period to February 2008 in
the near future, however to date our initial efforts are bearing some fruit as
you can see from the summary of the investments as at the end of August 2007
below.
Sir Peter Burt
Investment Manager's Review
Introduction
During the period Promethean India plc has invested £14.4m via the Mauritian
based entities Promethean India Investments Fund I and Promethean India
Investments Fund II (the "Funds") into Indian related businesses. Promethean
India plc also agreed a co-investment facility of £7.5 million with the Burman
Family. The co-investment facility will invest its pro-rata amount in all the
deals to which Promethean India plc subscribes. The Funds are managed by
Promethean Investments LLP (the "Manager" or "Promethean") a limited liability
partnership which is in turn advised by Promethean India Advisors Pvt. Ltd (the
"Advisor"), of which the senior executives in India are all members.
The Manager and the Advisor's investment team which is led by Mohit Burman and
Gaurav Burman, includes the members of the Advisor all of whom have extensive
experience within the private equity and financial services industry. The stated
intention is to invest the capital committed by Promethean India plc in the
Funds by 31 May 2009.
Investment Strategy
The Company was established in order to execute a value activist investment
strategy in both public and private businesses, building a concentrated
portfolio of investments in which the Manager and Advisor can act as a catalyst
for change and value creation. The Advisor and Manager will target companies
which they believe have the potential to add value and growth to the portfolio
by way of domestic growth, international expansion or restructuring. The Advisor
and Manager will hope to utilise their knowledge of the region, and networks
both inside and outside of India to assist investee companies in developing a
plan to ensure value creation.
All investments, whether in public or private companies, are preceded by
extensive due diligence to assess the risks and opportunities in any one
investment. This will include an overview of the target's market, management,
business model, financial track record, prospects and the likely realisation
strategy.
Should an investment lead to the Fund becoming a majority or controlling
shareholder in a company, the Manager and Advisor will work with the investee
company's management team to develop a plan outlining specifically how value is
to be created and detailed actions taken to realise this opportunity. The
Manager and Advisor will maintain a high ratio of investment executives to
investee companies in order to enable it to play a hands-on role with the
investee company in implementing and continually developing this plan.
Where the Fund is a minority shareholder in a publicly listed company, the
Manager and Advisor will engage actively with the Board of the investee company
to find ways to realise the additional value.
The Company has no fixed life and it is expected that it will continue to
re-invest the proceeds of any realisations net of gains with an appropriate
provision for actual or expected future losses.
Investment Origination and Activity
In the period to 31 August 2007 the Manager and Advisor were focused on trying
to execute the pipeline of transactions that they had identified prior to
concluding the fundraising of Promethean India plc. While the Manager and
Advisor worked diligently to execute the deal pipeline, the Advisor received and
actively reviewed a number of investment opportunities, of which the majority
were originated directly by the Advisor approaching the target company. The
Advisor has also reviewed a number of opportunities brought to it by various
professional intermediaries with whom the Advisor has relationships.
The Manager and Advisor are very satisfied with the quality of the investment
opportunities they are originating and they believe that their origination
activities will support the continued growth of the business.
The Manager and Advisor are confident of achieving their aim to have the Fund
fully invested by 31 May 2009. Furthermore they believe that in the absence of
unforeseen circumstances, the investment portfolio will show strong positive
returns in the current financial year.
Investment Activity
During the period Promethean India plc made four new investments in the
following companies:
Mahindra Forgings Mauritius Limited (held via Promethean 1 Limited)
In May 2007 Promethean India Plc secured exclusivity to purchase a 10% stake in
Mahindra Forgings Mauritius Limited (MFML). MFML in turn owned 100% of
Schoneweiss & Co. GmbH., one of the leading private forging companies in Germany
with 140 years of experience which had allowed it to become one of the top five
axle beam manufacturers in the world, specialising in suspension, power train
and engine parts.
The Mahindra Group is one of the best known industrial groups in India and a
leader in the automotive space with over US$4 billion per year in revenues. The
Mahindra group had decided that the automotive component sector had significant
growth potential and was key to their automotive strategy. As a result they had
adopted a buy and build strategy in this sector.
