Final Results

29 May 2013

PME African Infrastructure Opportunities plc

("PME" or the "Company")

(AIM: PMEA.L)

Preliminary Results for the year ended 31 December 2012

PME African Infrastructure Opportunities plc, an investment companyestablished to invest in sub-Saharan African infrastructure and infrastructure related industries, announces its results for the year ended 31 December 2012.

Financial Summary  

• US$12.4 million of cash returned to shareholders through a share buy back of 28.72% of the Company's issued ordinary share capital in October 2012

• Net Asset Value of US$39.5 million (2011: US$57.5m)

• NAV per share of US$0.39 (2011: US$0.40)

• Operating loss attributable to shareholders for the year ended 31 December 2012 was US$6.7 million (2011: US$27.9 million)

• Basic and diluted loss per share of US$0.0493 (2011: US$0.1938)

• Basic and diluted loss per share from continuing operations of US$0.0170 (2011: US$0.0245)

Operational Summary

• The Company continues to work towards the realisation of its investments, return cash to shareholders and then effect a voluntary winding up

• Remaining investments performing profitably

• Notwithstanding the impairment of the loan, Sheltam and the rail assets continue to perform well and demand for locomotives is encouraging

• A number of preliminary non-binding expressions of interest have been received in respect of the rail assets

• Sheltam recently agreed a settlement of ZAR 40.25 million for the two locomotives involved in the accident in Mozambique in May 2012 and expects to receive proceeds in the next few weeks

• Peninsula House in Dar-es-Salaam continues to be fully let and a local agent has been appointed to sell the business

For further information please contact:

Chairman's Statement

On behalf of the board, I am pleased to present the final results for PME African Infrastructure Opportunities plc ("PME" or the "Company") for the year ended 31 December 2012.

Investments and Valuations

As previously announced, the Company intends to realise its investments, return cash to shareholders and then effect a voluntary winding up.

The Company currently owns rail assets in South Africa (12 mainline locomotives and 50% of Sheltam Holdings (Proprietary) Limited ("Sheltam") and its subsidiaries, the group to which these locomotives are leased) ("Rail Assets") and commercial premises in Dar-es-Salaam, Tanzania ("Dar-es-Salaam Property").

Notwithstanding the impairment of the loan, the Rail Assets have continued to perform well and demand for locomotives is encouraging. The two C30 locomotives that were involved in an accident in Mozambique in May 2012 were the subject of an insurance claim. Sheltam has recently agreed a settlement amount with its insurance company of ZAR 40.25 million for the two locomotives involved in the accident. This settlement amount includes VAT. It is anticipated that the Company will receive the proceeds, excluding VAT, in the next few weeks.

In September 2012, PSG Capital (Pty) Limited ("PSG Capital") was appointed to assist the Company with the disposal of the Rail Assets. PSG Capital subsequently prepared a high level valuation of the Rail Assets and has initiated a sale process for the Company. The sale of the interest in the 12 mainline locomotives is expected to be effected through the sale of the Company's entire holding in its subsidiary, PME Locomotives (Mauritius) Limited, the owner of the locomotives. A number of potential bidders were approached and a number of parties have submitted preliminary non-binding expressions of interest for the Rail Assets. It is anticipated that the disposal of the Rail Assets will be completed within the next few months provided that the initial interest from third parties is maintained and a transaction can be finalised.

The Dar-es-Salaam Property is fully let and is being managed by a local company. There is a claim with regard to unpaid rent and service charges with one of the tenants, Dovetel, which is now in administration as discussed below. A local agent has been appointed to sell the building but a completion of the sale will probably only occur once the claim has been resolved.

Dovetel, which was the Company's telecommunication interest in Tanzania, was originally placed into administration in December 2011 and then sold to a third party. However Dovetel has once again been placed into administration in late April 2013. The directors expect that Dovetel will be wound up in due course.

The executive directors of the Company are overseeing the operational aspects of the investments and are managing the disposal programme. They are being supported by local personnel who are operating on a short term contractual basis.

Financial Results

The operating loss attributable to ordinary shareholders for the year ended 31 December 2012 was US$6.7 million (2011: US$27.9 million), representing US$0.0493 per Ordinary Share (2011: US$0.1938).

