Preliminary Results

9th Feb 2009 07:00



Immediate Release

9 February 2009

Elephant Capital Plc

Preliminary Results for twelve months ended 31August 2008

Elephant Capital Plc (ECAP), previously called Promethean India PLC, the India focused Private Equity fund is pleased to announce Preliminary results for the period ended 31 August 2008.

Key Points

Net Asset Value per share 96p (2007: 97p)

Cash of £28m -  42% of fund invested 

One investment during period of £1.3m, in an Education company

Ongoing due diligence on one potential investment

Management confident to be fully invested by 31st May 2010

In his statement to shareholders, Chairman Sir Peter Burt, commented:

"We added value this year, not only in the investments we made but perhaps even more in the investments we chose not to make……….. We remain enthusiastic about the opportunities available to us in India "

For further information contact:

Elephant Capital Plc	0207 292 6072
Gaurav Burman
Buchanan Communications	0207 466 5000
Mark Edwards / Chris McMahon
Seymour Pierce	0207 107 8000
Nandita Sahgal

  Chairman's Statement

This report covers the period from 1 September 2007 to 31August 2008. July 2007 marked the start of a period that will be remembered for a long time to come. There is the old cliché, "May you live in interesting times" and we certainly do. This has been a difficult year but despite this I am pleased to report that we have made solid progress.

This year has brought great changes for Elephant Capital plc. We changed our name on 29 August 2008, the date when we separated from Promethean Investments and we now have a team focused exclusively on India. We have three offices, London, New Delhi, and Mumbai, and have doubled our headcount to ten. The business is now established as an AiM listed, India focused Private Equity fund. Over the past year we have been both cautious and disciplined in our approach, making only one new investment during this period, in a leading India educational business, 'Project Einstein.' We are awaiting the outcome of discussions with the management of the business to proceed further with this investment. We also made a small follow-on funding in Obopay, maintaining our pro-rata shareholding in the company. Obopay received further funding from Essar (Vodafone's joint venture partner in India) at a significantly higher valuation to when the Company made its initial investment.

The past 18 months have been a difficult time for India, politically, socially, and economically. In economic terms, very few predicted that this period would bring for us the astonishing list of failures and rescues of financial companies around the world. Not surprisingly, India was not immune and continues to suffer from the global economic shock that effectively has dried up all liquidity. While all Indian investors understood that exponential growth was possible as a result of the country's demography and rising employment, what many forgot is that growth cannot happen without investment, and investment cannot happen without capital. As a result, while many appeared happy to pay high multiples for Indian businesses based on forecasts of their potential growth, the valuations came crashing down when the growth disappeared. This was compounded by a multiplier effect, which meant that as capital became scarce, emerging market risk premium that had disappeared returned and further depressed valuations. As a result the Indian benchmark indices for both the small and large cap sectors have fallen by up to 70%.

We did not come through unscathed. The mark to market valuations on both Nitco, and Mahindra Forgings have suffered but we continue to believe in the potential of both businesses. We have board seats in both and we are working diligently with the management to make sure the businesses weather the storm and come through the other side in good shape. EIH continues to trade well and its shares are still above the price which we paid for them. 

We added value this year, not only in the investments we made but perhaps even more in the investments we chose not to make. The team continued to see a tremendous amount of proprietary deal flow but we could not get comfortable with the valuations and the terms on which many of the investments were offered. The other good decision was our firm belief that the property prices in India had reached bubble like levels and we stayed away from that sector in its entirety. 

As a result of these factors, we now invested 42% of the total capital raised to date, leaving us with £28million of uninvested cash. We believe that leaves us ample opportunity to do approximately three or four transactions over the next 18 months. We are now conducting due-diligence on one business which is in a high growth consumer segment where there are still many barriers to entry. We also have a pipeline of transactions, a number of which would give us control of the businesses concerned. The next 2 - 3 years seem likely to be difficult and so, as a purchaser of assets, we should be well placed to take advantage of the opportunities and lower valuations.

