TIDMISH
RNS Number : 6556T
Ishaan Real Estate PLC
09 December 2011
Ishaan Real Estate plc
Interim Report
For the six months ended 30 September 2011
Overview
The Directors of Ishaan Real Estate plc announce the Company's
unaudited results for the six months ended 30 September 2011.
Overview of the six months ended 30 September 2011
Net Asset Value 30 Sep 31 Mar 11 Change
11
------------------------------------- ------ --------- ------
Adjusted NAV per share (pence) (1)
(2) 87.4 95.4 -8.4%
------------------------------------- ------ --------- ------
Reported NAV per share (pence) (1)
(2) 70.5 75.9 -7.1%
------------------------------------- ------ --------- ------
-- Portfolio value of GBP618 million, down c.1.4 per cent. from
GBP627 million at 31 March 2011. After adjusting for construction
expenditure capitalised during the period and exchange translation
losses, the underlying portfolio declined in value by 7.0 per cent.
(of which exchange translation losses contributed 6.0%), with these
items having a similar impact on adjusted net asset value per share
over the period.
-- Since the preliminary results announcement of 29 June 2011,
net additions of c.1.1 million sq. ft. (c.347,000 sq. ft. since the
trading update on 20 September 2011) have been made to the
aggregate area let or terms agreed.
-- In consultation with the Investment Adviser, in order to
optimise the developments as explained in more detail below, the
planned development area at Mindspace, Juinagar, has been reduced
from c.4.5 million sq. ft. to c.2.25 million sq. ft. and the
planned commercial development at Inorbit, Pune, has been reduced
from c.0.19 million sq. ft. to c.0.09 million sq. ft.
-- At Commerzone, Bangalore, revision to the development plan
has entailed cancellation of the serviced apartments and reduction
of the retail area from c.0.37 million sq. ft. to c.0.33 million
sq. ft. Consequently the overall development program has been
reduced from c.21.4 million sq. ft. to c.18.7 million sq. ft.
-- As at 30 September 2011, rent is being received on c.5
million sq. ft. of the portfolio, with an equivalent annualised
rental income of c.GBP27 million. Rent is being used primarily to
repay principal and pay interest on borrowings.
-- Financing of c.INR 33.3 billion (c.GBP436 million) including
debt facilities of c.INR 26.9 billion (c.GBP352 million) has been
secured by Indian SPVs to fund the c.INR 34.3 billion (c.GBP448
million) cost, of the areas constructed or currently under
construction.
-- With the continued increase in interest rates, the borrowing
costs of the Indian SPVs have increased by c.100 bps to 13-14 per
cent.
-- Andhra Pradesh Industrial Infrastructure Corporation Ltd.
(APIIC) has been offered restoration of its stake in the Intime
Properties Private Limited ('Intime') SPV and the Sundew Properties
Private Limited ('Sundew') SPV to 11 per cent., which would result
in the dilution of Ishaan's equity interest in Intime and Sundew
from 40 per cent. to 38.98 per cent.
-- Base advisory fees payable to the Investment Adviser have
been reduced from 2 per cent. per annum to 1.75 per cent. per annum
effective from 1 October 2011.
-- The Company had cash deposits of GBP11.8 million as at 30
September 2011 (GBP13.6 million as at 31 March 2011).
Ian Henderson, Chairman of Ishaan, commented:
"There remain significant challenges for the Board and the
Investment Adviser to overcome in order to crystallise value for
shareholders. While we reiterate our confidence in the relative
strength of the long-term fundamentals of the Indian economy,
market conditions today are substantially different from those
envisaged at the time of Ishaan's initial public offering.
We are pleased with the sustained increase in the letting
activity at our commercial projects despite the subdued economic
environment and the continuing political uncertainty in one of the
states where the Company has significant presence. The two malls in
the portfolio, which are both now operational, are trading well
with over 80% of the space occupied at each of the malls. c.5
million sq. ft. of the portfolio is now yielding rental income. We
anticipate that a further c.1 million sq. ft. will be yielding
rental income by March 2012.
While progress on developments has been stable at most of the
projects in the portfolio, the Mindspace, Juinagar and Pocharam
projects, have witnessed poor occupier demand. The reduction in
planned development at these projects reflects our pragmatic
approach and our focus on preserving value for shareholders.
Overall portfolio value has not mirrored the operational
performance on account of the extension of project schedules post
the global financial crisis, delays experienced in the receipt of
planning approvals in certain projects, cost escalations due to
high inflation, poor demand visibility at the projects which are
currently on hold and lower than estimated rentals.
Further, the continued increase in policy rates (repo rates) by
the Reserve Bank of India, in an effort to contain persisting
inflation, has resulted in an increase in interest costs. As a
result the borrowing costs of the Indian SPVs have been increasing,
together with inflationary increases in other development costs. It
is widely anticipated that inflation will peak in the near term,
thereby minimizing the likelihood of an increase in interest rate
in the next policy review. A high interest rate environment and the
limited availability of real estate financing has meant real estate
investment markets in India have been subdued with very few
significant transactions taking place.
The Board remains committed to realisation of value from the
portfolio and the return of cash to shareholders. The Board is in
discussion with an international property consultant for evaluating
a potential disposal of Ishaan's interest in certain of its assets
that are completed or nearing completion. However, the Board also
recognises that the current global economic environment, together
with economic conditions in India, does not currently provide us
with suitable conditions in which to achieve optimum prices from
the sale of completed assets. We will progress asset sales as soon
as it is prudent to do so and when the investment market allows for
orderly disposals to occur."
(1) Reported NAV per share is not considered the best method of
evaluating performance as it excludes valuation surpluses
attributable to development properties intended for sale and
includes the impact of deferred tax liability on valuation
surpluses. Adjusted NAV per share at 30 September 2011 includes all
investments at current valuations in proportion to the Group's
shareholdings and a provision for a potential income tax liability
in respect of the Vivarea project, but excludes the impact of the
deferred tax provision arising on valuation surpluses, on the net
assets of the Company and is considered by the Board to be a more
appropriate method of evaluating the performance of the Company
than Reported NAV per share.
(2) Exchange rate used for the purpose of this statement is 1GBP
= 76.52 INR, the Reserve Bank of India reference rate at 30
September 2011. Exchange rate at 31 March 2011 was 1GBP =71.93
INR.
Contacts:
College Hill Deutsche Bank AG London (NOMAD)
Gareth David Ben Lawrence
Tel : +44 207 457 2002; 44 777 Tel: +44 20 7545 8000
444 4162 Email: ben.lawrence@db.com
Email: Gareth.David@collegehill.com
Chairman's Statement
These results for the six months ended 30 September 2011 cover a
period in which we have been faced with an extremely challenging
trading environment, record interest rates in India and global
economic uncertainty. The loss before tax for the period of GBP3.5
million (2010: GBP3.7 million), reflects the cost of investment
advisory fees, the share of post-tax losses of associates and the
write down of investments in associates, partially offset by write
back of investment adviser performance fees.