As at 31 December 2012, PME's Net Asset Value attributable to ordinary shareholders in accordance with IFRS was US$39.5 million (US$0.39 per share), 31.2% down from the US$57.5 million (US$0.40 per share) that was reported as at 31 December 2011. However, taking into account the share buy back made by the Company in 2012 in the amount of US$12.4 million, the net percentage decline in PME's Net Asset Value was 12.3%.

Return of Cash and Outlook

The Company made an offer to acquire 30% of its issued ordinary share capital at a price of US$0.30 per share. 41,283,992 ordinary shares, comprising 28.72% of the Company's issued ordinary share capital, were tendered and redeemed on 31 October 2012. The Company returned US$12.4 million to shareholders through the share buy back.

Notwithstanding the impairment to the loan to associate, the remaining investments are performing profitably. As mentioned above, the disposal process for the Rail Assets is underway. It is anticipated that this disposal will take place during 2013. Once the cash has been received from the disposal programme a further distribution by way of tender offer will be proposed to shareholders.

David von Simson

As shareholders will be aware, David von Simson died suddenly on 11 November 2012. David chaired the board of the Company from its incorporation until his untimely death. He demonstrated great skill, leadership and wisdom. He will be sadly missed.

Paul Macdonald

Chairman

28 May 2013

Consolidated Income Statement

Consolidated Statement of Comprehensive Income

Consolidated Balance Sheet

Consolidated Statement of Changes in Equity

Consolidated Cash Flow Statement

Notes to the Financial Statements

1 General Information

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

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

Pursuant to its AIM admission document dated 6 July 2007, there was an original placing of up to 180,450,000 Ordinary Shares with Warrants attached on the basis of 1 Warrant for every 5 Ordinary Shares. Following the close of the placing on 12 July 2007, 180,450,000 Shares and 36,090,000 Warrants were issued. The Warrants lapsed in July 2012.

The Shares of the Company were admitted to trading on AIM, a market of the London Stock Exchange, on 12 July 2007 when dealings also commenced.

Financial Year End

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

Company Profit

In accordance with the provisions of Section 3 of the Isle of Man Companies Act 1982, no separate income statement has been presented for the Company. The amount of the Company's loss for the year recognised in the Consolidated Income Statement is US$3,922,792 (31 December 2011: loss US$67,645,371) after impairment of inter-company balances amounting to US$332,833 (31 December 2011: US$15,448,016) and impairment to its investments in subsidiaries amounting to US$6,766,129 (31 December 2011: US$50,892,477).

Dividends

In the year to 31 December 2012 the Company declared and paid dividends of US$nil (2011: US$20,124,265 (14 cents per share)). An initial tender offer took place in October 2012. 43,123,426 shares were offered at a price of US$0.30 per share. A total of 41,283,992 shares were validly tendered and were cancelled upon acquisition.

Going concern

In assessing the going concern basis of preparation of the financial statements for the year ended 31 December 2012, the Directors have taken into account the status of current negotiations on the realisation of the remaining assets. The Directors consider that the Group has sufficient facilities for its ongoing operations and therefore have continued to adopt the going concern basis in preparing these financial statements.

2 Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented unless otherwise stated.

2.1 Basis of preparation

These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The financial statements have been prepared under the historical cost convention, as modified by the revaluation of properties and financial assets at fair value through profit or loss, and the requirements of the Isle of Man Companies Acts 1931 to 2004. The preparation of financial statements in conformity with IFRS requires the use of accounting estimates. It also requires management to exercise its judgement in the process of applying the Company and Group's accounting policies.

a)New and amended standards adopted by the Group

There were no new or amended standards or interpretations that are applicable for the first time in these financial statements that would have had a material impact on these financial statements.

b) Standards, amendments and interpretations to existing standards relevant to the Group, that are not yet effective and have not been early adopted by the Group

IFRS 9, 'Financial instruments', issued November 2009 and October 2010. This standard is the first step in the process to replace IAS 39, 'Financial instruments: recognition and measurement'. IFRS 9 retains but simplifies the mixed measurement model and establishes two primary categories for financial assets: amortised cost and fair value. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. For financial liabilities, IFRS 9 retains most of the IAS 39 requirements, but in cases where the fair value option is taken, the part of a fair value change in a financial liability due to an entity's own credit risk is recorded in other comprehensive income rather than the income statement (unless this creates an accounting mismatch). The standard is not applicable until 1 January 2015 but is available for early adoption. However, the standard has not yet been endorsed by the EU. The Group is yet to assess IFRS 9's full impact.