I cannot ignore the terrible impact of the terrorist attacks that occurred in Mumbai towards the end of last year. We had colleagues and friends in both hotels, some of whom were injured and some sadly were killed. No country is immune to terrorism but the manner in which these attacks were orchestrated was terrible and we send our sympathy to everyone affected. 

We remain enthusiastic about the opportunities available to us in India. As this recession passes, India with its young demographic, high savings rate and relatively low leverage will emerge strong and we expect to see Indian businesses once again becoming highly valued global investors. Our thanks go to the team for all their hard work over the past year and we shall strive to ensure that Elephant has the ability to find and invest in the best businesses that India has to offer.

Sir Peter Burt

06 February 2009

  Investment Manager's Review

Introduction:

During the period Elephant Capital plc ("Elephant Capital" or the "Company") invested GBP 4.3 million via our Mauritian based fund vehicles Tusk Investments Fund I and Tusk Investments Fund II (individually as the "Fund", collectively as the "Funds") into businesses that are established or operating in India. The intention of the Manager is to invest Elephant Capital's remaining capital via the funds over next 12-18 months.

The Funds are now managed by Elephant Capital LLP (the "Manager" or "Elephant") a limited liability partnership which in turn is advised by Elephant India Advisors Pvt. Ltd (the "Advisor"), of which the senior executives in India are all members.

The Manager and the Advisor's investment team, led by Gaurav Burman and Mohit Burman, include the members of the Advisor all of whom have extensive experience within the private equity and financial services industry. 

Investment Strategy:

The Company was established in order to execute a value activist strategy in both public and private businesses, building a concentrated portfolio of investments in which the Manager and Advisor can act as catalysts for change and value creation. The Advisor and Manager target companies, which they believe have the potential to add value and growth to the portfolio by way of domestic growth, international expansion or restructuring. The Manager and Advisor utilize their knowledge of the region and networks both inside and outside of India to assist investee companies in developing a plan to ensure value creation. 

All investments, whether in public or private companies, are preceded by extensive due diligence to assess the risks and opportunities with respect to an investment. This includes an overview of the target's market, management, business model, financial track record, prospects and the likely realization strategy. The investment team remains sector agnostic and are careful in managing their exposure to any one sector.

The Manager and Advisor intend to make some investments that will lead to the Fund becoming a majority or controlling shareholder. Where this is the case, the Manager and Advisor will work with the investee company's management team to develop a plan outlining specifically how value is to be created and detailed actions taken to realize the opportunity. The Manager intends to maintain a high ratio of investment executives to investee companies in order to enable it to play a hands-on role with the investee company in implementing and continually developing this investment strategy.

Where the Fund is a minority shareholder in a publicly listed company or a private company, the Manager and Advisor will engage actively with the board of the investee company to find ways to realize additional value.

The Company has no fixed life and it is expected that it will continue to re-invest the proceeds of any realizations net of gains with an appropriate provision for actual or expected future losses.

Investment Origination and Activity:

In the period to 31August 2008 the Manager and Advisor were focused on adding value to the portfolio companies in which investments had been made and on originating and executing high quality deal-flow. 

The Manager and Advisor were challenged by a worsening global economic climate. They are pleased that their portfolio companies have continued to perform relatively well and remain profitable. The mark to market valuation on Nitco Tiles and Mahindra Forgings is disappointing but the Manager and Advisor are represented on the board of both these companies and are working diligently with management to make sure value is protected and the businesses survive the storm. EIH, the other listed investment is still at or above the cost at which the investment was made. Obopay received further funding from Essar (Vodafone's joint venture partner in India) at a significantly higher valuation to when the Fund made its initial investment.

One new investment was made, where the Fund took a position in one of the leading education businesses in India. The business is listed and the Fund is still awaiting the outcome of discussions with the management of the business, in order to decide the next steps.

