TIDMEIH
RNS Number : 7441D
EIH PLC
28 June 2019
EIH plc ("EIH" or the Company")
Posting of Annual Report and Accounts and Notice of AGM
EIH announces that its Annual Report and Accounts for the year
ended 31 December 2018 ("Annual Report") together with a Notice of
the Company's Annual General Meeting and associated documents
("Notice of AGM") have been posted to shareholders.
The Company also announces that its annual general meeting will
be held at the Company's registered office at First Names House,
Victoria Road, Douglas, Isle of Man on 30(th) July 2019 at
10.00am.
Copies of the Annual Report and Notice of AGM are available for
inspection on the Company's website at http://www.eihplc.co.uk
For further information, please contact:
EIH plc
Rhys Davies
Tel: +41 (0)796200215
Nplus1 Singer Advisory LLP
(Nominated Advisor)
James Maxwell
Tel: +44 (0)207 496 3000
Chairman's Statement
At 31 December 2018, the net asset value of EIH plc ("the
Company") was US$0.263 per share as compared with US$0.384 per
share a year earlier, a decline of 31.5% in the period. Adjusting
for the capital distributions of 2.5 cents per share and 1.5 cents
per share made to shareholders of the Company registered at 20
April 2018 and 20 July 2018 respectively, the Company's NAV per
share decreased by 21.1% in the period. The Company reported a loss
for the year of US$5.3m (2017: US$0.4m profit), due mainly to the
decrease in fair value of the investment in Evolvence India Fund
PCC of US$4.5m (2017: increase in fair value of US$0.9m).
During the year in review, the Company entered into an agreement
to dispose of its holding in RSB, resulting in sale proceeds being
received after the year end of approx. US$6.8m.
On 27 April 2018, the Company made a capital distribution to
shareholders of 2.5 cents per share, equivalent to approximately
US$1.61m.
On 26 July 2018, the Company made a capital distribution to
shareholders of 1.5 cents per share, equivalent to approximately
US$0.97m.
After the year end, on 23 April 2019, following the disposal of
the Company's holding in RSB, the Company made a capital
distribution of 8.0 cents per share to shareholders of the Company
registered as at 12 April 2019, equivalent to approximately
US$5.16m. Then on 24 May 2019, the Company made a capital
distribution of 2.0 cents per share to shareholders of the Company
registered as at 17 May 2019, equivalent to approximately
US$1.29m.
Total operating costs during the year were US$0.52m as compared
with US$0.44m in the prior year, an increase of 18.2%. This
operating cost figure represents approximately 3.2% of the
Company's Financial Assets at Fair Value. In addition, the Company
paid certain annual management fees and expenses to EIF in respect
of its commitment. These costs are embedded in the capital accounts
for those two funds and do not appear in the Company's statement of
comprehensive income.
The Company's portfolio now comprises the following (based on
year end Fair Values):
Table 1. Investments Capital Commitment Capital invested Capital Fair value Fair Value
Distribution adjustment
--------------------- ------------------- ----------------- -------------------- -------------------- -----------
US$ US$ US$ US$ US$
Fund Investments
(equity)
Evolvence India Fund
PCC 45,120,000 45,120,000 (30,675,015) (3,337,207) 11,107,778
Direct Investments
(equity)
EIF Co Invest VII
(RSB Group) 6,969,600 6,969,600 (29,235) (1,702,666) 5,237,699
52,089,600 52,089,600 (30,704,250) (5,039,873) 16,345,477
--------------------- ------------------- ----------------- -------------------- -------------------- -----------
Evolvence India Fund PCC ("EIF")
At the year end the Company had US$14.4m invested in EIF
(capital called less refund capital contributions), equivalent to
22.3 cents per share, and representing an approximate 18% interest.
At the reporting date the fair value of the Company's investment in
EIF was US$11.1m, equivalent to 17.2 cents per share, representing
a 0.77 times multiple over cost. EIF is now fully drawn down.
It is noted that the Indian Rupee ("INR") decreased in value by
8.2% against the US Dollar during the year in review. The
distributions from EIF's underlying funds increased by 11.9%
year-on-year, while the fair value of EIF's underlying funds
decreased by approximately 15.6% in US Dollar terms (on the basis
of beginning and end period fair values, and adjusting for
drawdowns and distributions made during the period). On the same
basis of measurement, the value of EIF's direct investments
decreased by approximately 31.7% in US Dollar terms to reflect
their realisable value.
EIF's private equity exposure is weighted towards funds with
vintages of 2006 and later. The remaining three funds of these
vintages, being EIF's three largest funds, comprise 74.3% of EIF's
private equity fund weighting. These funds are Jacob Ballas India
Fund III (Growth / PIPE category), JMF India Fund I (Growth
category) and HI-REF International LLC (Real Estate category). The
remaining six funds, with a 25.7% weighting, are all 2004 and 2005
vintages.
At the year end the fair value of the Company's interest in
EIF's ten underlying private equity funds was US$7.1m, equivalent
to 11.0 cents per share, while EIF's direct investments had a fair
value of US$3.6m, equivalent to 5.6 cents per share (see Table 2,
below).
The Directors have reviewed certain underlying financial
information provided to us by EIF's Investment Manager and we
remain confident that as EIF's underlying portfolio matures and
further realisations are achieved, further cash distributions will
be received by the Company.