Valuation
The 100 per cent. interests in the properties in the portfolio
have been valued by Cushman & Wakefield (India) Pvt. Limited
('Cushman & Wakefield') at 30 September 2011 at a total of INR
47.2 billion. This represents an increase of 4.9 per cent. against
a valuation of INR 45.1 billion reported at 31 March 2011. If
construction expenditure capitalised during the period, which
broadly reflects physical progress in construction, is adjusted
for, the portfolio's value declined by 1.0%. The decline in
property value is largely attributable to the extension of certain
project completion schedules due to delay in receipt of planning
approvals, increase in the estimated property tax at Mindspace,
Airoli, Navi Mumbai, revision to the development plan at
Commerzone, Bangalore, and lower than estimated rentals.
After conversion to pound Sterling, the 100 per cent. interests
in the properties in the portfolio were valued at GBP618 million at
30 September 2011, with Ishaan's 40 per cent. interest valued at
GBP247 million, compared to GBP251 million at 31 March 2011, a
decrease of 1.4 per cent (a decrease of 7.0 per cent. after
adjusting for construction expenditure capitalised during the
period). This decrease in pound Sterling valuation in part reflects
a 6.0 per cent. decrease in value since 31 March 2011 on account of
exchange translation loss (the exchange rate moved from INR 71.93
on 31 March 2011 to INR 76.52 on 30 September 2011).
Net Asset Value
Reported net asset value per share was 70.5p at 30 September
2011 against 75.9p at 31 March 2011. Reported net asset value per
share is calculated based on the Group's reported net assets at
period end divided by the number of shares in issue and excludes
valuation surpluses attributable to development properties intended
for sale.
Adjusted net asset value per share was 87.4p at 30 September
2011 a decrease of 8.4 per cent against 95.4p at 31 March 2011. The
decline in adjusted net asset value per share reflects the decrease
in the underlying value of the portfolio, the exchange translation
loss and reduction in cash deposits with the Company.
Adjusted NAV per share is considered by the Board to be a more
appropriate method of evaluating the performance of the Company
than Reported NAV per share. Adjusted NAV per share includes all
investments at current valuations in proportion to the Group's
shareholdings in each project and a provision for a potential
income tax liability on the Vivarea project and excludes deferred
tax provisions arising on valuation surpluses for all investment
properties.
The Board considers it appropriate to exclude deferred tax
provisions arising on valuation surpluses for all investment
properties in determining Adjusted NAV per share as the Group's
exit from its investment in the Indian SPVs holding the Company's
projects is not expected to entail the sale of development
properties, which should trigger the crystallisation of the
deferred tax provision. There have been judicial rulings in India
that have upheld the requirement that acquirers of controlling
stakes in Indian companies should withhold Indian tax from
consideration payable to overseas sellers. These judicial
developments are not considered definitive, particularly in view of
certain contrary judicial rulings about the ultimate Indian tax
liability of the overseas sellers on gains from the divestment of
controlling stakes in Indian companies, and also about their
applicability to the divestment by overseas sellers of minority
stakes in Indian companies. Given these uncertainties, the Board
considered it premature to include any provision in respect of
deferred tax provisions arising on valuation surpluses, in
determining Adjusted NAV per share.
Project Progress
Since the preliminary results announcement on 29 June 2011, net
addition of c.1.1 million sq. ft. (c. 347,000 sq. ft. since the
last update on 20 September 2011) has been made to the area let or
terms agreed.
As a result, the aggregate area let or under terms agreed across
the portfolio has increased to c.8.0 million sq. ft. representing
c.78 per cent. of the lettable area constructed or currently under
construction and c.46 per cent. of the aggregate lettable area of
the portfolio.
Options over c.208,000 sq. ft. have been given up by the
tenants. As a consequence the aggregate area under option now
stands at c.1.4 million sq. ft. which is in addition to the area
let or terms agreed.
Since the last update on 20 September 2011, an additional
c.12,000 sq. ft. of residential space has been pre-sold at Vivarea,
Mumbai. As a result, a total of c.495,000 sq. ft. has been pre-sold
at this project at an average price higher than that estimated at
the time of IPO. The area pre-sold represents c.80 per cent. of the
saleable residential area currently under construction. Estimated
completion of the fourth tower at this project is being extended by
a year to Q3 2015 on account of delay in receipt of planning
approvals, which are still awaited. Further, the proposed changes
to the development regulations shall result in levy of additional
premium charges thereby increasing the estimated costs of
development of the fourth tower.
To optimise the development at Mindspace, Juinagar, Navi Mumbai
and Inorbit, Pune, the development area at Mindspace, Juinagar has
been reduced from c.4.5 million sq. ft. to c.2.25 million sq. ft.
and the commercial development at Inorbit, Pune, has been reduced
from c.0.19 million sq. ft. to c.0.09 million sq. ft. The revisions
will reduce the estimated development costs of the project.
At Commerzone, Bangalore, in view of the current demand
conditions, the development plan is being revised. The revised plan
entails cancellation of development of serviced apartments. Also
the area of the planned retail development is being reduced from
c.0.37 million sq. ft. to c.0.33 million sq. ft. and that of
commercial development from c.0.19 million sq. ft. to c.0.18
million sq. ft. Development of multiplex is currently on hold. The
Company expects the mall to be launched by March 2012.
Consequently, the overall development program has been reduced
from c.21.4 million sq. ft. to c.18.7 million sq. ft. Of this, the
area under construction is now c.11 million sq. ft. comprising c.10
million sq. ft. of office and retail space and c.1 million sq. ft.
of hotel and residential space.
In the state of Andhra Pradesh, where the Company has a
predominant presence, political unrest over the issue of division
of the state continues. This has slowed down the operation of the
administrative machinery in the state and delayed the grant of
project approvals. This has caused a corresponding slowdown in the
pace of development of our SEZ project at Madhapur, Hyderabad. In
view of this, the estimated completion of the SEZ project is being
extended by a year to Q3 2015.
The revised aggregate area planned for development and the area
currently under construction is as follows:
Area sq. ft.