The Manager and Advisor are encouraged with the quality of the investment opportunities that they are originating and they believe that their origination activities will support the continued growth of the business. In fact it is the discipline and the refusal of the Manager and Advisor to recommend investments in this cycle due to higher than acceptable pricing and multiples, refusal of the target companies to allow a full due-diligence, and lack of sufficient governance that has allowed the fund to preserve cash until there are more opportunities. 

Since the period in question the Manager and Advisor are originating high quality deal flow, much of it being control situations at very favourable valuations given the changing expectations of businesses. The Company has conserved cash in what has been a volatile market and is now well positioned to take advantage of the current economic climate where cash and liquidity are highly valued by growth businesses in India due to the lack of supply. The Manager and Advisor are now confident of their ability to have the Fund fully invested by 31May 2010.

Investment Activity: 

During the period Elephant Capital plc made one new investment in the following company:

Project Einstein

In March 2008, Elephant Capital Plc invested a minority stake (0.60%) in a leading education business in India. Through market purchases, the Company invested approximately GBP 1.3 million for 1 million shares in the education business. The Company is awaiting the outcome of discussions with the management of the business to proceed further with this investment.

Portfolio Activity:

During the period our portfolio companies achieved the following:

Mahindra Forgings Mauritius Limited (held via Promethean 1 Limited)

In May 2007, Elephant Capital secured exclusivity to purchase a 10% stake in Mahindra Forgings Mauritius Limited (MFML). MFML in turn owned 100% of Schoneweiss & Co. GmbH, one of the leading private forging companies in Europe with 140 years of experience which had enabled it to become one of the top five axle beam manufacturers in the world, specializing in suspension, power train and engine parts.

The Mahindra Group is one of the best known industrial groups in India and a leader in the automotive space with approximately US$6 billion per annum in revenues. The Mahindra Group decided that the automotive component sector had significant growth potential and key to their automotive strategy. As a result they have adopted a buy and build strategy in this sector.

In November 2007, the Mahindra Group amalgamated all its foreign subsidiaries, Schoneweiss & Co. GmbH, Stokes Group Limited, Jeco Holdings AG with Mahindra Forgings Limited. As a result of this merger, the Fund became a shareholder in the listed Indian business through Promethean 1 Limited. Mahindra Forging's key customer segments are in the midst of a major cyclical slowdown, especially the commercial vehicles segment which forms approximately 75% of company's total revenues. The problems have been further compounded by the near failure of the Big Three US auto players. Due to the ongoing challenging environment, in January 2009, Mahindra Forgings announced the closure of one its manufacturing facilities at Walsall, West Midlands, UK which was part of the Stokes Group Ltd. The Company also decided to shutdown their Chakan plant in India, for 5-10 days in both December 2008 and January 2009 to align the production with reduced demand. The rationalization of capacity is expected to reduce costs and better manage the current demand-supply scenario.

Obopay Inc.

In June 2007, the Advisor began discussions with the management of Obopay, an exciting privately held California based company that specializes in mobile payment technology. Obopay's service allows an individual to instantly obtain, spend, and send money anywhere, anytime with anyone using their mobile phone. Given India has approximately 300 million mobile subscribers, the Advisor approached Obopay to discuss the possibility of helping them scale their operations in India.

Obopay already had considerable traction and was about to close a Series 'C' round of funding of US$12.5 million with a number of leading technology investors including Richmond, Redpoint, Onset, and a strategic investment from Citibank who had announced a trial of their technology for their current account holders. Obopay had also appointed Jim Wolfensohn, the ex-head of the World Bank to their board. Obopay viewed Elephant Capital as a valuable partner in their India strategy and agreed to work with us to scale their operations there. 

In July 2007, the Fund invested GBP 0.7 million in a heavily over- subscribed Series 'C' financing.

The company is currently raising a further US$ 25 million of equity financing, which should fully fund the business. Post our first investment the company raised US$20 million in a Series D Preferred stock offering. Elephant Capital invested GBP 0.5 million in that round. 