RSB Group ("RSB")
RSB is a large automotive components group based in Pune with a
multi-product portfolio comprising of propeller shafts, gears,
axles, machined engine components, trailers and construction
equipment parts. At the year end the Company's direct investment in
RSB was held through EIF Co Invest VII. The shareholders in EIF Co
Invest VII were the Company and EIF, which invested US$7.0m and
US$10.0m respectively, for a total investment of US$17.0m. During
the year the Company entered into an agreement to dispose of its
holding in RSB.
Through the above arrangements, and on a look-through basis, the
fair value of Company's total interest in RSB is 10.3 cents per
share; while the fair value of the Company's direct interest in RSB
(held through EIF Co Invest VII) is 8.1 cents per share. These
values represent a 0.8 times multiple over cost. The Directors have
reviewed certain underlying financial information pertaining to RSB
and its valuation is based on the agreement entered into by the
Company to dispose of its holding in RSB, a transaction which
completed after the year end.
Table 2. Investments (Fair Values) As per LP reports RSB Pro-forma
(EIF)
------------------------------------ ------------------ ------------ -----------
US$ US$ US$
Fund Investments
EIF (PE funds) 7,133,786 7,133,786
EIF (direct investments) 3,635,888 (1,417,712) 2,218,176
EIF (other) 338,104 338,104
Direct Investments
RSB Group 5,237,699 1,417,712 6,655,411
16,345,477 - 16,345,477
------------------------------------ ------------------ ------------ -----------
Table 2 extracts the Company's "look through" interest in RSB
(from EIF) and adds it to the Company's direct interest in RSB
(held by EIF Co Invest VII). On this basis, 40.7% of the Company's
Financial Assets at Fair Value (US$6.7m, equivalent to 10.4 cents
per share), is accounted for by its interest in RSB on an
underlying pro-forma basis.
Table 2 further shows that 43.6% of the Company's Financial
Assets at Fair Value is accounted for by its interests in EIF's ten
PE fund investments, and a further 13.6% by its interests in EIF's
direct investments (excluding RSB).
Other matters
At the date of signing this report the Company holds US$0.74m in
net cash balances, equivalent to 1.15 cents per share.
As a Board we will continue to manage operating costs carefully.
Our objective is to realise assets at the appropriate time and
value, and to return the proceeds less expenses to our
shareholders.
On behalf of the Board of Directors, I thank all Shareholders
for their support.
Sincerely yours,
Rhys Cathan Davies
Chairman
27 June 2019
Statement of Comprehensive Income
for the year ended 31 December 2018
Note
31 December 31 December
2018 2017
US$ US$
------------------------------------------- ----- -------------- --------------
Income
Interest receivable 496 1,194
Loss on disposal of investments
at fair value through
profit or loss - (3,653)
Fair value movement on investments
at fair value through profit or
loss 7 (4,737,192) 853,902
Other expenditure (4,723) (1,951)
Net investment (expenditure)/income (4,741,419) 849,492
------------------------------------------- ----- -------------- --------------
Expenses
Administrative expenses (346,065) (259,580)
Legal and other professional fees 9.2 (133,240) (137,027)
Audit fees (39,825) (45,473)
Total operating expenses (519,130) (442,080)
------------------------------------------- ----- -------------- --------------
(Loss)/profit before tax (5,260,549) 407,412
Income tax expense 16 - -
(Loss)/profit for the year (5,260,549) 407,412
------------------------------------------- ----- -------------- --------------
Other comprehensive income - -
------------------------------------------- ----- -------------- --------------
Total comprehensive (expenditure)/income
for the year (5,260,549) 407,412
------------------------------------------- ----- -------------- --------------
Basic and fully diluted (loss)/earnings
per share (cents) 14 (8.16) 0.63
------------------------------------------- ----- -------------- --------------
The Directors consider that all results derive from continuing
activities.
The accompanying notes form an integral part of these financial
statements.
Statement of Financial Position
as at 31 December 2018
Note 31 December 31 December
2018 2017
US$ US$
-------------------------------- ------ ------------ ------------
Non-current assets
Financial assets at fair value
through profit or loss 7 16,345,477 24,064,788
-------------------------------- ------ ------------ ------------
Total non-current assets 16,345,477 24,064,788
-------------------------------- ------ ------------ ------------
Current assets
Trade and other receivables 11 24,488 29,131
Cash and cash equivalents 10 627,867 747,553
-------------------------------- ------ ------------ ------------
Total current assets 652,355 776,684
-------------------------------- ------ ------------ ------------
Total assets 16,997,832 24,841,472
================================ ====== ============ ============
Issued share capital 13 1,264,706 1,264,706
Share premium 18,854,923 21,434,923
Retained (loss)/earnings (3,186,350) 2,074,199
-------------------------------- ------ ------------ ------------
Total equity 16,933,279 24,773,828
-------------------------------- ------ ------------ ------------
Trade and other payables 12 64,553 67,644
Total current liabilities 64,553 67,644
-------------------------------- ------ ------------ ------------
Total liabilities 64,553 67,644
-------------------------------- ------ ------------ ------------
Total equity and liabilities 16,997,832 24,841,472
================================ ====== ============ ============
The financial statements were approved by the Board of Directors
on 27 June 2019 and signed on their behalf by:
Rhys Cathan Davies Ramanan Raghavendran
Director Director
The accompanying notes form an integral part of these financial
statements.