--------------------- -----------------------------------------------------------------------------------------------
Project Area constructed Area under Area constructed Area for Total planned
construction and under future development
construction development
(a) (c = a
(b) + b) (d) (e = c +
d)
--------------------- ----------------- ---------------- ------------------ ----------------- -------------------
Mindspace, Airoli,
Navi
Mumbai 1,660,000 2,217,000 3,877,000 559,000 4,436,000
--------------------- ----------------- ---------------- ------------------ ----------------- -------------------
Mindspace, Pocharam 336,000 - 336,000 1,734,000 2,070,000
--------------------- ----------------- ---------------- ------------------ ----------------- -------------------
Mindspace, Madhapur
(SEZ) 1,100,000 1,704,000 2,804,000 1,995,000 4,799,000
--------------------- ----------------- ---------------- ------------------ ----------------- -------------------
Mindspace, Madhapur
(non-SEZ) 1,700,000 - 1,700,000 - 1,700,000
--------------------- ----------------- ---------------- ------------------ ----------------- -------------------
Inorbit, Hyderabad 780,000 - 780,000 322,000 1,102,000
--------------------- ----------------- ---------------- ------------------ ----------------- -------------------
Inorbit, Pune 546,000 - 546,000 97,000 643,000
--------------------- ----------------- ---------------- ------------------ ----------------- -------------------
Commerzone,
Bangalore
** - 271,000 271,000 240,000 511,000
--------------------- ----------------- ---------------- ------------------ ----------------- -------------------
Mindspace, Juinagar,
Navi Mumbai - - - 2,250,000 2,250,000
--------------------- ----------------- ---------------- ------------------ ----------------- -------------------
Sub-Total 6,122,000 4,192,000 10,314,000 7,197,000 17,511,000
--------------------- ----------------- ---------------- ------------------ ----------------- -------------------
Vivarea, Mumbai - 620,000 620,000 240,000 860,000
--------------------- ----------------- ---------------- ------------------ ----------------- -------------------
Commerzone,
Bangalore
*** - 360,000 360,000 - 360,000
--------------------- ----------------- ---------------- ------------------ ----------------- -------------------
Total 6,122,000 5,172,000 11,294,000 7,437,000 18,731,000
--------------------- ----------------- ---------------- ------------------ ----------------- -------------------
Areas reported above are chargeable / saleable areas.
**Area under construction comprises retail space and future
development comprises commercial and multiplex space.
*** Area under construction comprises hotel development.
Updated levels of letting activity in the Company's portfolio
are as follows:
Area sq. ft.
----------------------- -------------------------------------------------------------------------------------
Project Area Terms Aggregate Lettable % of area Area
let agreed area area constructed constructed yielding
(Area or under or under rent
let & construction construction as at
Terms 30 Sep
(b) Agreed) (d) (c)/(d) 11
(a) (c)=(a+b)
----------------------- ----------- ----------- ----------- ------------------ -------------- ----------
Mindspace, Airoli,
Navi Mumbai 1,262,000 1,634,000 2,896,000 3,877,000 75% 1,517,000
----------------------- ----------- ----------- ----------- ------------------ -------------- ----------
Mindspace, Pocharam 26,000 - 26,000 336,000 8% 26,000
----------------------- ----------- ----------- ----------- ------------------ -------------- ----------
Mindspace, Madhapur
(SEZ) 665,000 1,440,000 2,105,000 2,804,000 75% 691,000
----------------------- ----------- ----------- ----------- ------------------ -------------- ----------
Mindspace, Madhapur
(non-SEZ) 1,662,000 2,000 1,664,000 1,700,000 98% 1,664,000
----------------------- ----------- ----------- ----------- ------------------ -------------- ----------
Inorbit, Hyderabad
* 690,000 - 690,000 780,000 88% 648,000
----------------------- ----------- ----------- ----------- ------------------ -------------- ----------
Inorbit, Pune * 489,000 9,000 498,000 546,000 91% 456,000
----------------------- ----------- ----------- ----------- ------------------ -------------- ----------
Commerzone, Bangalore
* 146,000 146,000 271,000 54% -
----------------------- ----------- ----------- ----------- ------------------ -------------- ----------
Total 4,794,000 3,231,000 8,025,000 10,314,000 78% 5,002,000
----------------------- ----------- ----------- ----------- ------------------ -------------- ----------
* Figures are for the retail space at the respective
projects
Besides the above letting, options / Rights of First Refusal
(ROFRs) have been signed for c.1.4 million sq. ft. at the following
projects. These options / ROFRs are due to be exercised over the
next 1-2 years.
Project Area under
option / ROFR
(sq. ft.)
------------------------- ---------------
Mindspace, Airoli, Navi
Mumbai 860,000
------------------------- ---------------
Mindspace, Madhapur
(SEZ) 505,000
------------------------- ---------------
Rental income has commenced on an aggregate area of c.5 million
sq. ft. across six projects in the portfolio. Rent of c.GBP13
million has been generated from these lettings in the half year
ended 30 September 2011. Annualised rent from this area is
estimated at c.GBP27 million. In addition, by March 2012, the
Company expects rent to commence on another c.1 million sq. ft.
Rent is being used primarily to repay principal and pay interest on
borrowings.
Further to the update of 20 September 2011, with a view to
maintaining a harmonious relationship with APIIC and the Government
of Andhra Pradesh and in the interests of the projects involved,
the JV Company (i.e. K Raheja IT Park Pvt Ltd, the entity set-up to
develop IT Parks in Hyderabad) has offered to restore APIIC's stake
in the JV Company to 11% for a nominal consideration. This also
required Intime and Sundew (investee companies of Ishaan), which
were demerged from the JV Company, to offer to APIIC restoration of
APIIC's stake in these companies to 11%. The restoration of APIIC's
stake in these companies will be effected through a transfer of
shares owned in Intime and Sundew by K Raheja Corp Group and an
issue of new shares to APIIC by Intime and Sundew. The issue of new
shares will result in the dilution of Ishaan's equity interest in
Intime and Sundew from 40% to 38.98%. K Raheja Corp Group will
continue to hold a majority stake in the companies even after
dilution by the transfer of shares and issue of new shares.
Confirmation from APIIC of its acceptance of the above proposals is
awaited.
The impact of this dilution on Ishaan's Net Asset Value per
share at 30 September 2011 is estimated to be approximately 0.6p or
c.0.7% of the Adjusted NAV per share as at 30 September 2011.
Project details:
Mindspace, Airoli, Navi Mumbai
c.2.9 million sq. ft., representing c.75 per cent of the area
constructed or currently under construction, has been let or terms
agreed. Further, c.860,000 sq. ft. is under option/ROFR at this
project. As at 30 September 2011, rent has commenced from
c.1,517,000 sq. ft.
Five buildings, with an aggregate area of c.1.7 million sq. ft.,
are currently operational. Another c.2.2 million sq. ft. is under
construction with finishes and utilities work in progress on two
buildings, super structure work in progress on another two
buildings and foundation work having commenced on one more
building. Property tax for the buildings which are completed and
assessed for property tax is higher than estimated earlier.
Consequently, the average property tax for the project will be
higher than estimated. The valuation of the project factors this
increase in property tax.
Mindspace, Pocharam, Hyderabad
One building at this project is completed. Super structure work
is partly complete on the second building and further construction
is currently on hold. Area let at this project stands at c.26,000
sq. ft.
Mindspace, Madhapur, Hyderabad (SEZ Development)
Since reported in the preliminary results announcement on 29
June 2011, net addition of c.1,023,000 sq. ft. (c.333,000 sq. ft.
since the last update on 20 September 2011) has been made to area
let or terms agreed. As a result, the aggregate area let or terms
agreed is now c.2.1 million sq. ft. representing c.75 per cent of
the area constructed or currently under construction at this
project. As at 30 September 2011, rent has commenced from an area
of c.691,000 sq. ft.