Over the past year Obopay has entered into agreements with MasterCard, Fidelity and Bancorp for offering its person-to-person (P2P) mobile money transfer services. In March 2008, the company launched its instant money transfer service in India through an alliance between wholly-owned subsidiary Obopay India and Yes Bank. In August 2008, Obopay announced an alliance with Grameen Solutions for the use of mobile technology to deliver banking services to a billion of the world's poorest people by 2018.

Nitco Tiles Limited

The Advisor first became interested in Nitco Tiles Ltd in June 2007. The Advisor wanted to participate in the significant real estate growth in India but was finding it difficult to justify the high valuations that the private or listed property companies in India were demanding. As a result the Advisor started to look at businesses that it felt would benefit from the significant amount of commercial, residential and retail construction in India. Nitco was interesting for a number of reasons, the first and foremost being that the company since being founded in 1956 had grown to become the second largest branded tile manufacturer in India selling in excess of 125 million square feet of floor tiles per year. Over and above this the Advisor was very impressed by the management team and their ambitions for the future growth of the business.

Nitco had also recently announced that they were moving their production out of the Mumbai region to take advantage of tax subsidies that some less industrial states in India were offering to businesses that set up manufacturing units in those regions. As a result some valuable real estate that the company owned would be released and potentially developed into lucrative residential or commercial use. Given all the positive attributes of the company and given that it was not well covered by the research community in India we started to buy the stock and build our position. The Fund built its stake in the business during July to October 2007.

Since we invested, the company raised US$42 million at a 17 percent premium to our investment price through a Qualified Institutional Placement (QIP) round in November 2007. Key investors in the round were Deutsche Bank, Citigroup, Merrill Lynch and CSFB. Nitco has commenced developing their real estate in order to unlock the value of their land assets. Currently, an IT park and a premium residential building in Mumbai are under construction. They are also in the process of expanding capacities for the ceramic tiles segment and building capacities for processing imported marble. 

EIH Limited

The Advisor had for some time been interested in EIH, one of the largest branded hospitality businesses in India. Given the growth in tourism both domestic and international and the growth rate in the aviation sector which had resulted in both Indians and foreign visitors having access to air travel, India was witnessing a period of major growth in the hospitality and catering industries. The hospitality sector in India historically has suffered from significant under investment and as a result there are less luxury hotel rooms in India than there are in Manhattan. The Advisor believed that they had found an asset, which despite being one of the best portfolio of properties in India, has not been correctly valued by the public markets. 

The Fund built its stake in the business during the month of August 2007.

In March 2008, the company terminated its alliance with Hilton for marketing and co branding 'Trident-Hilton' brand. They are aggressively pursuing brand creation on their own. A new 436 room Trident at Bandra Kurla, Mumbai is expected to open in the fourth quarter of FY09. A host of new properties have been planned at various places in India and Middle East and are expected to come by FY10 and FY11. The new properties will be a mix of owned and managed properties.

The disturbing terrorist attacks in Mumbai in late November 2008 have worsened the prospects of the hotel industry, which was already feeling pressure from the ongoing recession in the developed world and a slowdown in India. 

As at 31August 2008, the portfolio was as follows:

Company	Sector		Cost GBP'000	Valuation* GBP'000	Gain /(Loss) GBP'000
		Listed
EIH Limited	Hospitality	Listed	7,131	9,846	2,715
Mahindra Forgings Limited**	Automotive	Listed	3,543	2104	(1,439)
Nitco Tiles Limited	Building Materials	Listed	5,501	2,497	(3,004)
Project Einstein***	Education	Listed	1,262	1,118	(144)
Obopay Inc.	Mobile Banking Services	Unlisted	1239	2,225	986
Total			18,676	17,790	(886)

* The valuations are in accordance with International Financial Reporting Standards / International Private Equity and Venture Capital valuation guidelines. Valuation of listed investments is based on the closing bid price as at 31st August 2008. Unlisted investments are held at fair value through profit or loss. All investments are recognized at the transaction date.