Statement of Changes in Equity
for the year ended 31 December 2018
Share Capital Share Premium Retained Earnings Total
US$ US$ US$ US$
-------------------------------------- -------------- -------------- ------------------ -------------
Balance at 1 January 2017 1,264,706 24,982,423 1,666,787 27,913,916
Total comprehensive income
Profit for the year - - 407,412 407,412
Other comprehensive income - - - -
-------------------------------------- -------------- -------------- ------------------ -------------
Total comprehensive income - - 407,412 407,412
-------------------------------------- -------------- -------------- ------------------ -------------
Transactions with shareholders
Return of capital to shareholders - (3,547,500) - (3,547,500)
-------------------------------------- -------------- -------------- ------------------ -------------
Total transactions with shareholders - (3,547,500) - (3,547,500)
-------------------------------------- -------------- -------------- ------------------ -------------
Balance at 31 December 2017 1,264,706 21,434,923 2,074,199 24,773,828
====================================== ============== ============== ================== =============
Balance at 1 January 2018 1,264,706 21,434,923 2,074,199 24,773,828
Total comprehensive expenditure
Loss for the year - - (5,260,549) (5,260,549)
Other comprehensive income - - - -
-------------------------------------- -------------- -------------- ------------------ -------------
Total comprehensive expenditure - - (5,260,549) (5,260,549)
-------------------------------------- -------------- -------------- ------------------ -------------
Transactions with shareholders
Return of capital to shareholders - (2,580,000) - (2,580,000)
-------------------------------------- -------------- -------------- ------------------ -------------
Total transactions with shareholders - (2,580,000) - (2,580,000)
-------------------------------------- -------------- -------------- ------------------ -------------
Balance at 31 December 2018 1,264,706 18,854,923 (3,186,350) 16,933,279
====================================== ============== ============== ================== =============
The accompanying notes form an integral part of these financial
statements.
Statement of Cash Flows
for the year ended 31 December 2018
31 December 31 December
Note 2018 2017
US$ US$
Cash flows from operating activities
(Loss)/profit before tax (5,260,549) 407,412
Adjustments:
Loss on disposal of investments
at fair value through profit or
loss 7 - 3,653
Fair value movement on investments
at fair value through profit or
loss 7 4,737,192 (853,902)
Interest receivable (496) (1,194)
Operating loss before working capital
changes (523,853) (444,031)
Decrease/(increase) in trade and
other receivables 4,643 (11,202)
(Decrease)/increase in trade and
other payables (3,091) 4,079
Net cash used by operating activities (522,301) (451,154)
------------------------------------------- ----- ------------ ------------
Cash flows from investing activities
Interest receivable 496 1,194
Proceeds from disposal of investment - 1,352,515
Capital distributions received 7 2,982,119 2,078,447
Net cash generated from investing
activities 2,982,615 3,432,156
------------------------------------------- ----- ------------ ------------
Cash flows from financing activities
Return of capital to shareholders (2,580,000) (3,547,500)
Net cash used by financing activities (2,580,000) (3,547,500)
------------------------------------------- ----- ------------ ------------
Net decrease in cash and cash equivalents (119,686) (566,498)
Cash and cash equivalents at beginning
of the year 747,553 1,314,051
------------------------------------------- ----- ------------ ------------
Cash and cash equivalents at end
of year 10 627,867 747,553
=========================================== ===== ============ ============
The accompanying notes form an integral part of these financial
statements.
Notes to the Financial Statements
for the year ended 31 December 2018
1 The Company
EIH plc was incorporated and registered in the Isle of Man under
the Isle of Man Companies Act 1931-2004 on 10 November 2006 as a
public company with registration number 118297C. The company
re-registered under the Isle of Man Companies Act 2006 on 28 March
2011 with registration number 006738V.
Pursuant to a prospectus dated 19 March 2007 there was a placing
of up to 65,000,000 Ordinary Shares of GBP0.01 each. The number of
Ordinary Shares in issue immediately following the placing was
65,000,002. The shares of the Company were admitted to trading on
AIM, a market of that name operated by the London Stock Exchange
plc following the closing of the placing on 23 March 2007. The
Company purchased 500,000 of its own shares for US$0.60 each on 30
September 2011.
The Company's agents perform all significant functions.
Accordingly, the Company itself has no employees.
The Company currently does not have a fixed life but the Board
considers it desirable that Shareholders should have the
opportunity to review the future of the Company at appropriate
intervals. Accordingly, at the annual general meeting of the
Company in 2018 a resolution was proposed that the Company ceases
to continue as presently constituted. No Shareholders voted in
favour of this resolution, therefore a similar resolution will be
proposed at every third annual general meeting of the Company
thereafter. If the resolution is passed, the Directors will be
required, within 3 months of the resolution, to formulate proposals
to be put to Shareholders to reorganise, unitise or reconstruct the
Company or for the Company to be wound up.
2 Basis of preparation
2.1 Statement of compliance
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRSs"), and
interpretations as adopted by the European Union ("EU").
The financial statements were authorised for issue by the Board
of Directors on 27 June 2019.
2.2 Basis of measurement
The financial statements have been prepared on the historical
cost basis except for financial assets at fair value through profit
or loss that are measured at fair value in the statement of
financial position.
2.3 Functional and presentation currency
These financial statements are presented in US Dollars, which is
the Company's functional currency. All financial information
presented in US Dollars has been rounded to the nearest Dollar.
2.4 Use of estimates and judgements
The preparation of financial statements in conformity with
IFRSs, as adopted by the EU, requires the Directors to make
judgements, estimates and assumptions that affect the application
of policies and the reported amounts of assets and liabilities,
income and expenses. The estimates and associated assumptions are
based on historical experience and various other factors that are
believed to be reasonable under the circumstances, the results of
which form the basis of making the judgements about carrying values
of assets and liabilities which are not readily apparent from other
sources. Actual results may differ from these estimates.