Options over c.208,000 sq. ft. have been given up by the
tenants. The total area under options at this project is now
c.505,000 sq. ft.
Two buildings at the project are operational, while super
structure work is ongoing on another two buildings. A slow down in
receipt of approvals has caused extension of the estimated project
completion by a year to Q3 2015 from Q3 2014.
Mindspace, Madhapur, Hyderabad (Non-SEZ Development)
All three buildings at this project are completed and
operational. Aggregate area let and generating income is c.1.66
million sq. ft., representing c.98 per cent of the project
area.
Inorbit, Madhapur, Hyderabad
Since its launch in October 2009 the mall has continued to trade
well. c.88 per cent of the retail space (c.690,000 sq. ft.) is
currently let and c.83 per cent of the space is currently trading.
The planned IT development at this project is currently on
hold.
Inorbit, Pune
Inorbit Pune was launched in March 2011. Aggregate area let or
terms agreed at this project stands at c.498,000 sq. ft.,
representing c.91 per cent. of the retail space. c.84 per cent of
the retail area is currently trading. As on 30 September 2011, rent
had commenced on c.456,000 sq. ft. Given the limited demand for IT
space in this micro market, the development of the commercial space
has been reduced from c.0.19 million sq. ft. to c.0.09 million sq.
ft.
Vivarea, Mumbai
Interiors and finishes work is in progress on the three towers.
Estimated completion of the fourth tower has been extended by a
year to Q3 2015 on account of delays in receipt of planning
approvals, which are still awaited. Also the proposed changes to
the development regulations will cause the levy of additional
premium charges thereby increasing the estimated development cost
of the project. These costs have been reflected in the
valuation.
c.495,000 sq. ft. has been pre-sold at this project,
representing c.80 per cent of the saleable area currently under
construction.
Commerzone Bangalore
The development plan of the project has been revised in view of
the current demand conditions. Consequently the development of
serviced apartments has been cancelled, the area of retail space
has been reduced from c.0.37 million sq. ft. to c.0.33 million sq.
ft. and the commercial space from c.0.19 million sq. ft. to c.0.18
million sq. ft. The development of multiplex is currently on
hold.
Interior and finishes work is in progress at the hotel and
retail site. The mall is expected to be launched by March 2012.
Terms have been agreed for c.146,000 sq. ft. of the retail area,
representing c.54 per cent of the retail space currently under
construction.
Mindspace, Juinagar, Navi Mumbai
Development area has been reduced from c.4.5 million sq. ft. to
c.2.25 million sq. ft. in order to optimize the development of the
project. Foundation work is complete on three buildings and further
construction is on hold till the Company sees potential demand.
Cost & Financing
Currently an area of c.10.7 million sq. ft. (excluding Vivarea)
is constructed or under construction. The Indian SPVs remain well
funded to meet the development requirements of this area. Against
the estimated cost of c.INR 34.3 billion (c.GBP448 million) the
Indian SPVs have secured funding of c.INR 33.3 billion (c.GBP436
million) comprising:
-- shareholders' equity of c.INR 4.2 billion (c.GBP55 million),
-- debt facilities of c.INR 26.9 billion (c.GBP352 million) and
-- security deposits received/receivable on areas let or terms
agreed of c.INR 2.2 billion (c.GBP29 million).
Of the above estimated project costs for the area currently
under development, c.INR 26.9 billion (c.GBP352 million) has been
incurred up-to 30 September 2011. The Indian SPVs had drawndown
debt of c.INR 19.5 billion (c.GBP254 million) at 30 September 2011,
with the unutilised facilities of c.INR 7.4 billion (c.GBP98
million). In addition, c.80 per cent. of the saleable residential
space currently under construction at Vivarea is pre-sold, which
will fund the cost of construction of this project.
The debt facility of c.INR 26.9 billion (c.GBP352 million)
includes debt of c.INR 19 billion (c.GBP248 million) in the form of
long term amortizing loans. The balance debt of c.INR 7.9 billion
(c.GBP104 million) is other construction debt.
Debt Maturity Profile: INR bn GBP Mn
========================================== ========= ======
Long term amortizing loans 19.0 248
========================================== ========= ======
Other Construction debt (INR 86 million
repayable by March 13) 7.9 104
========================================== ========= ======
TOTAL 26.9 352
========================================== ========= ======
Having secured funding for the area currently under development,
the Company is confident of meeting its future development
requirements through further debt financing.
The Reserve Bank of India has continued to increase the policy
rates in an effort to contain the unabated inflation. This has led
to a significant increase in the borrowing cost of Indian SPVs. The
current interest rates on the funding secured by the Indian SPVs
are c.13-14 per cent. p.a.
Reduction to the Investment Advisory fee payable to the
Investment Advisor
As announced in the trading update on 20 September 2011, Neerav
Investment Advisory Services (Dubai) Limited ('Neerav') has agreed
to reduce the base advisory fee payable to Neerav from 2% per annum
to 1.75% per annum effective 1 October 2011. The Base advisory fee
paid to Neerav totaled GBP3.04 million in the financial year ended
31 March 2011. On a proforma basis had the new rate of fees been
applied in that year the fees would have been GBP2.64 million.
Dividend
In accordance with the dividend policy set out in the IPO
admission document, which stated that it was not anticipated that
dividends would be paid in the foreseeable future, as the projects
remain in a highly capital intensive stage, the Board is not
declaring a dividend for the six months ended 30 September 2011.
The Board will consider payment of dividends when it becomes
commercially prudent to do so.
Outlook
In line with the global economic slowdown and also due to the
continued tightening of monetary policy by the Reserve Bank of
India, economic activity in India has slowed. In September 2011,
the Index of Industrial Production ("IIP") grew by only 1.9% year
on year, the slowest pace of IIP growth since September 2009,
reflecting the weakness in both investment and consumption growth
in Indian economy. Also, India's GDP growth declined to 6.9 per
cent in the quarter ended September 2011.
To contain rising inflation the Reserve Bank of India has since
January 2010 raised the policy rate thirteen times by a cumulative
375 basis points which has increased interest costs. It is widely
expected that inflation will peak soon which would provide room for
monetary policy to address risks to growth and may mean further
interest rate increases are not required in the short term.
In the real estate market in India, occupier demand for
commercial space has moderated. Pick up in commercial real estate
demand will be driven by the global market conditions. Demand for
high quality retail space and retail rentals remain stable.
Although demand for residential space in many markets has remained
stable or has marginally declined, Mumbai residential market has
seen a significant decline in volumes and is expected to remain
under pressure given the current high interest rate scenario and
high residential real estate prices. At our residential project
Vivarea, we expect the remaining sales to accelerate once the
buildings are completed.
While we have made good letting progress during this period, our
plans to return capital to shareholders have inevitably been slowed
by the difficult economic environment both in India and globally.