IFRS 10, 'Consolidated financial statements', issued in May 2011. This standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements. The standard provides additional guidance to assist in determining control where this is difficult to assess. This standard is applicable for periods beginning on or after 1 January 2014. It is not expected to have a significant impact on the Group or Company.

IFRS 12, 'Disclosure of interests in other entities', issued in May 2011. This standard includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. This standard will be applicable for periods beginning or after 1 January 2014. The Group will adopt this standard from 1 January 2014. It is not expected to have a significant impact on the Group or Company. 

IFRS 13, 'Fair value measurement', issued in May 2011. This standard is to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements, which are largely aligned between IFRSs and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs or US GAAP. This standard is applicable for periods beginning on or after 1 January 2013. It is not expected to have a significant impact on the Group or Company. 

IAS 1, 'Presentation of Financial Statements' issued in June 2011. The amendment requires items recognised outside profit or loss in other comprehensive income to be grouped according to whether or not they may subsequently become reclassifiable to profit or loss. The changes are to be applied for annual periods beginning on or after 1 July 2012, subject to EU endorsement. The changes are not expected to have a significant impact on the Group or Company.

2.2 Critical accounting estimates

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below:

Loan to Associate

The Group tests semi-annually whether the investment and loans to its associate have suffered any impairment. In assessing this, the Group determines the recoverable amount of the CGU determined based on discounted cash flows. The Group also takes into account the associate's (see note 10) progress compared to its business plan. In addition, the Group engaged specialist valuers to conduct a semi-annual valuation of the associate. This independent valuation was adjusted to directors' valuation as the sales process progressed and after consideration of preliminary non-binding expressions of interest. It has been assumed that the disposal of the associate will take place in the next few months. At 31 December 2012 the Group has recognised an impairment of US$7,064,424 (31 December 2011: US$nil) with respect to its loans to associate (see note 16).

2.3 Foreign currency translation

(a) Functional and presentation currency

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

(b) Transactions and balances

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

(c) Group companies

The results and financial position of all the Group entities that have a functional currency different from the presentational currency are translated into the presentational currency as follows:

(i) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

(ii) income and expenses for each income statement are translated at average exchange rates; and

(iii) all resulting exchange differences are recognised as a separate component of equity.

On consolidation, exchange differences arising from the translation of the net investment in foreign operations are taken to other comprehensive income. When a foreign operation is partially disposed or sold, exchange differences that were recorded in equity are recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate.

2.4 Revenue and expense recognition

Revenue comprises the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group's activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group.

The Group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Group and when specific criteria have been met for each of the Group's activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

The main categories of revenue and the bases of recognition are:

(i) Post Paid Products

·; Connection fees: Revenue is recognised on the date of activation by the CDMA operator of a new Subscriber Identification Module (SIM) card.

·; Access charges: Revenue is recognised in the period to which the charges relate.

·; Airtime: Revenue is recognised on the usage basis commencing on the date of activation.

(ii) Prepaid Products

·; SIM kits: Revenue is recognised on the date of sale.

·; Connection fees: Revenue is recognised on the date of activation.

·; Airtime: Revenue is recognised on the usage basis commencing on the date of activation.

Rental income from property is recognised within revenue in discontinued operations in profit or loss on a straight line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.

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

The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating the interest income or interest expense over the year.

Expenses are accounted for on an accruals basis.

2.5 Basis of consolidation

Subsidiaries

Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. The Group also assesses existence of control where it does not have more than 50% of the voting power but is able to govern the financial and operating policies by virtue of de-facto control. De-facto control may arise in circumstances where the size of the Group's voting rights relative to the size and dispersion of holdings of other shareholders give the Group the power to govern the financial and operating policies, etc.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognised amounts of acquiree's identifiable net assets.