We were pleased to be investing alongside them in an asset which they intend to
grow aggressively by scaling the company's manufacturing in India and by using
its history, goodwill, and relationships in Europe to supply the European OEMs
with automotive components.
Obopay Inc.
In June of 2007 the Advisor was introduced to Obopay, an exciting privately held
California based company. After spending some time with the company and its
management the Advisor was impressed by their comprehensive mobile payment
technology. The Obopay service allows an individual to instantly obtain, spend,
and send money anywhere, anytime with anyone using their mobile phone. Given
India is home to over 200 million mobile phone subscribers and this base is
growing rapidly, the Advisor approached Obopay to discuss the possibility of
helping them scale their operations in India.
Obopay already had considerable traction and was about to close a Series 'C'
round of funding in the amount of £12.5 million with a number of leading
technology investors including Richmond, Redpoint, Onset and with a strategic
investment from Citibank who had announced a trial of their technology for their
current account holders. Obopay have also recently appointed Jim Wolfensohn, the
ex-head of the World Bank to their board. Obopay viewed Promethean plc as a
valuable ally in their India strategy and agreed to work with us to scale their
operation there. We agreed to invest in their heavily oversubscribed Series 'C'
financing.
Nitco Tiles Limited
The Advisor first became interested in Nitco Tiles Ltd in June 2007. It was
clear that the Advisor wanted to participate in the significant real estate
growth in India but was finding it difficult to justify the high valuations that
the private or listed property companies in India were demanding. As a result
the Advisor started to look at businesses that it felt would benefit from the
significant amount of commercial, residential and retail construction in India.
Nitco was interesting for a number of reasons, the first and foremost being that
the company since being founded in 1956 had grown to become the second largest
branded tile manufacturer in India producing in excess of 250 million square
feet of floor tiles per year. Over and above this the Advisor was very impressed
by the management team and their ambitions for the future growth of the
business.
Nitco had also recently announced that they were moving their production out of
the Mumbai region to take advantage of tax subsidies that some of the less
industrial states in India were offering to businesses that set up manufacturing
units in those regions. As a result some valuable real estate that the company
owned would be released and potentially developed into lucrative residential or
commercial use. Given all the positive attributes of the company and given that
it was not well covered by the research community in India we started to buy the
stock and build our position.
Project Hospitality
The Advisor has for some time been looking at one of the largest branded
hospitality businesses in India. Given the growth in tourism both domestic and
international and the growth in the aviation sector which has resulted in both
Indians and foreign visitors having access to air travel, we are witnessing a
period of major growth in the hospitality and catering industries. The
hospitality sector in India historically has suffered from significant under
investment and as a result there are less 5 star luxury hotel rooms in India
than there are in Manhattan. The Advisor believes they have found an asset
which, despite being one of the best portfolio of properties in India, has not
been correctly valued by the public markets. The Advisor believes this
undervaluation may change in the medium term and has identified ways in which
Promethean India can act as a catalyst for this change. We are currently in the
process of building our stake and have not yet disclosed the name of this
target.
As at 31 August 2007, the portfolio was as follows:
Company Sector Cost Valuation* Gain
£000 £000 £000
------------------ --------------- ------ ---------- ---------- ---------
Mahindra
Forgings
Mauritius
Limited** Automotive Unlisted 2,453 2,453 -
Obopay Inc. Mobile Banking Unlisted 729 729 -
Services
Nitco Tiles
Limited Building Listed 4,053 4,138 85
Materials
Project
Hospitality*** Hospitality Listed 7,139 7,398 259
------------------ --------------- -------- --------- --------- --------
Total 14,374 14,718 344
------------------ --------------- -------- --------- --------- --------
* The valuations are in accordance with IFRS / IPEVCA guidelines. Valuation of
listed investments is based on the closing bid price as at 31 August 2007.
Unlisted investments are held at fair value which for a limited period is cost.
All investments are recognised at the transaction date.
** The investment in Mahindra Forgings Mauritius Limited is held via an
intermediary holding company, Promethean 1 Limited (Mauritius).
*** Company name undisclosed, with the underlying investment purchased by via
P-notes.