We continue to explore ways of realising value from sale of
Ishaan's interest in the completed / near completion assets in the
portfolio and remain confident in the Company's ability to continue
progressing the development of its high quality assets.
Ian Henderson
Chairman
Review report by KPMG Audit LLC to Ishaan Real Estate plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly report for the six
months ended 30 September 2011, which comprises the consolidated
statement of comprehensive income, the consolidated statement of
financial position, the consolidated statement of changes in
equity, the consolidated statement of cash flows and the related
explanatory notes. We have read the other information contained in
the half-yearly report and considered whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
This report is made solely to the Company in accordance with the
terms of our engagement. Our review has been undertaken so that we
might state to the Company those matters we are required to state
to it in this report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for
preparing the half-yearly report in accordance with the AIM
Rules.
As disclosed in note 2 the annual financial statements are
prepared in accordance with IFRS. The condensed set of financial
statements included in this half yearly report have been prepared
in accordance with IAS 34 Interim Financial Reporting.
The accounting policies that have been adopted in preparing the
condensed set of financial statements are consistent with those
applied by the Group in its consolidated financial statements as at
and for the year ended 31 March 2011.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly report
based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and
Ireland) and consequently does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly report for the six months ended 30 September
2010 is not prepared, in all material respects, in accordance with
IAS 34 and the AIM Rules.
KPMG Audit LLC
Chartered Accountants
Douglas
Isle of Man
08 December 2011
Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2011
Unaudited Unaudited Audited
From 1 April 2011 to 30 From 1 April 2010 to 30 From 1 April 2010 to 31
September 2011 September 2010 March 2011
Notes GBP000's GBP000's GBP000's
-------------------------- -------------------------- --------------------------
Administrative expenses 4 (1,913) (1,879) (3,976)
Share of post tax
(losses) / profit of
associates 6 (994) 880 2,459
Write-down of investments
in associates net of
investment adviser
performance fees 5 (664) (2,709) (3,526)
-------------------------- -------------------------- --------------------------
Group operating loss from
continuing operations (3,571) (3,708) (5,043)
Net finance income 58 52 107
-------------------------- -------------------------- --------------------------
Loss from continuing
operations before tax (3,513) (3,656) (4,936)
Taxation - - -
-------------------------- -------------------------- --------------------------
Loss for the period from
continuing operations (3,513) (3,656) (4,936)
========================== ========================== ==========================
Other comprehensive
(loss)/ income
Translation reserve -
associates 6 (4,378) (3,452) (4,304)
-------------------------- -------------------------- --------------------------
Other comprehensive
(loss) for the period (4,378) (3,452) (4,304)
========================== ========================== ==========================
Total comprehensive loss
for the period
attributable to equity
holders of parent (7,891) (7,108) (9,240)
========================== ========================== ==========================
Basic and diluted loss
per share attributable to
the equity holders of the
parent during the
period (expressed as
pence per share)
Basic loss per share 8 (2.41) (2.51) (3.39)
Diluted loss per share 8 (2.41) (2.51) (3.39)
The attached notes 1 to 10 form an integral part of these
unaudited consolidated financial statements.
Consolidated Statement of Financial Position
As at 30 September 2011
Unaudited Unaudited Audited
30 September 30 September 31 March
2011 2010 2011
Notes GBP000's GBP000's GBP000's
-------------- -------------- ----------
ASSETS
Non-current assets
Investment in associates 6 94,090 100,622 100,727
-------------- -------------- ----------
94,090 100,622 100,727
-------------- -------------- ----------
Current assets
Trade and other receivables 91 95 129
Cash and short term
deposits 11,783 15,620 13,595
-------------- -------------- ----------
11,874 15,715 13,724
-------------- -------------- ----------
TOTAL ASSETS 105,964 116,337 114,451
============== ============== ==========
EQUITY AND LIABILITIES
Equity attributable
to shareholders of the
parent company
Share capital 7 1,457 1,456 1,457
Share capital redemption
reserve 622 622 622
Foreign currency translation
reserve (1,590) 3,640 2,788
Retained profits 102,236 106,930 105,699
-------------- -------------- ----------
Total equity 102,725 112,648 110,566
-------------- -------------- ----------
Current liabilities
Trade and other payables 829 873 874
Non-current liabilities
Financial liabilities 2,410 2,816 3,011
TOTAL EQUITY AND LIABILITIES 105,964 116,337 114,451
============== ============== ==========
The attached notes 1 to 10 form an integral part of these
unaudited consolidated financial statements
Unaudited Unaudited Audited
From 1 April From 1 April From 1 April
2011 to 30 2010 to 30 2010 to 31
September September March 2011
2011 2010
GBP000's GBP000's GBP000's
----------------- -------------- -----------------------
OPERATING ACTIVITIES
Loss before tax from continuing
operations (3,513) (3,656) (4,936)
Adjustments for:
Interest income (58) (52) (107)
Share of post tax losses/(profits)
of associates 994 (880) (2,459)
Grant of directors' annual
share options 50 50 100
Write-down of investments
in associates net of investment
adviser performance fee 664 2,709 3,526
----------------- -------------- -----------------------
Operating loss before working
capital changes (1,863) (1,829) (3,876)
Decrease in trade and other
receivables 38 18 (16)
(Decrease)/increase in trade
and other payables (45) 738 739
----------------- -------------- -----------------------
Net cash flows from operating
activities (1,870) (1,073) (3,153)
----------------- -------------- -----------------------
INVESTING ACTIVITIES
Interest received 58 52 107
Net cash flows generated
from / (used in) investing
activities 58 52 107
----------------- -------------- -----------------------
FINANCING ACTIVITIES
Net cash flows used in financing -
activities - -
----------------- -------------- -----------------------
Net movements in cash and
cash equivalents (1,812) (1,021) (3,046)
Cash and cash equivalents
at the beginning of period 13,595 16,641 16,641
----------------- -------------- -----------------------
Cash and cash equivalents
at the end of the period 11,783 15,620 13,595
----------------- -------------- -----------------------
Represented by:
Cash and short term deposits 11,783 15,620 13,595
----------------- -------------- -----------------------
11,783 15,620 13,595
----------------- -------------- -----------------------
Consolidated Statement of Cash Flows
For the six months ended 30 September 2011
The attached notes 1 to 10 form an integral part of these
unaudited consolidated financial statements.