Judgements made by the Directors in the application of IFRS, as
adopted by the EU, that have a significant impact on the financial
statements and estimates with a significant risk of material
adjustment in the next financial year relate to valuation of
financial assets at fair value through profit or loss - see note
4.
3 Significant accounting policies
The accounting policies set out below have been applied
consistently to all periods presented in these financial
statements.
3.1 IFRS 9 Financial Instruments Policy effective from 1 January 2018
The Company adopted IFRS 9 Financial Instruments on its
effective date of 1 January 2018. IFRS 9 replaces IAS 39 Financial
Instruments: Recognition and Measurement and introduces new
requirements for classification and measurement, impairment and
hedge accounting. IFRS 9 is not applicable to items that have
already been derecognised at 1 January 2018, the date of initial
application.
IFRS 9 contains three principal classification categories for
financial assets: measured at amortised cost, fair value through
other comprehensive income, and fair value through profit or loss.
The classification of financial assets under IFRS 9 is generally
based on the business model in which a financial asset is managed
and its contractual cash flow characteristics. IFRS 9 eliminates
the previous IAS 39 categories of held to maturity, loans and
receivables, and available for sale. Under IFRS 9, derivatives
embedded in contracts where the host is a financial asset in the
scope of the standard are never separated. Instead, the hybrid
financial instrument as a whole is assessed for classification.
Changes in accounting policies resulting from the adoption of
IFRS 9 were applied retrospectively, with the exception that, the
Company has taken advantage of the exemption allowing it not to
restate comparative information for prior periods with respect to
classification and measurement (including impairment) changes.
Differences in the carrying amounts of financial assets and
financial liabilities resulting from the adoption of IFRS 9 would
be recognised in retained earnings and reserves as at 1 January
2018. There were no changes in the carrying amounts as a result of
the adoption of IFRS 9.
As a result of the adoption of IFRS 9, the Company adopted
consequential amendments to IAS 1 Presentation of Financial
Statements which requires impairment of financial assets to be
presented in a separate line item in the statement of comprehensive
income. Additionally, the Company adopted consequential amendments
to IFRS 7 Financial Instruments: Disclosures, but not applied to
comparative information.
IFRS 9 replaces the 'incurred loss' model in IAS 39 with an
'expected credit loss' (ECL) model. The new impairment model
applies to financial assets measured at amortised cost, but not to
investments in equity instruments. IFRS 9 requires the Company to
record ECLs on all of its trade receivables, either on a 12 month
or lifetime basis. Given the limited exposure of the Company to
credit risk, this amendment has not had a material impact on the
financial statements. The Company only holds receivables with no
financing component and which have maturities of less than 12
months at amortised cost and therefore has adopted an approach
similar to the simplified approach to calculation of ECLs.
IFRS 9 has not resulted in changes in the carrying amount of the
Company's financial instruments due to changes in measurement
categories. All financial assets and liabilities that were
classified as fair value through profit or loss under IAS 39 are
still classified as fair value through profit or loss under IFRS 9.
All other financial assets and financial liabilities that were
classified as receivables and payables and measured at amortised
cost continue to be recognised and measured on that basis.
3.2 Investments at fair value through profit or loss
IFRS 13, Fair Value Measurement, has been adopted from 1 January
2013. It establishes a single source of guidance for measuring fair
value and requires disclosure about the fair value measurements.
Fair value under IFRS 13 is an exit price regardless of whether
that price is directly observable or estimated using another
valuation technique. Also IFRS 13 includes disclosure
requirements.
Investments are designated as financial assets at fair value
through profit or loss. They are measured at fair value with gains
and losses recognised through the profit or loss.
The Company's investments at fair value through profit or loss
comprise funds and co-investment vehicles, where fair value is
estimated by the Directors to be the Company's share of net asset
value per latest financial results reported by the underlying fund
administrator.
3.3 Foreign currency translation
The US dollar is the functional currency and the presentation
currency. Transactions in foreign currencies are translated to the
functional currency of the Company at exchange rates at the dates
of the transactions. Monetary assets and liabilities denominated in
foreign currencies at the date of these financial statements are
translated to US dollars at exchange rates prevailing on that date.
All resulting exchange differences are recognised in the profit or
loss.
3.4 Interest income and dividend income
Interest income is recognised on a time-proportionate basis
using the effective interest rate method. Dividend income is
recognised when the right to receive payment is established.
3.5 Cash and cash equivalents
Cash comprises current deposits with banks. Cash equivalents are
short-term highly liquid investments that are readily convertible
to known amounts of cash, are subject to an insignificant risk of
changes in value, and are held for the purpose of meeting
short-term cash commitments rather than for investment or other
purposes.
3.6 Earnings per share
The Company presents basic and diluted earnings per share (EPS)
data for its ordinary shares. Basic EPS is calculated by dividing
the profit or loss attributable to ordinary shareholders of the
Company by the weighted average number of ordinary shares
outstanding during the period. Diluted EPS is determined by
dividing the profit or loss attributable to ordinary shareholders
and the weighted average number of ordinary shares outstanding,
adjusted for the effects of all dilutive potential ordinary
shares.
3.7 Segment reporting
The Company has one segment focusing on maximising total returns
through investing in an Indian private equity portfolio of
investments (see note 7). No additional disclosure is included in
relation to segment reporting, as the Company's activities are
limited to one business and geographic segment.