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

Transactions and non-controlling interests

The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised gains/losses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.

Associates

Associates are those entities in which the Group has a significant influence, but no control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Group's investment in associates includes goodwill identified on acquisition, net of any accumulated impairment loss. The consolidated income statement includes the Group's share of its associates' profits or losses, after adjustments to align the accounting policies with those of the Group, from the date that significant influence commences until the date that significant influence ceases. When the Group's share of losses exceeds its interest in an associate, the carrying amount of that interest (including any long-term investment) is reduced to US$nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the associate.

Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

2.6 Operating segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is the person or group that allocates resources to and assesses the performance of the operating segments of an entity. The Group has determined that its chief operating decision-makers are the Board and the Investment Manager of the Company.

2.7 Intangible assets

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net identifiable assets (including intangible assets) of the acquired subsidiary. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.

Telecommunication licences

Licence fees paid to governments, which permit telecommunication activities to be operated for defined periods, are initially recorded at cost and amortised from the time the network is available for use to the end of the licence period.

Computer software licences

Computer software licences are capitalised on the basis of the cost incurred to acquire and bring the specific software into use. The cost is amortised over the useful life of the software of three to five years.

2.8 Assets held for sale

Groups of non-current assets (or disposal groups) are reclassified as held for sale when a sale within one year is highly probable and the assets are available for immediate sale in their present condition. Property plant and equipment and intangible assets held for sale are remeasured at the lower of fair value less cost to sell or the carrying amounts at the date they meet the held for sale criteria. Any resulting impairment loss is recognised in the profit & loss account.

2.9 Financial assets and financial liabilities

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

At 31 December 2012 and 2011 the Group did not have any financial assets at fair value through profit or loss. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date which are classified as non-current assets. The Group's loans and receivables comprise 'loan due from associate', 'finance lease receivables', 'trade and other receivables' and 'cash at bank' in the balance sheet (notes 10.2, 13, 14 and 15).

The Group classifies its financial liabilities in the following categories: at fair value through profit or loss and other liabilities. At 31 December 2012 and 2011 the Group did not have any financial liabilities at fair value through profit or loss. Other liabilities are loans and trade creditors which are included in 'trade and other payables' in the balance sheet (note 19).

2.10 Impairment of non-financial assets

Assets that have an indefinite useful life - for example, goodwill or intangible assets not ready to use - are not subject to amortisation and are tested semi-annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

2.11 Property, plant and equipment

Properties are shown at fair value, based on valuations by external independent valuers, less subsequent depreciation. Valuations are performed with sufficient regularity to ensure that the fair value of a revalued asset does not differ materially from its carrying amount. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is restated to the revalued amount of the asset. All other categories of property, plant and equipment are initially recorded at historical cost. Subsequently, the assets are stated at historical cost, less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the assets' carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the consolidated income statement during the financial year in which they occurred.

Depreciation is calculated on the straight-line basis to allocate their costs to their residual values over their estimated useful lives as follows:

Properties 25 years

Locomotives 15 years

Network infrastructure and equipment 3 to 15 years

Other 3 to 6 years

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Capital work in progress

Property, plant and equipment under construction is stated at initial cost and depreciated from the date the asset is placed in use over its useful life. The cost of self-constructed assets includes expenditure on materials and direct labour. Assets are transferred from capital work in progress to an appropriate category of property, plant and equipment when commissioned and ready for the intended use.

When the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount.

Gains or losses on disposals are determined by comparing the disposal proceeds with the carrying amount and are included in the consolidated income statement.

2.12 Finance lease receivables

Amounts due from lessees under finance leases are recorded as receivables at the amount of the Group's net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group's net investment outstanding in respect of the leases.

2.13 Inventory

Inventories are stated at the lower of cost and net realisable value. Cost is determined on a weighted average basis, and includes expenditure incurred in acquiring the inventories, and other costs incurred in bringing them to their existing location and condition. Net realisable value is the price at which inventories can be sold in the normal course of business after allowing for the costs of realisation.