Consolidated Statement of Changes in Equity
For the six months ended 30 September 2011
Share capital Share Capital Retained earnings / Foreign currency Total equity
Redemption Reserve (losses) translation reserve
GBP000's GBP000's GBP000's GBP000's GBP000's
-------------- -------------------- -------------------- -------------------- -------------
Balance at 1
April 2010 1,455 622 110,537 7,092 119,706
Total
comprehensive
loss for the
period
Loss for the
period - - (3,656) - (3,656)
Other
comprehensive
loss
Foreign currency
translation
reserve -
associates - - - (3,452) (3,452)
-------------- -------------------- -------------------- -------------------- -------------
Total other
comprehensive
income - - - (3,452) (3,452)
-------------- -------------------- -------------------- -------------------- -------------
Total
comprehensive
loss for the
period - - (3,656) (3,452) (7,108)
-------------- -------------------- -------------------- -------------------- -------------
Transactions with
owners, recorded
directly in
equity
(Contributions by
and distributions
to owners)
Issue of shares
under directors'
annual options 1 - (1) - -
Grant of
directors'
annual share
options - - 50 - 50
Total transaction
with owners 1 - 49 - 50
-------------- -------------------- -------------------- -------------------- -------------
Balance at 30
September 2010 1,456 622 106,930 3,640 112,648
Total
comprehensive
loss for the
period
Loss for the
period - - (1,280) - (1,280)
Other
comprehensive
income
Foreign currency
translation
reserve -
associates - - - (852) (852)
-------------- -------------------- -------------------- -------------------- -------------
Total other
comprehensive
income - - - (852) (852)
-------------- -------------------- -------------------- -------------------- -------------
Total
comprehensive
(loss)/ income
for the period - - (1,280) (852) (2,132)
-------------- -------------------- -------------------- -------------------- -------------
The attached notes 1 to 10 form an integral part of these
unaudited consolidated financial statements
Consolidated Statement of Changes in Equity (continued)
For the six months ended 30 September 2011
Share capital Share Capital Retained earnings / Foreign currency Total equity
Redemption Reserve (losses) translation reserve
GBP000's GBP000's GBP000's GBP000's GBP000's
-------------- -------------------- -------------------- -------------------- -------------
Transactions with
owners, recorded
directly in equity
(Contributions by
and distributions
to owners)
Issue of shares
under directors'
annual options 1 - (1) - -
Grant of directors'
annual share
options - - 50 - 50
Total transaction
with owners 1 - 49 - 50
-------------- -------------------- -------------------- -------------------- -------------
Balance at 31 March
2011 1,457 622 105,699 2,788 110,566
Total comprehensive
loss for the period
Loss for the period - - (3,513) - (3,513)
Other comprehensive
income
Foreign currency
translation
reserve -
associates - - - (4,378) (4,378)
-------------- -------------------- -------------------- -------------------- -------------
Total other
comprehensive loss - - - (4,378) (4,378)
-------------- -------------------- -------------------- -------------------- -------------
Total comprehensive
loss for the
period - - (3,513) (4,378) (7,891)
-------------- -------------------- -------------------- -------------------- -------------
Transactions with
owners, recorded
directly in equity
(Contributions by
and distributions
to owners)
Issue of shares - - - - -
under directors'
annual options
Grant of directors'
annual share
options - - 50 - 50
Total transaction
with owners - - 50 - 50
-------------- -------------------- -------------------- -------------------- -------------
Balance at 30
September 2011 1,457 622 102,236 (1,590) 102,725
The attached notes 1 to 10 form an integral part of these
unaudited consolidated financial statements.
Notes to the Consolidated Financial Statements
1 The Company
The Company was incorporated in the Isle of Man on 11 August
2006 as a public company under the Isle of Man Companies Acts 1931
to 2004 with registered number 117470C. The Company's Ordinary
Shares are traded on AIM.
The principal activity of the Company and its subsidiaries is
that of investment holding.
The consolidated financial statements of Ishaan Real Estate plc
comprises the Company and its subsidiaries (together referred to as
the "Group").
This interim financial information for the period ended 30
September 2011 is unaudited and does not constitute statutory
accounts within the meaning of the Companies Acts 1931 to 2004.
The statutory accounts for the period from 1 April 2010 to 31
March 2011 which were prepared in accordance with International
Financing Reporting Standards (IFRS) have been filed and copies can
be obtained from the Registered Office of the Company at Top Floor,
14 Athol Street, Douglas, Isle of Man. The auditors' report on
those accounts was unqualified. This unaudited interim financial
information includes the results of the Company and its wholly
owned subsidiaries for the period under review.
2 Significant Accounting Policies
(a) Basis of accounting
The condensed financial statements have been prepared under
historical cost convention except for investment properties that
have been measured at fair value.
(b) Basis of preparation
The condensed financial statements have been prepared using
accounting policies that are consistent with those followed in
preparation of the Group's annual financial statements for the
period 1 April 2010 to 31 March 2011, and in accordance with
International Accounting Standards ("IAS") 34: Interim Financial
Reporting. The consolidated financial statements have been prepared
in pounds sterling.
(c) Other financial liabilities - Investment adviser performance fees
The provision for performance fees payable to the Investment
Adviser represents the Directors' estimate of the present value of
the future cash flows payable, discounted using the Directors'
estimate of the risk adjusted value of money. These fees are
considered to be directly attributable to the acquisition by the
Group of its investment in its associates and the amount provided
has been included in the cost of the Group's investment in
associates. Subsequent to the date of acquisitions, revisions to
these provisions are charged to the profit or loss.
(d) Investment property
At 31 March 2009, the Group adopted Amendment to IAS 40
Investment property that amended the definition of investment
property to include property that is being constructed or developed
for future use as investment property.
Land and buildings owned by the Group for the purposes of
generating rental income or capital appreciation or both and
property that is being constructed or developed for future use as
investment property (which includes freehold/leasehold land) are
classified as investment properties.
Investment properties are initially measured at cost, including
related transaction costs. Subsequent to initial recognition,
investment properties are accounted for using the fair value model
under IAS 40. Any gain or loss arising from a change in value is
recognized in profit or loss.
When an item of property, plant and equipment is transferred to
investment property following a change in its use, any differences
arising at the date of transfer between the carrying amount of the
item immediately prior to transfer and its fair value is recognized
in other comprehensive income if it is a gain. Upon disposal of the
item, the gain is transferred directly to retained earnings to the
extent of the revaluation surplus recognized in other comprehensive
income. Any loss arising in this manner is recognized in profit or
loss immediately.
If the investment property becomes owner-occupied, it is
reclassified as property, plant and equipment and its fair value at
the date of reclassification becomes its deemed cost for subsequent
accounting.
3 Segment Reporting
The Directors consider the Group to be operating in one
geographic segment and one business segment since all investments
are in India and all the operations in India are concerned with
property development. Consequently no segmental disclosures have
been presented.
4 Administrative expenses
Unaudited Unaudited Audited
From 1 April 2011 to 30 From 1 April 2010 to 30 From 1 April
September 2011 September 2010 2010 to 31
March 2011
GBP000's GBP000's GBP000's
---------------------------- ---------------------------- ---------------------------
Directors' fees and expenses 81 63 155
Secretarial and
administration 58 51 108
Audit fees 37 35 81
Investment adviser fees 1,520 1,520 3,040
Other professional fees 110 103 357
Other expenses 57 57 135
Grant of Directors' annual
share options 50 50 100
---------------------------- ---------------------------- ---------------------------
1,913 1,879 3,976
============================ ============================ ===========================
5 Write-down of investments in associates
The Group writes-down its investments in associates, including
the cost of performance fees payable, to its share of net assets in
respect of those associates holding investment properties which
were stated at valuation. The investment in one of the associates,
which holds properties held for sale, was not written down and is
stated at cost plus share of profits/losses and cost of performance
fees payable.