**Part of the investment in Mahindra Forgings Limited is held via an intermediary company, Promethean 1 Limited (Mauritius).

*** Company name undisclosed, with the underlying investment purchased via P-notes. 

Realisations

During the year the Company made no realizations of any of its investments. 

Principles of valuations of unlisted investments:

Principles of valuation of unlisted investments

Investments are stated at amounts considered by the directors to be a reasonable assessment of their fair value, where fair value is the amount at which an asset could be exchanged between knowledgeable, willing parties in an arm's length transaction.

All investments are valued according to one of the following bases:

Cost (less any provision required)

Price of recent transaction 

Earnings multiple

Net assets

Sale price

Investments are only valued at cost for a limited period after the date of acquisition, otherwise investments are valued on one of the other bases described above, and the earnings multiple basis of valuation will be used unless this is inappropriate, as in the case of certain asset based businesses.

When valuing on earnings multiples basis, profits before interest and tax of the current year will normally be used, depending on whether or not more than six months of the accounting period remain and the predictability of future profits. Such profits will be adjusted to a maintainable basis, taxed at the full corporation tax rate and multiplied by an appropriate and reasonable price/earnings multiple. This is normally related to comparable quoted companies, with adjustments made for points of difference between the comparator and the company being valued, in particular for risks, earnings growth prospects and surplus assets or excess liabilities.

   

Consolidated Income Statement

	Notes	For the year ended 31 August 2008		Period from 16 May 2006 to 31 August 2007
		£'000		£'000
Revenue
Investment and other income	6	1,945		885
Net gains/(losses) on financial assets at fair value through profit or loss	7	(1,238)		344
		707		1,229
Expenses
Management fees		(1,000)		(343)
Other expenses	8	(473)		(436)
Profit/(loss) before finance costs and tax		(766)		450
Finance costs		(1)		(1)
Profit /(loss) before tax		(767)		449
Income tax expense	9	-		-
Group profit/(loss) after tax		(767)		449
Attributable to:
Equity holders of the Company		(767)		449
Earnings/(loss) per share - (basic and diluted)	17	(0.02p)		0.01p

  Consolidated Balance Sheet

		As at 31 August 2008		As at 31 August 2007
	Notes	£'000		£'000
Non-current assets
Investments held at fair value through profit or loss	11	17,790		14,718
Loan recoverable	12	-		3,766
		17,790		18,484
Current assets
Loan recoverable - current portion	12	3,708		-
Receivables	13	369		947
Cash and cash equivalents	14	26,264		32,920
		30,341		33,867
Total assets		48,131		52,351
Current liabilities
Payables	15	197		3,650
Net assets		47,934		48,701
Equity
Share capital	16	500		500
Share premium		47,752		47,752
Unrealised investment revaluation reserve		(886)		352
Retained earnings		568		97
Equity attributable to equity holders of the Company		47,934		48,701
Net asset per share	17	£0.96		£0.97

  Cash Flow Statement

	Consolidated		Company
	For the year ended 31 August 2008	Period from 16 May 2006 to 31 August 2007	For the year ended 31 August 2008	Period from 16 May 2006 to 31 August 2007
	£'000	£'000	£'000	£'000
Cash inflow from operating activities
Profit/(loss) before taxation	(767)	449	885	676
Adjustments for :
Interest Income	(1,754)	(885)	(1,327)	(794)
Dividend Income	(191)		-	-
Unrealised (gain)/ loss on investments	1,238	(352)	-	-
Net changes in working capital:
Decrease/(increase) in receivables	863	(947)	(1,151)	(431)
Increase/(decrease) in payables	(3,453)	3,650	(207)	342
Net cash generated /(used in) from operations	(4,064)	1,915	(1,800)	(207)
Cash flow from investing activities
Purchase of investments	(4,310)	(18,715)	-	-
Proceeds from sale of investments	-	4,349	-	-
Investment in subsidiaries	-	-	(9,250)	(18,985)
Interest received	1,664	885	1,322	794
Dividend received	54	-	-	-
Net cash used in investing activities	(2,592)	(13,481)	(7,928)	(18,191)
Proceeds from issue of shares capital	-	48,252	-	48,252
Issue of loan	-	(3,766)	-	-
Net cash from financing activities	-	44,486	-	48,252
Net increase/(decrease) in cash and cash equivalents	(6,656)	32,920	(9,728)	29,854
Cash and cash equivalents at beginning of period	32,920	-	29,854	-
Cash and cash equivalents at end of period	26,264	32,920	20,126	29,854