Realisations
During the year the Company made no substantial realisations of any of its
investments.
Principles of valuation of unlisted investments
Investments are stated at amounts considered by the directors to be a reasonable
assessment of their fair value, where fair value is the amount
at which an asset could be exchanged between knowledgeable, willing parties in
an arm's length transaction.
All investments are valued according to one of the following bases:
* Cost (less any provision required)
* Price of recent transaction
* Earnings multiple
* Net assets
* Sale price
Investments are only valued at cost for a limited period after the date of
acquisition, otherwise investments are valued on one of the other bases
described above, and the earnings multiple basis of valuation will be used
unless this is inappropriate, as in the case of certain asset based businesses.
When valuing on an earnings multiple basis, profits before interest and tax of
the current year will normally be used, depending on whether or not more than
six months of the accounting period remain and the predictability of future
profits. Such profits will be adjusted to a maintainable basis, taxed at the
full corporation tax rate and multiplied by an appropriate and reasonable price/
earnings multiple. This is normally related to comparable quoted companies, with
adjustments made for points of difference between the comparator and the company
being valued, in particular for risks, earnings growth prospects and surplus
assets or excess liabilities.
Where a company has incurred losses, or if comparable quoted companies are not
primarily valued on an earnings basis, then the valuation may be calculated with
regard to the underlying net assets and any other relevant information, such as
the pricing for subsequent recent investments by a third party in a new
financing round that is actively being sought, then any offers from potential
purchasers would be relevant in assessing the valuation of an investment and are
taken into account in arriving at the valuation.
Where appropriate, a marketability discount (as reflected in the earnings
multiple) may be applied to the investment valuation, based on the likely timing
of an exit, the influence over that exit, the risk of achieving conditions
precedent to that exit and general market conditions.
When investments have obtained an exit (either by listing or trade sale) after
the valuation date but before finalisation of the Company's relevant accounts
(interim or final), the valuation is based on the sale price.
In arriving at the value of an investment, the percentage ownership is
calculated after taking into account any dilution through outstanding
warrants, options and performance related mechanisms.
Principles of valuation of listed investments
Investments are valued at bid-market price or the conventions of the market on
which they are quoted.
Valuation review procedures
Valuations are initially prepared by the Advisor. These valuations are then
subject to review by external auditors, prior to final approval
by the directors.
Events after the balance sheet date
Events after the balance sheet date are disclosed in note 17 to the financial
statements.
Promethean Investments LLP
Promethean India plc
Group Income Statement for the period 16 May 2006 to 31 August 2007
Notes Period ended
31 Aug 2007
£'000
Revenue
Investment and other income 2 885
Realised and unrealised gain on financial investments 2 344
----------
1,229
Management expenses (779)
Profit before finance costs and taxation 450
----------
Finance costs 4 (1)
----------
Profit before tax from trading operations 449
----------
Income tax expense 6 -
----------
Group profit after tax from trading operations 449
----------
Attributable to:
Equity holders of the parent 449
----------
449
----------
Earnings per share - (basic and diluted) 7 0.01p
Promethean India plc
Group Balance Sheet as at 31 August 2007
Notes 31 August 2007
£'000
Non-current assets
Investments held at fair value through profit or loss 9 14,718
---------
Non-current loans 10 3,766
---------
18,484
---------
Current assets
Trade and other receivables 11 947
Cash and cash equivalents 12 32,920
---------
33,867
---------
---------
Total assets 52,351
---------
Current liabilities
Trade and other payables 13 3,650
---------
Net assets 48,701
---------
Equity
Share capital 14 500
Share premium 47,752
Unrealised investment revaluation reserve 352
Retained earnings 97
---------
Equity attributable to equity holders of the parent 48,701
---------
Net asset per share 7 £0.97
---------
Promethean India plc
Cash Flow Statement for the period ended 31 August 2007
Group Company
2007 2007
£'000 £'000
Cash flows from operating activities
Profit after taxation 449 676
Adjustments for :
Interest income (885) (794)