3.8 Future changes in accounting policies
A number of new standards and amendments to standards are
effective for annual periods beginning after 1 January 2018, and
have not been applied in preparing these financial statements. None
of these are expected to have a significant effect on the Company's
financial statements.
4 Use of estimates and judgements
These disclosures supplement the commentary on financial risk
management (see note 17).
Key sources of estimation uncertainty
Determining fair values
The determination of fair values for financial assets for which
there is no observable market prices requires the use of valuation
techniques as described in accounting policy 3.1. For financial
instruments that trade infrequently and have little price
transparency, fair value is less objective, and requires varying
degrees of judgement depending on liquidity, concentration,
uncertainty of market factors, pricing assumptions and other risks
affecting the specific instrument. The eventual outcome may differ
from the value estimate. See also "Valuation of financial
instruments" below.
Critical judgements in applying the Company's accounting
policies
Valuation of financial instruments
The Company's accounting policy on fair value measurements is
discussed in accounting policy 3.1. The Company measures fair value
using the IFRS 13 fair value hierarchy that reflects the
significance of the inputs used in making the measurements:
-- Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.
-- Level 2: Valuation techniques based on observable inputs,
either directly (i.e., as prices) or indirectly (i.e., derived from
prices). This category included instruments valued using: quoted
market prices in active markets for similar instruments: quoted
market prices for identical or similar instruments in markets that
are considered less than active; or other valuation techniques
where all significant inputs are directly or indirectly observable
from market data.
-- Level 3: Valuation techniques using significant unobservable
inputs. This category includes all instruments where the valuation
technique includes inputs not based on observable data and the
unobservable inputs have a significant effect on the instrument's
valuation. This category includes instruments that are valued based
on quoted prices for similar instruments where significant
unobservable adjustments or assumptions are required to reflect
differences between the instruments. The Company's investments in
funds and co-investment vehicles are classified as level 3, as the
underlying investments are private entities, valued using valuation
techniques (see note 7).
The table below analyses financial instruments measured at fair
value at the end of the reporting period, by the level in the fair
value hierarchy into which the fair value measurements are
categorised:
31 December 31 December
2018 2017
Level 3 Level 3
US$ US$
Financial assets at fair value through profit
or loss (note 7)
Evolvence India Fund PCC 11,107,778 18,562,615
EIF Co Invest VII (RSB Group) 5,237,699 5,502,173
16,345,477 24,064,788
============ ============
The table in note 7 shows a reconciliation from the beginning
balances to the ending balances for investments, all of which are
categorised as level 3 in the fair value hierarchy.
5 Net asset value per share
The net asset value per share as at 31 December 2018 is US$0.263
per share based on 64,500,002 ordinary shares in issue as at that
date (2017: US$0.384 per share based on 64,500,002 ordinary
shares).
6 Dividends and capital distributions
The Directors do not propose to declare a dividend for the year
ended 31 December 2018 (2017: US$Nil). During the year capital
distributions of 2.5 cents per share and 1.5 cents per share,
equivalent to approximately US$1.61m and approximately US$0.97m
respectively, were made to the shareholders of the Company (2017:
4.0 cents per share and 1.5 cents per share, equivalent to
approximately US$2.58m and approximately US$0.97m,
respectively).
7 Financial assets at fair value through profit or loss
The objective of the Company is to make indirect investments in
Indian private equity funds and companies via Mauritian based
investment funds and to also co-invest directly in certain
portfolio companies of the underlying funds. As at 31 December
2018, the investment portfolio comprised the following assets:
Investments Capital Commitment Capital Invested Capital Fair value Fair Value
(unlisted) Distribution Adjustment
--------------------- ------------------- ----------------- -------------------- -------------------- -----------
US$ US$ US$ US$ US$
Fund Investments
(equity)
Evolvence India Fund
PCC 45,120,000 45,120,000 (30,675,015) (3,337,207) 11,107,778
Direct Investments
(equity)
EIF Co Invest VII
(RSB Group) 6,969,600 6,969,600 (29,235) (1,702,666) 5,237,699
52,089,600 52,089,600 (30,704,250) (5,039,873) 16,345,477
--------------------- ------------------- ----------------- -------------------- -------------------- -----------
The fair value of the Company's investments has been estimated
by the Directors with advice from Evolvence India Advisors Inc. The
movement in investments in the year was as follows:
31 December 2018 31 December 2017
US$ US$
Fair value brought forward 24,064,788 26,645,501
Disposal proceeds of investments at fair value - (1,352,515)
Loss on disposal of investments at fair value through profit and loss - (3,653)
Capital distributions (2,982,119) (2,078,447)
Movement in fair value (4,737,192) 853,902
Fair value at year end 16,345,477 24,064,788
------------------------------------------------------------------------- ----------------- -----------------
The outstanding capital commitments as at 31 December 2018 were
US$nil (2017: US$nil).
Evolvence India Fund PCC (EIF)
Evolvence India Fund PCC, a protected cell company formed under
the laws of Mauritius having limited liability, is a private equity
fund of funds with a co-investment pool, focusing primarily on
investments in India. The fund size of EIF is US$250 million, of
which approximately two-thirds have been invested in different
private equity funds (including growth capital, mezzanine and real
estate funds) with significant focus on India, and the balance has
been invested in co-investment opportunities, primarily in Indian
companies or companies with significant operations in India. The
fund investments of EIF include Baring India Private Equity Fund
II, IDFC Private Equity Fund II, India Value Fund II (Formerly GW
Capital), Leverage India Fund, New York Life Investment Management
India Fund II, Ascent India Fund, JM Financial India Fund I, HI-REF
International LLC Fund, NYLIM Jacob Ballas India Fund III and IDFC
Private Equity Fund III.