Unaudited Unaudited Audited
30 September 2011 30 September 2010 31 March 2011
GBP000's GBP000's GBP000's
---------------------------- ------------------- ---------------
Write-down of investments to share of net assets
in associates (1,265) (3,303) (3,925)
Investment adviser performance fees 601 594 399
---------------------------- ------------------- ---------------
(664) (2,709) (3,526)
============================ =================== ===============
6 Investments in associates
Unaudited Unaudited Audited
30 September 2011 30 September 2010 31 March 2011
GBP000's GBP000's GBP000's
---------------------------- ------------------- ---------------
Unquoted
Balance at the beginning of the period 100,727 106,497 106,497
Share of post tax (losses) /profit of associates (994) 880 2,459
Write-down of investments to share of net assets
in associates* (1,265) (3,303) (3,925)
Foreign currency translation (4,378) (3,452) (4,304)
---------------------------- ------------------- ---------------
Balance at the end of the period 94,090 100,622 100,727
============================ =================== ===============
6 Investments in associates (continued)
*As detailed in note 5, the Group wrote-down its investments in
associates except for one associate which holds properties held for
sale. Had the fair value gains on the properties in this associate
been recorded in the books, the investment in associate would have
been higher by GBP 13.151 million (31 March 2011: GBP 15.228
million).
Properties held by the associates have been valued by Cushman
& Wakefield (India) Pvt. Limited at 30 September 2011. All the
properties were valued on the basis of market value. The valuations
have been made in accordance with the appropriate sections of both
the current Practice Statements and United Kingdom Practice
Statements contained within the RICS Appraisal and Valuation
Standards, 6(th) Edition (the "Red Book"). For development
projects, the valuation assumes completion to a high standard and
is based on gross development value less future expenditure to be
incurred on costs of development.
Summarised financial information extracted from the interim
financial statements of associates for six month period ended 30
September 2011 is given below:
Genext Trion Serene Magna Sundew Intime Newfound
-----------------------
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
----------------------- --------- --------- --------- --------- --------- --------- ---------
Share of the
associates balance
sheet:
----------------------- --------- --------- --------- --------- --------- --------- ---------
Total assets 70,545 39,881 63,433 17,874 43,882 35,399 10,391
----------------------- --------- --------- --------- --------- --------- --------- ---------
Total liabilities 61,713 30,276 49,402 16,269 29,334 22,429 4,040
----------------------- --------- --------- --------- --------- --------- --------- ---------
Share of the
associates results:
----------------------- --------- --------- --------- --------- --------- --------- ---------
Total revenue 375 3,220 2,777 - 963 2,295 -
----------------------- --------- --------- --------- --------- --------- --------- ---------
Profit/(loss)
for the period
(excluding movements
in valuation
of properties) 1,427 (217) (547) (332) (458) (677) (190)
----------------------- --------- --------- --------- --------- --------- --------- ---------
Summarised financial information extracted from the interim
financial statements of associates for six month period ended 30
September 2010 is given below:
Genext Trion Serene Magna Sundew Intime Newfound
-----------------------
GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's GBP000's
----------------------- --------- --------- --------- --------- --------- --------- ---------
Share of the
associates balance
sheet:
----------------------- --------- --------- --------- --------- --------- --------- ---------
Total assets 65,911 39,098 59,100 13,370 39,563 32,924 11,244
----------------------- --------- --------- --------- --------- --------- --------- ---------
Total liabilities 59,383 28,604 40,332 9,759 22,701 21,928 4,028
----------------------- --------- --------- --------- --------- --------- --------- ---------
Share of the
associates results:
----------------------- --------- --------- --------- --------- --------- --------- ---------
Total revenue - 1,583 1,383 82 514 2,102 -
----------------------- --------- --------- --------- --------- --------- --------- ---------
Profit/(loss)
for the period
(excluding movements
in valuation
of properties) 1,105 (17) (529) 5 (191) 676 (169)
----------------------- --------- --------- --------- --------- --------- --------- ---------
6 Investments in associates (continued)
Details of the investments in associates are as follows:
Investee company Country Type of % Holding % Holding
of Incorporation Shares 30 September 31 March
2011 2011
------------------------------------ ------------------- ------------- -------------- ----------
Trion Properties Private
Limited India Equity 40% 40%
Preference 100% 100%
---------------------------------------------------------------------- -------------- ----------
Serene Properties Private
Limited India Equity 40% 40%
Preference 100% 100%
---------------------------------------------------------------------- -------------- ----------
Magna Warehousing and Distribution
Private Limited India Equity 40% 40%
Preference 100% 100%
---------------------------------------------------------------------- -------------- ----------
Genext Hardware and Parks Equity 40% 40%
Private Limited ** India Preference - -
------------------------------------ ------------------- ------------- -------------- ----------
Sundew Properties Private Equity 40% 40%
Limited * India Preference - -
------------------------------------ ------------------- ------------- -------------- ----------
Intime Properties Private Equity 40% 40%
Limited * India Preference - -
------------------------------------ ------------------- ------------- -------------- ----------
Newfound Properties and
Leasing Private Limited Equity 40% 40%
** India Preference - -
------------------------------------ ------------------- ------------- -------------- ----------
The principal activity of all associates is real estate
development.
* The Preference Shares to be compulsorily converted into Equity
shares in one tranche at the expiry of a period of three years and
ten calendar days from the date of the allotment. Out of the face
value of INR100,000 of each of the preference share upon its
conversion, INR10 shall be treated as the face value of each equity
share and INR99,990 shall be treated as premium payable in respect
of each such equity share. The Preference Shares shall, till the
date of conversion and subject to availability of profits during
any financial year, be entitled to nominal non cumulative dividend
of INR1 per Preference Share per year. The preference shares shall
not carry any voting rights, even if dividend on the Preference
Shares has remained unpaid for any year or dividend has not been
declared by the Company for any year. On 15 June 2010, preference
shares in Intime Properties Private Limited were converted into
equity shares and consequently the percentage of shareholding in
equity is now 40% in the associate. On 1 July 2010, preference
shares in Sundew Properties Private Limited were converted into
equity shares and consequently the percentage of shareholding in
equity is now 40% in the associate.
** The Preference Shares shall be compulsorily converted into
Equity shares in one tranche at the expiry of a period of three
years and ten calendar days from the date of the allotment. Out of
the face value of INR1,000,000 of each of the preference share upon
its conversion, INR10 shall be treated as the face value of each
equity share and INR999,990 shall be treated as premium payable in
respect of each such equity share. The Preference Shares shall,
till the date of conversion and subject to availability of profits
during any financial year, be entitled to nominal non cumulative
dividend of INR1 per Preference Share per year. The preference
shares shall not carry any voting rights, even if dividend on the
Preference Shares has remained unpaid for any year or dividend has
not been declared by the Company for any year. On 9 August 2010,
preference shares in Genext Hardware and Parks Private Limited were
converted into equity shares and consequently the percentage of
shareholding in equity is now 40% in the associate. On 23 November
2010, preference shares in Newfound Properties and Leasing Private
Limited were converted into equity shares and consequently the
percentage of shareholding in equity is now 40% in the
associate.