Realised and unrealised gain on financial investments (344) -
Increase in trade and other receivables (947) (431)
Increase in payables 3,650 342
-------- ---------
Net cash from operating activities 1,923 (207)
-------- ---------
Income tax paid - -
Cash flows from investing activities
Purchase of investments (18,715) (18,985)
Proceeds from sale of investments 4,341 -
Interest received 885 794
-------- ---------
Net cash used in investing activities (13,489) (18,191)
-------- ---------
Proceeds from issue of share capital 48,252 48,252
Issue of loan (3,766) -
-------- ---------
Net cash used in financing activities 44,486 48,252
-------- ---------
Net increase in cash and cash equivalents 32,920 29,854
-------- ---------
Cash and cash equivalents at beginning of period - -
-------- ---------
Cash and cash equivalents at end of period 32,920 29,854
======== =========
Promethean India plc
Statement of changes in equity for the period 16 May 2006 to 31 August 2007
Group
Share Share Unrealised Retained Total
capital premium investment earnings
revaluation distributable
reserve
£'000 £'000 £'000 £'000 £'000
Balance as at 16 May 2006 - - - - -
-------- -------- -------- ---------- --------
Issue of share
capital 500 - - - 500
Premium on
shares issued - 49,500 - - 49,500
Expenses
relating to
the issue of
shares - (1,748) - - (1,748)
Unrealised
gains reserve
transfer - - 352 (352) -
Profit for the
period - - - 449 449
-------- -------- -------- ---------- --------
Balance as at
31 August 2007 500 47,752 352 97 48,701
-------- -------- -------- ---------- --------
Company
Share Share Unrealised Retained Total
capital premium investment earnings
revaluation distributable
reserve
£'000 £'000 £'000 £'000 £'000
Balance as at 16 May 2006 - - - - -
-------- -------- ---------- ---------- --------
Issue of share
capital 500 - - - 500
Premium on
shares issued - 49,500 - - 49,500
Expenses
relating to
the issue of
shares - (1,748) - - (1,748)
Profit for the
period - - - 676 676
-------- -------- ---------- ---------- --------
Balance as at
31 August 2007 500 47,752 - 676 48,928
-------- -------- ---------- ---------- --------
Notes to the financial statements for the period 16 May 2006 (date of
incorporation) to 31 August 2007
1. Accounting policies
Basis of accounting
The financial statements have been prepared in accordance with applicable
International Financial Reporting Standards.
The Company was incorporated in the Isle of Man and as such is regulated by Isle
of Man company law. The ordinary shares of the company are quoted on AIM. The
principal accounting policies adopted are set out below.
Under Protocol 3 of the UK's Treaty of Accession, the Isle of Man is part of the
custom's territory of the European Union. The Group has therefore chosen to
prepare financial statements in accordance with the applicable International
Financial Reporting Standards.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and enterprises controlled by the Company (and its subsidiaries)
made up to 31 August each year. Control is achieved where the Company has the
power to govern the financial and operating policies of an investee enterprise
so as to obtain benefits from its activities. On acquisition, the identifiable
assets, liabilities and contingent liabilities of a subsidiary are measured at
their fair values at the date of acquisition.
The consolidated financial statements of the group include the results of the
Company. For the period to 31 August 2007 the company achieved a profit of £0.7
million.
The results of subsidiaries acquired or disposed of during the year are included
in the consolidated income statement 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
other members of the Group. All significant intercompany transactions and
balances between group enterprises are eliminated on consolidation.
Critical accounting estimates and judgements
The preparation of financial statements requires the use of estimates and
judgements that affect the reported amount of assets and liabilities at the date
of the financial statements and the reported amount of revenues and expenses
during the reported period. Although these estimates are based on management's
best knowledge of the amount, events or actions, actual results ultimately may
differ from those estimates. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities relate to the valuation of unlisted financial investments
held at fair value through profit or loss, which are valued on the basis noted
below.
Revenue recognition
Investment income comprises interest income from treasury deposits and from
loans advanced.
Interest income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate.
Dividend income from investments is recognised when the shareholders' rights to
receive payment have been established.
Expenses
All expenses are accounted for on an accruals basis.