Valuation basis
The fair value of the investment in EIF is based on the
Company's share of the net assets of EIF at 31 December 2018 per
its results as reported by the underlying fund administrator. The
financial statements of EIF are prepared under IFRS, with all
investments stated at fair value. The valuation of the investment
portfolio of EIF has been performed by its investment manager at 31
December 2018. The investment portfolio comprises investments in
private equity funds, where fair value is based on reported net
asset values, and co-investments in private companies where fair
values are based on valuation techniques.
EIF Co Invest VII
The Company has invested US$6,969,600 in RSB Group through a
special purpose vehicle (SPV), EIF Co Invest VII. RSB Group is a
leading manufacturer of automotive components and construction
aggregates. The fair value of the investment in Co Invest VII is
based on the sale proceeds received from its post year-end sale
(note 18).
8 Related parties and related party transactions
Parties are considered to be related if one party has the
ability to control the other party or to exercise significant
influence over the other party in making financial or operational
decisions.
None of the Directors had any interest during the period in any
material contract for the provision of services which was
significant to the business of the Company.
9 Charges and Fees
9.1 Nominated Adviser's fees
As nominated adviser to the Company for the purposes of the AIM
Rules, Nplus1 Singer Advisory LLP is entitled to receive an annual
fee of GBP30,000 in addition to reasonable costs and expenses
incurred in carrying out its obligations under the nominated
adviser agreement.
Advisory fees paid to the Nominated Adviser for the year
amounted to US$40,564 (2017: US$38,349).
9.2 Administrator's and Registrar's fees
By a deed dated 17 July 2009 between the Company and IQ EQ (Isle
of Man) Limited (IQ EQ), IQ EQ agreed to provide general
secretarial services to the Company for which it receives fees
incurred on a time spent basis in accordance with the charging
rates of IQ EQ in force from time to time; and all disbursements
and expenses incurred by IQ EQ in connection with the provision by
it of services to the Company. The fees are subject to Value Added
Tax (VAT).
The Company and IQ EQ may terminate the deed on the giving of
thirty days' prior written notice, or earlier in the event of,
inter alia, material breach of the terms of the deed or
commencement of winding up. The governing law of the deed is that
of the Isle of Man.
IQ EQ may utilise the services of a CREST accredited registrar
for the purpose of settling share transactions through CREST. The
cost of this service will be borne by the Company. The Company pays
the CREST Service Provider an annual fee of GBP6,654 plus a fee for
each holding and transfer registered.
Administration fees for the year amounted to US$10,434 (2017:
US$19,364) of which US$nil was outstanding at 31 December 2018
(2017: US$nil).
CREST fees were US$21,846 (2017: US$21,792) of which US$5,150
was outstanding at 31 December 2018 (2017: US$5,374).
9.3 Consultancy fees
Mr Brett Miller was retained by the Company as a consultant
until his appointment as a Director on 26 June 2017. Consultancy
fees are paid at the same rate as directors fees and expenses.
Consultancy fees payable for the year ended 31 December 2018
amounted to US$nil (2017: US$29,351).
10 Cash and cash equivalents
31 December 2018 31 December 2017
US$ US$
--------------------------- ----------------- -----------------
Bank balances 627,867 747,553
Cash and cash equivalents 627,867 747,553
--------------------------- ----------------- -----------------
11 Trade and other receivables
31 December 2018 31 December 2017
US$ US$
------------------ ----------------- -----------------
Other debtors - 5,056
Prepaid expenses 18,182 16,990
VAT receivable 6,306 7,085
------------------ ----------------- -----------------
Total 24,488 29,131
------------------ ----------------- -----------------
12 Trade and other payables
31 December 2018 31 December 2017
US$ US$
----------------- ----------------- -----------------
Other creditors 22,791 20,960
Accruals 41,762 46,684
----------------- ----------------- -----------------
Total 64,553 67,644
----------------- ----------------- -----------------
13 Issued share capital
Ordinary Shares of 1p each Number US$
----------------------------------- ----------- ----------
In issue at the start of the year 64,500,002 1,264,706
Movement in issued share capital - -
In issue at 31 December 2018 64,500,002 1,264,706
----------------------------------- ----------- ----------
The authorised share capital of the Company is GBP700,000
divided into 70 million Ordinary Shares of GBP0.01 each. The
holders of ordinary shares are entitled to receive dividends as
declared from time to time and are entitled to one vote per share
at meetings of the Company. All shares rank equally with regards to
the Company's assets.
Capital management
The Board's policy is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and to sustain
future development of the business. The Board manages the Company's
affairs to achieve shareholder returns through capital growth
rather than income, and monitors the achievement of this through
growth in net asset value per share.
At Annual General Meeting (AGM) held on 28 June 2010 the
Company's new investment policy was unanimously approved by
shareholders:
"The Company shall not make any new investments, save for
commitments already entered into. The Company will actively manage
its investments and seek to realise such investments in a managed
way at an appropriate time, returning proceeds to Shareholders as
soon as practicable.
Shareholder returns are expected to be delivered by way of
return of capital on their shares, whether by dividend, repurchase,
tender or otherwise."
The Company's capital comprises share capital, share premium and
reserves. The Company is not subject to externally imposed capital
requirements.