Statement of Changes in Equity

Consolidated

	Share Capital	Share Premium	Unrealised Investment Revaluation Reserve	Retained Earnings	Total
	£'000	£'000	£'000	£'000	£'000
Balance as at 16 May 2006	-	-	-	-	-
Issue of share capital	500	-	-	-	500
Premium on shares issued	-	49,500	-	-	49,500
Expenses relating to the issue of shares	-	(1,748)	-	-	(1,748)
Profit for the period				449	449
Unrealised gains reserve transfer	-	-	352	(352)	-
Balance as at 31 August 2007	500	47,752	352	97	48,701
Balance as at 1 September 2007	500	47,752	352	97	48,701
Loss for the year	-	-	-	(767)	(767)
Net unrealised loss reserve transfer	-	-	(1,238)	1,238	-
Balance as at 31 August 2008	500	47,752	(886)	568	47,934

  Notes to Consolidated Financial Statements

6. REVENUE

	2008		2007
	£’000		£’000
Investing operations:
Interest income	1,754		885
Dividend income	191		-
	1,945		885

7. NET GAINS/ (LOSSES) ON FINANCIAL ASSETS 

AT FAIR VALUE THROUGH PROFIT AND LOSS

	2008		2007
	£’000		£’000
Unrealised gain on investments	985		352
Unrealised loss on investments	(2,223)		-
Realised loss on investments	-		(8)
	(1,238)		344

8. OTHER EXPENSES

		2008		2007
		£'000		£'000
Administration charges		291		321
Directors' Fees*		124		42
Auditors' remuneration**		58		73
		473		436

\* The amount paid to the highest paid director
during the year was as follows:
		2008		2007
		£'000		£'000
Directors' fees		25		9
The Company has no other employees
**Auditor's remuneration comprises:
Audit of Company's annual accounts		27@		25
Audit of subsidiaries' annual accounts		11		13
Review of Group's half yearly accounts		20		-
Non-audit services		-		35
		58		73
@includes £ 8 thousand paid for previous year's audit services

9. TAXATION

The Company is resident for Isle of Man income tax purposes, being subject to the standard rate of income tax, which is currently 0%. No provision for taxation has, therefore, been made. As the Company is wholly owned by non-residents, along with being listed on a recognised stock exchange, it will not be subject to the Distributable Profits Charge or the Attribution Regime for Individuals, which will commence from 1 September 2008.

The Mauritian entities are Global Business License Category 1 (GBL1) companies in Mauritius and under the current laws and regulations liable to pay income tax on their net income at a rate of 15%. The entities are, however, entitled to a tax credit equivalent to the higher of actual foreign tax suffered and 80% of the Mauritian tax payable in respect of their foreign source income thus reducing their maximum effective tax rate to 3%. No Mauritian capital gains tax is payable on profits arising from the sales of securities, and any dividends and redemption proceeds paid by the entities to their member will be exempt in Mauritius from any withholding tax.

Deferred taxation

No deferred tax asset has been recognised in respect of the tax loss carried forward in Tusk Investments Fund 1 and Tusk Investments Fund 2 as no taxable income is probable in the foreseeable future. 