Taxation
The charge for current tax is based on the results for the period as adjusted
for items which are non-assessable or disallowed. It is calculated using rates
that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in
respect of temporary differences arising from differences between the carrying
amount of assets and liabilities in the financial statements and the
corresponding tax basis used in the computation of taxable profit. In principle,
deferred tax liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a transaction which
affects neither the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the Group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
Deferred tax is charged or credited in the income statement, except when it
relates to items credited or charged directly to equity, in which case the
deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when they relate to income taxes
levied by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Non current loans
Non current loans are initially recognised at fair value and then held at
amortised cost using the effective interest method.
Financial investments
Where a financial investment is not required to be consolidated, the equity,
loan and similar instruments are designated at fair value through profit or
loss, and their fair value is determined in accordance with the International
Private Equity and Venture Capital Association valuation guidelines, principles
of which are set out in the Investment Manager's Review. Gains and losses on the
realisation of financial investments are dealt with through the income
statement.
The Company's and the Group's business is investing in financial assets with a
view to profiting from their total return in the form of income and capital
growth. This portfolio of financial assets is managed and its performance
evaluated on a fair value basis, in accordance with a documented investment
strategy, and information about the portfolio is provided internally on that
basis to the company's Board of directors and other key management personnel.
Accordingly, upon initial recognition the investments are designated by the
Company and its subsidiaries as "at fair value through profit or loss". They are
included initially at fair value, which is taken to be their cost (excluding
expenses incidental to the acquisition which are written off in the Income
Statement, and allocated to "capital" at the time of acquisition). Subsequently,
the investments are valued at "fair value".
The difference between the fair value of financial investments and cost to the
Group is shown as an unrealised gain or loss in the income statement, and taken
to the unrealised investment revaluation reserve.
Investments in subsidiaries are valued at cost.
Foreign Currencies
Transactions in foreign currencies are translated at the exchange rate ruling at
the date of the transaction. Monetary assets and liabilities in foreign
currencies are translated at the rates of exchange ruling at the balance sheet
date. Non-monetary items that are measured at historical cost in a foreign
currency are translated at the exchange rate at the date of the transaction.
Non-monetary items that are measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value was
determined.
Any exchange differences arising on the settlement of monetary items or on
translating monetary items at rates different from those which they were
initially recorded are recognised in the profit or loss in the period in which
they arise. Exchange differences on non-monetary items are recognised in the
statement of recognised income and expenses to the extent that they relate to a
gain or loss on that non-monetary item taken to the statement of recognised
income and expenses, otherwise such gains and losses are recognised in the
income statement.
Cash and cash equivalents
Cash comprises cash in hand and demand deposits. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known
amounts of cash and are subject to insignificant risks of changes in value.
Trade receivables
Trade receivables are initially recognised at fair value and then held at
amortised cost using the effective interest method.
Trade payables
Trade payables are stated at fair value less issue cost and then held at
amortised cost using the effective interest method.
2. Revenue 2007
£'000
Investing operations
Interest income 885
---------
Realised loss on financial investments (8)
Unrealised gain on financial investments 352
---------
---------
Realised and unrealised gain on financial investments 344
---------
1,229
---------
3. Profit before tax from trading operations 2007
£'000
Profit before tax from trading operations arrived at after
charging:
Audit remuneration:
Audit of company's annual accounts 25
Audit of subsidiaries' annual accounts 14
Non-audit services 41
---------
4. Finance costs 2007
£'000
Finance charges 1
---------
5. Employees and directors 2007
£'000
The total costs for the Group were:
Directors' fees 42
---------
£'000
The amount paid to the highest paid director during the year was as
follows:
Directors' fees 9
---------
The Company has no other employees.
6. Taxation
The standard rate of income tax for companies in the Isle
of Man is 0%. No provision for taxation has, therefore,
been made. As the Company is wholly owned by non-resident
members and is listed on a recognised stock exchange, it
meets the definition of a 'distributing company' and is
therefore exempt from the distributable profits charge.