14 (Loss)/earnings per share
Basic (loss)/earnings per share is calculated by dividing the
(loss)/profit attributable to equity holders of the Company by the
weighted average number of ordinary shares in issue during the
year:
2018 2017
(Loss)/profit attributable to equity holders of the Company (US$) (5,260,549) 407,412
Weighted average number of ordinary shares in issue 64,500,002 64,500,002
------------------------------------------------------------------- ------------ -----------
Basic (loss)/earnings per share (cents per share) (8.16) 0.63
------------------------------------------------------------------- ------------ -----------
There are no dilutive potential ordinary shares in issue,
therefore there is no difference between the basic and fully
diluted (loss)/earnings per share for the year.
15 Directors' remuneration
The maximum amount of remuneration payable to the Directors
permitted under the Articles of Association is GBP200,000 per
annum. The Directors are each entitled to receive reimbursement of
any expenses incurred in relation to their appointment. If by
arrangement with the Board, any Director performs any special
duties outside his ordinary duties as a Director, he may be paid
such reasonable additional remuneration as the Board may determine.
Due to the protracted sale of the Company's holding in RSB, the
sale of which was agreed in September 2018, and completed in March
2019, both Rhys Davies and Brett Miller were paid an additional
GBP50,000 each (US$65,211 each). Total fees and expenses paid to
the Directors for the year amounted to US$315,234 (year ended 31
December 2017: US$199,078) and insurance expenses totalled
US$16,324 (year ended 31 December 2017: US$16,237).
Director 31 December 2018 31 December 2017
US$ US$
--------------------------------------------- ------------------- -------------------
Rhys Cathan Davies 126,815 60,026
Ramanan Raghavendran 61,604 60,026
Brett Lance Miller (appointed 26 June 2017) 126,815 30,675
Paul Mark Garnett (resigned 26 June 2017) - 48,351
--------------------------------------------- ------------------- -------------------
Total 315,234 199,078
--------------------------------------------- ------------------- -------------------
See note 9.3 in respect of consultancy fees paid to Brett Miller
in the period until his appointment.
16 Taxation
The Company is resident for taxation purposes in the Isle of Man
by virtue of being incorporated in the Isle of Man and is subject
to taxation on its income but the rate of tax is zero.
The Company invests in a number of Mauritian incorporated
companies and funds, which in turn invest in India. The Company is
therefore exposed to Mauritian tax on the investee companies and to
Indian tax on underlying investments of those companies. However,
pursuant to the Double Taxation Treaty between India and Mauritius,
the Mauritian incorporated companies and funds are entitled to
significant tax benefits.
There is no Mauritian tax payable on distributions paid to the
Company from Mauritian investee companies.
17 Financial risk management
The Company's activities expose it to a variety of financial
risks: equity market risks, foreign exchange risk, credit risk,
liquidity risk and interest rate risk.
Equity market risks
The Company's investments are subject to equity market risks.
The investments are concentrated in India. The Company's strategy
on the management of investment risk is driven by the Company's
investment objective. The main objective of the Company is to
maximise the total returns to investors by making investments in
Indian private equity funds and co-investment vehicles. Underlying
investments in India may be difficult, slow or impossible to
realise.
The Company is subject to general risks incidental to equity
investments in the relevant market sectors, including general
economic conditions, poor management of the target company,
increasingly competitive market conditions, changing sentiments and
increasing costs, amongst others. The marketability and value of
any investment will depend on many factors beyond the control of
the Company and therefore the Company can give no assurance that an
exit from any investment will be achieved.
The investment portfolio is subject to market price sensitivity
related to the Indian equity market.
A substantial portion of the Company's underlying investments
are or will be in unlisted companies, whose securities are
considered to be illiquid. Illiquidity may affect the ability of
the primary and underlying funds to acquire and dispose of such
investments.
Foreign exchange risk
A significant portion of the investments of the Company, the
primary funds and the underlying funds are made in securities of
companies in India and the income and capital realisations received
from such investments as well as the income and capital
realisations received from any direct investments will be
denominated in Indian Rupees, whereas the capital contributions by
the Company are in US Dollars. The Company's other operations are
also conducted in other jurisdictions which generate revenue,
expenses, assets and liabilities in currencies other than the US
Dollars. As a result, the Company is subject to the effects of
exchange rate fluctuations with respect to these currencies. The
currency giving rise to this risk is primarily the Indian
Rupee.
The Company's policy is not to enter into any currency hedging
transactions.
At the reporting date the Company had the following
exposure:
31 December 2018 31 December 2017
% %
----------------- ----------------- -----------------
Pounds Sterling 0.16 0.45
Indian Rupee 96.53 97.14
US Dollar 3.31 2.41
----------------- ----------------- -----------------
Total 100.00 100.00
----------------- ----------------- -----------------
The following table sets out the Company's total exposure to
foreign currency risk and the net exposure to foreign currencies of
the monetary assets and liabilities:
Monetary Assets Monetary Net Exposure
US$ Liabilities US$
US$
31 December 2018
------------------ ---------------- ------------- -------------
Pound Sterling 74,294 (46,912) 27,382
Indian Rupee 16,345,477 - 16,345,477
US Dollar 578,061 (17,641) 560,420
16,997,832 (64,553) 16,933,279
------------------ ---------------- ------------- -------------
Monetary Assets Monetary Net Exposure
US$ Liabilities US$
US$
31 December 2017
------------------ ---------------- ------------- -------------
Pound Sterling 179,037 (67,644) 111,393
Indian Rupee 24,064,788 - 24,064,788
US Dollar 597,647 - 597,647
24,841,472 (67,644) 24,773,828
------------------ ---------------- ------------- -------------
At 31 December 2018, had the Indian Rupee strengthened or
weakened by 5% in relation to all currencies, with all other
variables held constant, net assets attributable to equity holders
of the Company and the loss per the statement of comprehensive
income would have increased or decreased by US$817,274 (2017:
US$1,203,239).