A reconciliation of the income tax expense based on accounting profit and the actual income tax expenses is as follows: 

	2008		2007
	£’000		£’000
Analysis of charge for the year
Income tax expense	-		-
Total tax expense	-		-
Profit / (loss) before taxation	(767)		449
Less: Profit attributable to Elephant Capital Plc	(885)		(676)
Profit / (loss) attributable to Mauritian entities	(1,652)		(227)
Enacted rate for Isle of Man	0%		0%
Enacted rate for Mauritius	15%		15%
Taxation at standard rate in Isle of Man	-		-
Taxation at standard rate in Mauritius	(248)		(34)
Tax effect of:
Exempt income	(13)		(1)
Non-taxable items	186		(53)
Non-allowable expenses	25		34
Unutilised tax loss for the period	50		54
Income tax charge	-		-

10. INVESTMENTS IN SUBSIDIARIES

Company		2008		2007
		£'000		£'000
Company shares in group undertakings:
Tusk Investments Fund 1(formerly Promethean India Investments Fund 1)		6,985		6,985
Tusk Investments Fund 2 (formerly Promethean India Investments Fund 2)		21,250		12,000
		28,235		18,985

The Group comprises of the following entities 

	Incorporation	Proportion	Proportion
	(or registration)	Ownership	Of voting
Name of Subsidiary	And operation	Interest	Power
Promethean India LP*	England	100%	100%
Tusk Investments Fund 1	Mauritius	100%	100%
Tusk Investments Fund 2	Mauritius	100%	100%
Elephant Investments (General Partner) Limited	England	100%	100%
Elephant Investments (Carry) Limited	British Virgin Islands	100%	100%
Elephant Capital Services Limited	England	100%	100%
Elephant Capital LLP	England	90%	90%

* The name of the entity has been changed to Elephant Capital LP with effect from 9 September 2008 pursuant to the separation agreement with Promethean Plc.

11. INVESTMENTS AT FAIR VALUE THROUGH PROFIT OR LOSS

The Group has invested in a portfolio of listed and unlisted securities of businesses operating in India. The quoted securities are listed on Bombay Stock Exchange ('BSE') and National Stock Exchange ('NSE'), India and value of such listed investments has been determined using the closing bid market prices on NSE as at the reporting date. The Group has investments in Obopay Inc, an unquoted company incorporated in United States of America. The Group invested further £511 thousand on 24 April 2008 as part of the fourth round of funding of Obopay Inc. The fair value of the unquoted investment has been determined using the 'price of recent investment' methodology in accordance with International Private Equity and Venture Capital Guidelines. 

 

	Note	2008		2007
		£’000		£’000
Listed investments
Balance brought forward		11,536		-
Additions		3,799		11,853
Transfer from unlisted investment*		2,453		-
Disposal		-		(661)
		17,788		11,192
Unrealised gain/ (loss)	7	(2,223)		344
	A	15,565		11,536

Details of the Group's investments are as under:

* includes investments in Mahindra Forgings Mauritius Ltd which was amalgamated into Mahindra Forgings Limited, a Company listed on Bombay Stock exchange and National Stock Exchange, India. The investment is held through a 40% stake in Promethean 1 Limited, an unquoted company incorporated in the Republic of Mauritius. The investments in Promethean 1 Limited is not considered as an investment in associate under IAS 28 (Investments in Associates) as the standard is not applicable to investments in associates held by venture capital organizations, mutual funds and similar entities. Accordingly the Company has classified the investment as 'investments held at fair value through profit or loss', and accounted for in accordance with IAS 39 (Financial Instruments: Recognition and Measurement).

		2008		2007
		£’000		£’000
Loan recoverable – non current portion		-		3,766
Loan recoverable – current portion		3,708		-

 

12. LOANS RECOVERABLE

 

The Company through one of its subsidiaries granted loan to Krammer Holdings Pte. Ltd. The loan was utilised to acquire 60% share capital of Promethean 1 Limited. The loan is secured via a share pledge agreement and deed of guarantee. The fair value of the collateral secured via the share pledge agreement was £2,152 thousand at the balance sheet date, and the rights attached thereto can be utilised by the Group on default under the loan agreement. The loan carries interest charge at the rate of 9 percent per annum. Carrying value of the loan is not materially different from its fair value.