2.14 Loans and receivables

Loans and receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables.

2.15 Trade and other receivables

Trade and other receivables are initially stated at fair value and subsequently measured at amortised cost using the effective interest method, less impairment.

A provision for impairment is established when there is objective evidence that the Group will not be able to collect all amounts to be received. Significant financial difficulties of the counterparty, probability that the counterparty will enter bankruptcy or financial reorganisation, and default in payments are considered indicators that the amount to be received is impaired. Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss.

2.16 Cash and cash equivalents

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

2.17 Investments in subsidiaries

Investments in subsidiaries are accounted for in the Company balance sheet at cost less impairment. Cost also includes directly attributable costs of investments.

2.18 Trade and other payables

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

2.19 Taxation

The Company is resident for taxation purposes in the Isle of Man and is subject to income tax at a rate of zero per cent. The Group is liable to tax on the activities of its subsidiaries and associates in accordance with the applicable tax laws in the countries in which they are incorporated.

The tax expense represents the sum of the tax currently payable, which is based on taxable profits for the year. The Group's liability is calculated using the tax rates enacted or substantially enacted at the balance sheet date.

Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

2.20 Retirement benefit obligations

The Group's subsidiaries, Dovetel Tanzania Limited and TMP Uganda Limited, contributed to the National Social Security Fund, "Fund", in Tanzania and Uganda respectively. These were defined contribution plans. A defined contribution plan is a pension plan under which the Group' subsidiaries paid fixed contributions into a separate entity. The Group had no legal or constructive obligations to pay further contributions if the Fund did not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions by the Group's subsidiaries were recognised as an employee benefit expense when they were due.

2.21 Share capital

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

2.22 Dividends

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

3 Risk Management

The Company's activities expose it to a variety of financial risks: market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk. The financial risks relate to the following financial instruments: loans and receivables, cash and cash equivalents and trade and other payables. The accounting policies with respect to these financial instruments are described in Note 2.

Risk management was carried out by the Investment Manager until the date of its termination under policies approved by the Board of Directors. The risk management is now being carried out by the executive Directors.

Foreign currency risk

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

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

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

Within the 2012 balances, US$7,967,000 (2011: US$780,000) relates to disposal groups held for sale.

The Board of Directors monitor and review the Group's currency position on a continuous basis and act accordingly.

At 31 December 2012, had the US Dollar strengthened by 7% (2011: weakened 3%) in relation to South African Rand, Tanzanian Shilling and Pound Sterling, with all other variables held constant, the shareholders' equity would have (decreased)/ increased by the amounts shown below:

The direct and indirect subsidiaries do not have US Dollar as their functional currency and therefore on the Group level any effects of changes in foreign exchange rates will be included in the foreign currency translation reserve on consolidation.

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 Group.

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.

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

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

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its obligations as they fall due. The Group currently manages its liquidity risk by maintaining sufficient cash. The Group's liquidity position is monitored by the Investment Manager (up to date of termination) and the Board of Directors.

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

Interest rate risk

Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Group is exposed to interest rate risk from the cash held in interest bearing accounts at floating rates or short term deposits of one month or less. The Company's Investment Manager (until the date of its termination) and Board of Directors monitor and review the interest rate fluctuations on a continuous basis and act accordingly.

During the year ended 31 December 2012 should interest rates have decreased by 10 basis points, with all other variables held constant, the shareholders' equity and the result for the year would have been US$6,000 (2011: 10 basis points US$24,000) lower.

Capital risk management

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

Group capital comprises share capital and reserves.

No changes were made in respect of the objectives, policies or processes in respect of capital management during the years ended 31 December 2011 and 2012 except for the change in investing policy noted above.

4 Operating Segments

The chief operating decision-maker has been identified as the Board. The Board reviews the Group's internal reporting in order to assess performance and allocate resources. It has determined the operating segments based on these reports. The Board considers the business on a project by project basis by type of business. The type of business is telecommunications (wireless and broadband services), transport (railway) and leasehold property.

* Other refers to income and expenses of the Group not specific to any specific sector such as fees of the Investment Manager and income on un-invested funds. Other assets comprise cash and cash equivalents US$1,929,227 and other assets US$189,092.