The Mauritian entities are Global Business Licence
Category 1 (GBL1) companies in Mauritius and under the
current laws and regulations liable to pay income tax on
their net income at a rate of 15%. The entities are,
however, entitled to a tax credit equivalent to the higher
of actual foreign tax suffered and 80% of the Mauritian
tax payable in respect of their foreign source income thus
reducing their maximum effective tax rate to 3%. No
Mauritian capital gains tax is payable on profits arising
from the sale of securities, and any dividends and
redemption proceeds paid by the entities to their member
will be exempt in Mauritius from any withholding tax.
Deferred taxation
No deferred tax asset has been recognised in respect of
the tax loss carried forward in Promethean India
Investment Fund 1 as no taxable income is probable in the
foreseeable future. No deferred tax liability has been
recognised in respect of the unrealised gain on
investments in Promethean India Investment Fund 2 on the
grounds of materiality.
A reconciliation of the actual income tax expenses based
on accounting profit and the actual income tax expenses is
as follows:
2007
£'000
Analysis of charge for the
year
Income tax charge
-
---------
Total tax expense -
---------
Profit before taxation 449
Taxation at standard rate -
in Isle of Man nil%
Taxation at standard rate (34)
in Mauritius 15%
Notional foreign tax (21)
credit
Non deductible expenses 2
Unutilised tax loss for 53
the period ---------
Income tax charge -
---------
7. Earnings and net asset value per
share
2007
Profit attributable to ordinary £449,483
shareholders ---------
Issued ordinary shares 50,000,000
---------
Earnings per share (basic and 0.01p
diluted) ---------
Net asset value per share £0.97
(statutory)
Net asset value per share (statutory) is based on the statutory £48,701,526
net assets at period end ---------
There were no options in issue to dilute the
earnings per share.
Details of warrants issued are disclosed in
note 14.
8. Investments in Subsidiaries
Company 2007
£'000
Company shares in group undertakings
Promethean India Investments Fund I (Mauritius) 6,985
Promethean India Investments Fund II (Mauritius) 12,000
---------
18,985
---------
Name of Country of Proportion Proportion Principal
subsidiary incorporation (or of ownership of voting activity
registration) and interest power
operation
----------------- ---------- -------- ------- -----------
Promethean
India LP England 100% 100% Limited
partner
Promethean
India
Investments
Fund I Mauritius 100% 100% Holding Company
for unlisted
investments
Promethean
India
Investments
Fund II Mauritius 100% 100% Holding Company
for listed
investments
Promethean 1
Limited Mauritius 40% 40% Holding company
for MFML
investment
9. Investments 2007
Group £'000
India listed investments
Cost 11,853
Disposal (661)
---------
11,192
Unrealised gain 344
---------
Listed investments 11,536
---------
India unlisted investments
Cost 6,862
Disposal (3,680)
---------
Unlisted investments 3,182
---------
Total Investments 14,718
---------
10. Non current loans 2007
£'000
Non current loan 3,766
---------
During the period the Company granted a loan to Krammer Holdings Pvt. Ltd as
consideration to the disposal of its 60% interest in the share capital of
Promethean 1 Limited.
The loan is repayable on 22 June 2009 and accrues interest at a rate of 9% per
annum, payable annually.
11. Trade and other receivables Group Company
2007 2007
£'000 £'000
Other receivables 924 21
Prepayments and accrued income 23 410
------- --------
947 431
------- --------
12. Cash and cash equivalents Group Company
2007 2007
£'000 £'000
Cash at bank and in hand 32,920 29,854
------- --------
13. Trade and other payables - current Group Company
2007 2007
£'000 £'000
Trade payables 112 58
Accruals and deferred income 3,538 284
------- --------
3,650 342
------- --------
14. Share Capital Group
2007
Share capital £'000
Authorised
300,000,000 ordinary shares of 1p each 3,000
--------
Issued and fully paid
50,000,000 ordinary shares 1p each 500
--------
The Company's share capital comprises ordinary shares. Rights attached to
ordinary shares include the right to vote at the Company's AGM and receive
future dividends. On listing, warrants were allocated to initial placees of the
ordinary shares in the ratio of one warrant for every five ordinary shares. Each
warrant will entitle the holder to subscribe for ordinary shares at a
subscription price of £1.25 (being a 25% premium to the placing price), from
2007 to 2012, within 30 days of the Company's interim unaudited accounts being
sent to shareholders, subject to certain conditions.