13. RECEIVABLES 

	Group	Company	Group	Company
	2008	2008	2007	2007
	£'000	£'000	£'000	£'000
Prepayments	14	12	23	410
Other receivables (including dividend and interest receivable)	355	1,575	924	21
	369	1,587	947	431

None of the receivables are past due as at the balance sheet date

14.CASH AND CASH EQUIVALENTS

	Group	Company	Group	Company
	2008	2008	2007	2007
	£'000	£'000	£'000	£'000
Cash at bank	26,264	20,126	32,920	29,854
	26,264	20,126	32,920	29,854

15. PAYABLES 

	Group	Company	Group	Company
	2008	2008	2007	2007
	£'000	£'000	£'000	£'000
Payables	52	30	3,538	58
Accruals	145	105	112	284
	197	135	3,650	342

16. SHARE CAPITAL

		2008		2007
		£'000		£'000
Share capital
Authorised 300,000,000 ordinary shares of 1p each		3,000		3,000
Issued and fully paid 50,000,000 ordinary
shares 1p each		500		500

The Company's share capital comprises ordinary shares. Rights attached to ordinary shares include the right to vote at the Company's AGM and receive future dividends. On listing, warrants were allocated to initial placees of the ordinary shares in the ratio of one warrant for every five ordinary shares. Each warrant entitles the holder to subscribe for ordinary shares at a subscription price of £1.25 (being a 25% premium to the placing price), from 2007 to 2012, within 30 days of the Company's interim unaudited accounts being sent to shareholders, subject to certain conditions. Further the Company allocated warrants to Elephant India Limited ('EIL Warrants) in respect of investment by the co-investment vehicle. The EIL Warrants are subject to the same terms and conditions as the warrants issued under the placing. 

Copies of the warrant instrument are available on application to the Company's registered office.

17. EARNINGS AND NET ASSET VALUE PER SHARE

	2008		2007
Profit / (loss) attributable to ordinary shareholders	(767,366)		£449,483
Issued ordinary shares	50,000,000		50,000,000
Earnings/ (Loss) per share (basic and diluted)	(0.02p)		0.01p
Net assets value per share (statutory)	£0.96		£0.97
Net asset value per share (statutory) is based on the statutory net assets at year / period end	47,934,261		£48,701,526

There were no options in issue to dilute the earnings per share. Details of warrants issued are disclosed in note 16. The dilutive effect of these warrants have not been considered in calculation of earnings per share as the exercise price of the warrants was more than the market price of the ordinary share.

18. EVENTS AFTER THE BALANCE SHEET DATE

Subsequent to the period end, there has been a fall in the value of Company's investments due to decline in the Indian Stock Market. This has increased the unrealised loss on investments by £6047 thousand, resulting in the following valuations:

Investments	Value at 31 August 2008	Purchases/	Unrealised	Value at 4 February 2009
		(Sales)	Loss
EIH Limited*	9,846	(2,052)	(2,249)	5,545
Nitco Tiles Limited	2,497		(1,657)	840
Mahindra Forgings Limited	2,104		(1,210)	894
Project Einstein@	1,118	595	(931)	782
	15,565		(6,047)	8,061

*On 5 December 2008, the Company sold 1,300 thousand shares of EIH Limited for an aggregate consideration of £2,052 thousand. The partial exit resulted in a realized gain of £323 thousand. Subsequent to the disposal, value of Company's aggregate holding in EIH Limited was 4,062 thousand shares, valued at £5,545 thousand.

@In October and November 2008, the Company invested further £595 thousand in Project Einstein by purchasing 1,606 thousand shares from the secondary market. Post this additional investment, the value of Company's aggregate investment in Project Einstein is 2,606 thousand shares valued at £782 thousand.

ENDFR EAPAPESXNEFE

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Related Shares:

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