** Other refers to income and expenses of the Group not specific to any specific sector such as fees of the Investment Manager and income on un-invested funds. Other assets comprise cash and cash equivalents US$11,575,230 and other assets US$208,999.

The total of non-current assets other than financial instruments and deferred tax assets is US$nil (2011: US$29,212) and all of these were located in Mauritius.

5 Investment Manager's Fees

Annual fees

The Investment Manager received a management fee of 1.25% per annum of the gross asset value of the Group from Admission, payable quarterly in advance and subject to a cap of 3% per annum of the net asset value of the Group. On 6 July 2011, the Company served formal notice on the Investment Manager to terminate the Management agreement dated 6 July 2007 between the Company and the Investment Manager, which took effect on 6 July 2012.

The Investment Manager was entitled to recharge to the Group all and any costs and disbursements reasonably incurred by it in the performance of its duties including costs of travel save to the extent that such costs are staff costs or other internal costs of the Investment Manager. Accordingly, the Group is responsible for paying all the fees and expenses of all valuers, surveyors, legal advisers and other external advisers to the Group in connection with any investments made on its behalf. All amounts payable to the Investment Manager by the Group are paid together with any value added tax, if applicable. Annual fees payable to the Investment Manager for the year ended 31 December 2012 amounted to US$367,143 (31 December 2011: US$1,288,727).

Performance fees

The Investment Manager was entitled to a performance fee of 20% of the net income and capital cash returns to the Company or any subsidiary in respect of the sale or partial sale, refinancing or restructuring of an investment in an infrastructure project ("relevant investment") provided that the "Project test" had been passed. For these purposes, the Project test was passed if the Company or any subsidiary had received in cash the return of all its cash invested in a relevant investment and a return equivalent to an internal rate of return of 12% on such cash.

At the end of each financial year (or at date of termination) the Total Return will be calculated and the total performance fee will be calculated as 20% of the Total Return multiplied by the weighted average number of Ordinary Shares in issue during the year. This is provided that the Total Return exceeds the NAV test, being the proceeds of the Placing Shares increased at a rate of 12% per annum on an annual compound basis from the date of Admission to the Relevant End Date. Total Return is the difference between the net asset value per Ordinary Share as at the last business day of the relevant financial year and the net proceeds of the Placing Shares divided by the number of Placing Shares.

Performance fees payable for the year ended 31 December 2012 amounted to US$nil (31 December 2011: US$nil).

6 Operating and Administration Expenses

Administrator and Registrar fees

The Administrator receives a fee of 10 basis points per annum of the net assets of the Company between £0 and £50 million; 8.5 basis points per annum of the net assets of the Company between £50 and £100 million and 7 basis points per annum of the net assets of the Company in excess of £100 million, subject to a minimum monthly fee of £4,000 and a maximum monthly fee of £12,500 payable quarterly in arrears.

Administration fees payable by the Company for the year ended 31 December 2012 amounted to US$89,578 (31 December 2011: US$158,683).

The Administrator provides general secretarial services to the Company, for which it receives a minimum annual fee of £5,000. Additional fees, based on time and charges, will apply where the number of Board meetings exceeds four per annum. For attendance at meetings not held in the Isle of Man, an attendance fee of £750 per day or part thereof will be charged. The fees payable by the Company for general secretarial services for the year ended 31 December 2012 amounted to US$19,304 (31 December 2011: US$30,783).

From 26 October 2010 the Administrator has been appointed to oversee the administration of the Mauritian subsidiaries. The minimum annual fee for each of these companies is £5,000 per annum. Administration fees of the Mauritian subsidiaries for the year ended 31 December 2012 amounted to US$53,338 (31 December 2011: US$80,427).

Directors' remuneration

The maximum amount of basic remuneration payable by the Company by way of fees to the Non-executive Directors permitted under the Articles of Association is £200,000 per annum. The Directors are each entitled to receive reimbursement of any expenses incurred in relation to their appointment. The Non-executive (excluding the Chairman) Directors are entitled to receive an annual fee of £30,000 each and the Chairman £35,000. At the time of termination of the Investment Manager three of the directors became Executive Directors: David von Simson, Paul Macdonald and Lawrence Kearns.