Credit risk
Credit risk is the risk that a counterparty to a financial
instrument will fail to discharge an obligation or commitment that
it has entered into with the Company.
The carrying amounts of financial assets best represent the
maximum credit risk exposure at the balance sheet date. This
relates also to financial assets carried at amortised cost, as they
have a short term maturity.
At the reporting date, the Company's financial assets exposed to
credit risk amounted to the following:
31 December 2018 31 December 2017
US$ US$
------------------------------------------------------- ----------------- -----------------
Financial assets at fair value through profit or loss 16,345,477 24,064,788
Trade and other receivables 24,488 29,131
Cash and cash equivalents 627,867 747,553
------------------------------------------------------- ----------------- -----------------
Total 16,997,832 24,841,472
------------------------------------------------------- ----------------- -----------------
The maximum exposure to credit risk is represented by the
carrying amount of each financial asset in the balance sheet. The
Directors do not expect any counterparty to fail to meet its
obligations.
Liquidity risk
Liquidity risk is the risk that the Company will encounter
difficulty in meeting obligations associated with its financial
liabilities that are settled by delivering cash or another
financial asset. The Company manages its liquidity risk by
maintaining sufficient cash balances to meet its obligations. The
Company's liquidity position is monitored by the Board of
Directors.
Residual undiscounted contractual maturities of financial
liabilities:
31 December 2018 Less than 1-3 3 months 1-5 years Over No stated
1 month months to 1 year 5 years maturity
------------------------- ---------- -------- ----------- ---------- --------- ----------
Financial liabilities US$ US$ US$ US$ US$ US$
Trade and other payables 64,553 - - - - -
------------------------- ---------- -------- ----------- ---------- --------- ----------
64,553 - - - - -
------------------------- ---------- -------- ----------- ---------- --------- ----------
31 December 2017 Less than 1-3 3 months 1-5 years Over No stated
1 month months to 1 year 5 years maturity
------------------------- ---------- -------- ----------- ---------- --------- ----------
Financial liabilities US$ US$ US$ US$ US$ US$
Trade and other payables 67,644 - - - - -
------------------------- ---------- -------- ----------- ---------- --------- ----------
67,644 - - - - -
------------------------- ---------- -------- ----------- ---------- --------- ----------
Capital commitments outstanding to private equity funds as at 31
December 2018 amounted to US$nil (2017: US$nil).
Interest rate risk
Cash held by the Company is invested at short-term market
interest rates.
The table below summarises the Company's exposure to interest
rate risks. It includes the Company's financial assets and
liabilities at the earlier of contractual re-pricing or maturity
date, measured by the carrying values of assets and
liabilities:
31 December 2018 Less than 1-3 months 3 months 1-5 years Over Non-interest Total
1month to 1 5 bearing
year years
Financial Assets US$ US$ US$ US$ US$ US$ US$
Financial assets
at fair value
through profit
or loss - - - - - 16,345,477 16,345,477
Trade and other
receivables - - - - - 24,488 24,488
Cash and cash
equivalents 627,867 - - - - - 627,867
----------------------- ---------- ----------- --------- ---------- ------- ------------- ------------
Total financial
assets 627,867 - - - - 16,369,965 16,997,832
----------------------- ---------- ----------- --------- ---------- ------- ------------- ------------
Financial Liabilities
Trade and other
payables - - - - - (64,553) (64,553)
----------------------- ---------- ----------- --------- ---------- ------- ------------- ------------
Total financial
liabilities - - - - - (64,553) (64,553)
----------------------- ---------- ----------- --------- ---------- ------- ------------- ------------
Total interest 627,867 - - - -
rate sensitivity
gap
----------------------- ---------- ----------- --------- ---------- ------- ------------- ------------
31 December 2017 Less than 1-3 months 3 months 1-5 years Over Non-interest Total
1month to 1 5 Bearing
year years
Financial Assets US$ US$ US$ US$ US$ US$ US$
Financial assets
at fair value
through profit
or loss - - - - - 24,064,788 24,064,788
Trade and other
receivables - - - - - 29,131 29,131
Cash and cash
equivalents 747,553 - - - - - 747,553
Total financial
assets 747,553 - - - - 24,093,919 24,841,472
Financial Liabilities
Trade and other
payables - - - - - (67,644) (67,644)
Total financial
liabilities - - - - - (67,644) (67,644)
----------------------- ---------- ----------- --------- ---------- ------- ------------- ------------
Total interest 747,553 - - - -
rate sensitivity
gap
----------------------- ---------- ----------- --------- ---------- ------- ------------- ------------
No financial assets are subject to fair value interest rate
risk. No sensitivity is provided with respect to variable interest
rate movements as the effect is considered not significant.
18 Subsequent events
In April 2019, the Company received a distribution totalling
approx. US$5.2m from EIF Co Invest VII in respect of the Company's
disposal of its direct holding in RSB, with a further approx.
US$1.6m being received from EIF in respect of the Company's
disposal of its indirect holding in RSB. As disclosed in the
Chairman's Statement, the Company made capital distributions of 8.0
cents per share and 2.0 cents per share to shareholders of the
Company registered as at 12 April 2019 and 17 May 2019,
respectively.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR LDLLLKQFXBBV
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