7 Share capital
Unaudited Unaudited Audited
30 September 30 September 31 March
2011 2010 2011
----------------------- -------------- ------------
Authorised:
Number of ordinary shares
of GBP0.01 each 400,000,000 400,000,000 400,000,000
Share Capital (GBP 000's) 4,000 4,000 4,000
Allotted, called up and
fully paid:
Number of ordinary shares
of GBP0.01 each 145,681,721 145,569,055 145,681,721
Share Capital (GBP 000's) 1,457 1,456 1,457
8 Loss per share
Basic and diluted (loss)/earnings per share
Basic (loss)/earnings per share is calculated by dividing the
net (loss)/profit attributable to the equity shareholders of the
Company by the weighted average number of ordinary shares
outstanding during the period.
Diluted (loss)/earnings per share is calculated by dividing the
net (loss)/profit attributable to ordinary equitable holders of the
parent by the weighted average number of Ordinary Shares
outstanding during the period, plus the weighted average number of
ordinary Shares that would be issued on the conversion of all the
dilutive potential Ordinary Shares into Ordinary Shares.
Unaudited Unaudited Audited
30 September 30 September 31 March
2011 2010 2011
----------------------- -------------- ---------------------
Loss attributable to equity
holders of the company
(GBP'000) (3,513) (3,656) (4,936)
Weighted average of number
of ordinary shares in
issue (thousands) 145,682 145,520 145,547
Weighted average number
of ordinary shares in
issue (diluted) (thousands) 145,682 145,520 145,547
Basic loss per share (pence) (2.41) (2.51) (3.39)
======================= ============== =====================
Diluted loss per share
(pence) (2.41) (2.51) (3.39)
======================= ============== =====================
9 Related party transactions
Investment Adviser Fees
The Investment Adviser is entitled to a performance fee in
respect of each Mauritian SPV which is designed to encourage the
Investment Adviser to seek the highest returns on the underlying
projects. Pursuant to the performance fee arrangements, if the
Mauritian SPVs achieve an SPV level IRR in respect of the partial
or total realisation of an investment in excess of 10 per cent,
then the Investment Adviser will be entitled to a performance fee
of 20 per cent of the realised proceeds which exceeds the proceeds
required to achieve a 10 per cent SPV level IRR (with such
participation increasing to 30 per cent for that portion of the
realised proceeds from an investment which exceeds the proceeds
required to achieve a 20 per cent SPV level IRR). The fair value of
the total performance fee payable to the Investment Adviser at 30
September 2011 is GBP2.410 million (31 March 2011: GBP3.011
million).
In addition, the annual base fee paid to the Investment Adviser
for the period in accordance with the terms of the agreement is
GBP1,519,800 (for the period ended 30 September 2010:
GBP1,519,800). The annual base fee is calculated on a quarterly
basis based on the agreed formula of 2% on committed capital less
an allowance of GBP150,000 per annum pro-rated per quarter less a
further deduction of GBP500,000 per annum pro-rated per quarter up
to 31 December 2007.
Directors' Interests
Neel Raheja is a shareholder and director of various K Raheja
Corp entities. These entities include the Indian Investment
Vehicles, which are 40% owned by the Company and K Raheja Corporate
Services Private Limited which is contracted to provide services to
the Indian Investment Vehicles.
The amount charged to the Indian Investment Vehicles by K Raheja
Corporate Services Private Limited during the period towards
project support service and royalty was GBP0.787 million (September
2010: GBP1.076million) and other amounts paid to other K Raheja
Corp entities were GBP 0.567 million (30 September 2010: GBP0.090
million).
As at 30 September 2011, the amounts of loan receivable by
associate companies from K Raheja Corp entities totaled GBP84.060
million (31 March 2011: GBP90.585 million). The loans were interest
bearing and as at 30 September 2011 interest owing totaled GBP5.997
million (31 March 2011: GBP9.916 million). In addition, as at 30
September 2011, the associate companies had loan balances owing to
K Raheja Corp entities of GBP39.404 million (31 March 2011 of
GBP36.446 million) and interest payable in relation to these loans
of GBP2.278 million (31 March 2011: GBP3.355 million).
9 Related party transactions(continued)
The amount paid to K Raheja Corp Private Limited during the
period was GBP1.724 million (September 2010: GBP5.076 million)
towards deferred consideration for transfer of development rights
for a project developed by one of the Indian Investment
Vehicles.
Neel Raheja indirectly co-owns the Investment Adviser - Neerav
Investment Advisory Services (Dubai) Limited. As at 30 September
2011, Neerav Investment Advisory Services (Cyprus) Private Limited,
the parent company of the investment adviser, held 7,493,811 shares
of the Company (31 March 2011: 6,643,811 shares).
10. Comparatives
Certain comparative figures have been reclassified to conform to
the presentation adopted in these consolidated financial
statements.
Registered office: Bankers
Top Floor Royal Bank of Scotland International
14 Athol Street Isle of Man Branch
Douglas PO Box 151, 2 Victoria Street
Isle of Man Douglas
IM1 1JA Isle of Man
British Isles IM99 1NJ
Lloyds TSB Corporate Banking
Registered number: Victory House, Prospect Hill
Registered in the Isle of Douglas
Man
No: 117470C Isle of Man
IM99 2JY
Company secretary: Standard Chartered Bank
Anne Elizabeth Couper Woods 3(rd) Floor, Basinghall Avenue
London, EC2V 5DD
Directors:
Ian James Henderson (Chairman)
Rajendra Prabhakar Chitale Auditors
Vittorio Radice KPMG Audit LLC
Neel Chandru Raheja Heritage Court
Timothy Graham Walker 41 Athol Street
Stephen John Roland Vernon Douglas
Anne Elizabeth Couper Woods Isle of Man
IM99 1HN
Investment adviser
Neerav Investment Advisory
Services
(Dubai) Limited Solicitors
Level 8, Suite 810B, Liberty Simmons & Simmons
House
Dubai International Financial City Point, One Ropemaker
Centre Street
P O Box 506731 London
Dubai, United Arab Emirates EC2Y 9SS
Nominated adviser and broker Administrator and registrar
Deutsche Bank AG, London IQE Limited
Branch
1 Great Winchester Street (formerly Simcocks Trust
Limited)
London 14 Athol Street
EC2N 2DB Douglas
Isle of Man
Broker IM1 1JA
J P Morgan Cazenove
20 Moorgate
London
EC2R 6DA
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BRBDDGUGBGBI
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