Executive Directors' fees 

The Executive Directors are entitled to receive annual basic salaries of £75,000.

All directors' remuneration and fees

Total fees and basic remuneration (including VAT where applicable) and expenses payable by the Company for the year ended 31 December 2012 amounted to US$373,459 (31 December 2011: US$219,393) and was split as below. Directors' insurance cover payable amounted to US$31,000 (31 December 2011: US$31,327).

* David von Simson died on 11 November 2012

7 Finance Income

8 Income Tax Expense

The tax on the Group's profit/(loss) before tax is higher than the standard rate of income tax in the Isle of Man of zero %. The differences are explained below:

There are no losses carried forward in the underlying subsidiaries (31 December 2011: US$2.3m). There is no expiry date for the carrying forward of losses. For prudence, tax losses are not carried as deferred tax assets in the consolidated balance sheet until the realisation of the related tax benefit through future taxable profits is probable.

9 Basic and Diluted Loss per Share

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

There is no difference between basic and diluted Ordinary Shares in issue as the Warrants lapsed in July 2012 and are not dilutive in 2011.

10 Investments in Subsidiaries and Associate

10.1 Investments in Subsidiaries

The direct and indirect subsidiaries held by the Company are as follows:

* a liquidator was appointed on 19 December 2011

** the company's directors passed a resolution on 19 February 2013 to appoint a liquidator

In June 2012 the Group disposed of its 65% holding in Dovetel Tanzania Limited for total consideration of US$1. This resulted in a loss on disposal of US$102,556.

The Company invested in its direct subsidiaries as follows:

* this impairment relates to the underlying associate (see note 10.2)

10.2 Investment in Associate

The 2011 recoverable amount of the associate was determined based on value-in-use calculations. This calculation used a pre-tax cash flow projection based on financial budgets approved by management covering the financial periods to 31 December 2013. Cash flows beyond this period were extrapolated using estimated growth rates. The key assumptions used for value-in-use calculations in 2011 were as follows: Growth rate 3% and a discount rate of 16.4%.

As a result of the valuation performed, the investment in associate and loans due from associate were impaired by US$nil in 2011.

The investment in associate has been transferred to assets held for sale in 2012 (note 16(a)).

Loans due from associate

The loans due from associate have been transferred to assets held for sale in 2012 (note 16(a)).

11 Intangible assets

* loss of control was due to the appointment of a liquidator (see note 16)

Amortisation of licences is calculated using the straight-line method to allocate the cost of licences over their estimated useful lives. The useful lives and renewal periods of licences are determined primarily with reference to the unexpired licence period.

12 Property, Plant and Equipment

* loss of control was due to the appointment of a liquidator (see note 16)

13 Finance Lease Receivables

The present value of the lease payments is receivable as follows:

The Group entered into finance leasing arrangements with Sheltam Holdings (Pty) Limited, an associated company, for twelve locomotives (six in December 2008 and another six in June 2009). The average term of finance leases entered into is ten years. The interest rate inherent in the leases is fixed at the contract date for the entire lease term. The average effective interest rate contracted approximates to 16.30% (2011: 16.30%). The fair value of the Group's finance lease receivables at 31 December 2011 is estimated at US$26,890,605. The lease receivables are secured on the related assets.

The finance lease receivables have been transferred to assets held for sale in 2012 (note 16).

14 Trade and Other Receivables

A total of US$22,879 was drawn down by PME Tanco during the year in respect of its intercompany loan facility provided by the Company. Interest of US$248,156 was accrued on this facility over the year. The balance at 31 December 2012 has been impaired by US$7,890,858. This loan facility bear interest at the US prime rate, are unsecured and repayable on demand.

A total of US$17,080 was drawn down by PME Uganco during the year in respect of its intercompany loan facility provided by the Company. Interest of US$nil was accrued on this facility over the year as the balance was fully written off at the year end due to PME Uganco going into liquidation.

PME TZ Property and PME RSACO were lent US$14,680 and US$48,480 respectively to cover operational expenditure and PME TZ Property repaid US$31,950 of its balance. These balances are interest free, unsecured and repayable on demand.