Copies of the warrant instrument are available on application to the Company's
registered office.
15. Related party transactions
2007
£'000
Sir Peter Burt is a member of Promethean 71
Investments LLP (the Investment Manager) and a
director of Promethean India plc.
During the year the Company had the following 136
related party transactions with Promethean
Investments LLP:
Management Fees - Fixed Fee
Management Fees - Manager's Balance Fee
The balance outstanding to Promethean 207
Investments LLP as at 31 August 2007 was: --------
Elizabeth Tansell is a principal of Chamberlains Fund Services
and a director of Promethean India plc.
During the year the Company had the following relating party
transactions with Chamberlain Fund Services Limited:
Registrar and administrator services charged: 7
The balance outstanding to chamberlain Fund Services as at 31 7
August 2007 --------
All transactions were undertaken in the normal course of business.
16. Financial Instruments
Market risk
Market risk embodies the potential for both losses and gains and includes
currency risk, fair value interest rate risk and price risk.
The Group's strategy on the management of market risk is driven by its
investment objective, as outlined in the Manager's report. The Group invests in
a range of investments, including quoted and unquoted equity securities in a
range of sectors. The board monitors the Group's investment exposure against
internal guidelines specifying the proportion of total assets that may be
invested in various sectors.
Currency risk
Management monitors the currency fluctuations of underlying investments as part
of its investment strategy .
Interest rate risk
Interest bearing financial assets and interest-bearing financial liabilities
mature or reprice in the short term. As a result the Group is subject to limited
exposure to fair value interest rate risk due to fluctuations in the prevailing
levels of market interest rates. The non-current loan of £3.7 million to Krammer
Holdings Pvt. Ltd to purchase 60% of Promethean 1 Limited has a fixed interest
rate of 9% per annum.
Price risk
Price risk is risk that the value of an instrument will fluctuate as a result of
changes in market prices, whether caused by factors specific to an individual
investment, its issuer or factors affecting all instruments traded in the
market. As the majority of the Company's financial instruments are carried at
fair value with fair value changes recognised in the income statement, all
changes in the market conditions will directly affect net investment income.
Price risk is mitigated by constructing a diversified portfolio of instruments
and direct involvement in the management of the investment portfolio.
As stated in the Prospectus the Company will not invest more than 25% of its Net
Asset Value in any more than one investment.
Credit risk
The Group's trade and other receivables are actively monitored to avoid
significant concentrations of credit risk. The recoverability of debts from
investee companies is monitored by directors attending board meetings and review
of management accounts. The £3.7 million non current loan to Krammer Holdings
Pvt. Ltd. is secured via a share pledge over the 60% investment in Promethean 1
Limited for which the loan proceeds were utilised. The loan is fully guaranteed
and is repayable on 22 June 2009.
Fair value risk
The Group's investments are carried at fair value on the balance sheet. The
carrying value of certain other financial instruments, specifically trade and
other receivables and payables approximates to fair value due to the short term
nature of these instruments.
17. Events after the balance sheet date
The group has not made any additional investment in "Project
Hospitality" since 31 August 2007. As at 14 February 2008, based on the
closing bid price the investment was valued at £11.2 million, which
represents an uplift of £3.8 million.
At the period end our investment in Nitco Tiles was held at £4.1
million, based on a closing bid price of INR 238.75. As at 14 February
2008 the closing bid price was INR 255.10, resulting in an uplift of
£0.6 million on our initial investment to a current valuation of £4.7
million.
Subsequent to the balance sheet date, Mahindra Forgings Mauritius Ltd
has been amalgamated with Mahindra Forgings Ltd, a company listed on the
Bombay stock exchange. As at 14 February 2008, the closing bid price was
INR 206.4, which has resulted in a slight reduction of £0.1m in our
investment valuation (held via an intermediary holding company
Promethean 1 Ltd) to £2.3 million.
18. Ultimate Controlling Party Company
The directors are of the opinion that there is no ultimate controlling party.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SELFEDSASEDE
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