The balances relating to expense recharges at 31 December 2012 have been impaired by US$40,852.

15 Cash and Cash Equivalents

16 Non-Current Assets Held for Sale and Discontinued Operations

The property and associated liabilities of PME Properties Limited, the investment in associate and loan to associate of PME RSACO (Mauritius) Limited, the finance lease and loan to associate of PME Locomotives (Mauritius) Limited and the assets and liabilities of Dovetel Tanzania Limited have been presented as held for sale following the approval by the Board to sell or close these assets/companies. The results associated with these assets and for these companies are therefore included under discontinued operations (2011: assets and liabilities of Dovetel Tanzania Limited and PME Properties Limited).

Additionally, TMP Uganda Limited appointed a liquidator on 19 December 2011 and its results are therefore also included under discontinued operations. This loss of control resulted in a write back of payables in 2011 of US$1,476,325 (see note 16(d)) and recycling of foreign exchange losses from reserves to the consolidated income statement of US$4,426,088 (see note 16(c)).

On 25 June 2012 the Company received written approval from the High Court for the sale of PME's shareholding in Dovetel Tanzania Limited for a nominal consideration of US$1 in cash. Following the sale which completed on 28 June 2012, the Company had no further funding requirements or obligations with regard to Dovetel. The disposal resulted in recycling of foreign exchange losses from reserves to the consolidated income statement of US$2,102,497 (see note 16(c)).

(a) Assets of disposal group classified as held for sale

The Group owns 50% of the ordinary share capital in its associate, Sheltam Holdings (Pty) Limited, which is unlisted.

The loans due from associates are as follows:

* shareholder loan repayable to PME RSACO (Mauritius) Limited, unsecured and has no fixed repayment terms.

** rescheduled debt agreement repayable to PME Locomotives (Mauritius) Limited in relation to the finance lease arrears amounts to 30 June 2011 plus lease payments outstanding up to 31 March 2012.

(b) Liabilities of disposal group classified as held for sale

ZTE Corporation of China was the supplier of the core network equipment to Dovetel. The loans were unsecured and interest free.

(c) Cumulative income or expense recognised in other comprehensive income relating to disposal group classified as held for sale

Analysis of the result of discontinued operations, and the result recognised on the re-measurement of assets of disposal group, is as follows:

* in relation to disposal of Dovetel

(d) Operating and administration expenses

17 Share Capital

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

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

On 12 July 2007, the Company raised a gross amount of US$180,450,000 following the admission of the Company's Ordinary Shares to AIM. The Company placed 180,450,000 Ordinary Shares of US$0.01 par value, at an issue price of US$1.00 per share, and 36,090,000 Warrants on a 1 Warrant per 5 Ordinary Shares basis.

A registered holder of a Warrant has the right to subscribe for Ordinary Shares of US$0.01 each in the Company in cash on 30 April in any of the years 2008 to 2012 for a price of US$1.21 each (adjusted from US$1.25 effective from 11.59pm on 23 February 2010, and an additional 1,193,042 Warrants were issued). The subscription price was adjusted from US$1.21 to US$1.00 effective from 11.59pm on 21 September 2010, and an additional 7,829,424 Warrants were issued. The subscription price was further adjusted from US$1.00 to US$0.72 effective from 11.59pm on 22 July 2011, and an additional 17,543,718 Warrants were issued taking the total number of Warrants in issue to 62,656,184. The Warrants lapsed in July 2012. No subscriptions rights were exercised prior to the Warrants lapsing.

An initial tender offer took place in October 2012. 43,123,426 shares were offered at a price of US$0.30 per share. A total of 41,283,992 shares with an aggregate nominal value of US$412,840 were validly tendered and were cancelled upon acquisition. Retained earnings were reduced by US$12,385,198, being the consideration paid for these shares.

18 Net Asset Value per Share

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

19 Trade and Other Payables

PME Locomotives (Mauritius) Limited recharged US$124,841 to the Company during the year, which was fully repaid by the end of the year. This balance was interest free, unsecured and repayable on demand.