21 December 2022

Infrastructure India plc

("IIP" or the "Company" and together with its subsidiaries, the "Group")

Interim results for the six months ended 30 September 2022

Infrastructure India plc, an AIM quoted infrastructure fund investing directly into assets in India, announces its unaudited interim results for the six months ended 30 September 2022.

Financial performance

·     As at 30 September 2022, the value of the Group's investments was £194.1 million (£168.7 million as at 31 March 2022; £263.1 million as at 30 September 2021). The value increased against the previous period as a result of foreign exchange rates, principally GBP:USD. The comparable rates were GBP:USD 1.12 as at 30 September 2022 against GBP:USD 1.31 as at 31 March 2022.

·    Net liabilities were £85.7 million as at 30 September 2022 (net liabilities of £46.8 million as at 31 March 2022 and net assets of £72.1 million as at 30 September 2021). The value increased against the previous period due to the effect of changes in foreign exchange rates on the Group's borrowings, which are primarily USD denominated.

·    As announced in the annual results on 21 December 2022, the net liability position is based on agreed preliminary terms with a third party and the ascribed net minimum consideration for IIP's largest holding, Distribution Logistics Infrastructure Limited ("DLI"). The proposed transaction is structured in two parts, with a deferred consideration - not included in the valuation - which the Directors expect to have a positive impact on net assets in due course. The Board will be making further announcements as and when appropriate.

          Enquiries:

JOINT STATEMENT FROM THE CHAIRMAN AND THE CHIEF EXECUTIVE

We would like to report Infrastructure India plc's ("IIP", the "Company" and together with its subsidiaries, the "IIP Group") unaudited interim results for the six-month period ended 30 September 2022.

Net liabilities were £85.7 million as at 30 September 2022, compared to £46.8 million as at 31 March 2022 and net assets of £72.1 million as at 30 September 2021. The net liability position was based on agreed preliminary terms with a third party and the ascribed net minimum consideration for IIP's largest holding, Distribution Logistics Infrastructure Limited ("DLI"). The proposed transaction is structured in two parts, with a deferred consideration which the Directors expect to have a positive impact on net assets in due course. The increase in Group net debt was also a contributor to the net liabilities.

The first half of the fiscal year was dominated by discussions and due diligence around the sale of both Indian Energy Limited ("IEL") and DLI. Both assets have interest from multiple buyers and further announcements will be made as and when appropriate.

Company liquidity and financing

As at 30 September 2022, the Group had gross cash resources of £3.0 million (£0.3 million as at 31 March 2022; £2.0 million as at 30 September 2021).

On 31 August, IIP announced that the term loan provided by IIP Bridge Facility was increased by US$6 million to meet urgent operational overheads at DLI as well as Group working capital needs.

As announced in the Group's Annual Results published 21 December 2022, the Board have been active in securing sources of financing to ensure the Group has adequate funding to continue to meet liabilities as they fall due.  The sale of IEL is expected to complete, although AVSR Constructions, who have unconditionally agreed to purchase IEL, has requested some additional time. Consequently, there are other potential buyers for IEL undertaking due diligence. IIP has also agreed preliminary terms for the sale of DLI in a dual component transaction and further announcements with regard to this will be made as and when appropriate. IIP has also commenced discussions with several other potential buyers and due diligence in underway.

The Company's creditors remain supportive, and it is expected the consideration due to the Company from the anticipated sale of IEL will be partially utilised towards settlement of such creditors.

The Board will continue to update shareholders on discussions around the sale of DLI and IEL as well as other developments across IIP's portfolio.

Tom Tribone & Sonny Lulla

20 December 2022

Consolidated Statement of Comprehensive Income
for the period ended 30 September 2022

The accompanying notes form an integral part of the financial statements.

Consolidated Statement of Financial Position
as at 30 September 2022

These financial statements were approved by the Board on 20 December 2022 and signed on their behalf by

Sonny Lulla                                                       Graham Smith

Chief Executive                                                 Director

Consolidated Statement of Cash Flows
for the period ended 30 September 2022

The accompanying notes form an integral part of the financial statements.

Selected notes to the interim consolidated financial statements
for the six months ended 30 September 2022

1. General information

The Company is a closed-end investment company incorporated on 18 March 2008 in the Isle of Man as a public limited company. The address of its registered office is 55 Athol Street, Douglas, Isle of Man.

The Company is listed on the AIM market of the London Stock Exchange. 

The Company and its subsidiaries (together the Group) invest in assets in the Indian infrastructure sector, with particular focus on assets and projects related to energy and transport.

The Company has no employees.

2. Basis of Preparation

These condensed consolidated interim financial statements for the six-month period ended 30 June 2022 have been prepared in a form consistent with that which will be adopted in the Group's annual accounts having regard to the accounting standards applicable to such annual accounts namely International Financial Reporting Standards ('IFRS') and should be read in conjunction with the Group's last annual consolidated financial statements as at and for the year ended 31 March 2022 ('last annual financial statements'). They do not include all of the information required for a complete set of financial statements prepared in accordance with IFRS Standards. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual financial statement.

These interim consolidated financial statements were approved by the Board of Directors on 20 December 2022.

3. Going Concern

As disclosed within the 31 March 2022 consolidated financial statements, the Board has concluded that the Group cannot be considered a going concern and as a result a basis other than that of going concern has been adopted. The investments holdings in DLI and IEL have been moved to available for sale and carried at the expected realisable amounts as per IFRS 5. Other than this, there is no impact to the financial information as result of changing to this basis as investments were already being carried at realisable amounts.

The financial statements do not include any provision for the future costs of except to the extent that such costs were committed at the end of the reporting period.

4. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries and subsidiary undertakings). Control is achieved where the Company has power over an investee, exposure or rights to variable returns and the ability to exert power to affect those returns.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated Statement of Comprehensive Income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

The Directors consider the Company to be an investment entity as defined by IFRS 10 Consolidated Financial Statements as it meets the following criteria as determined by the accounting standard;

·      Obtains funds from one or more investors for the purpose of providing those investors with investment management services;

·      Commits to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both; and

·      Measures and evaluates the performance of substantially all of its investments on a fair value basis.

As an investment entity under the terms of the amendments to IFRS 10 Consolidated Financial Statements, the Company is not permitted to consolidate its controlled portfolio entities.

5. Significant accounting policies

The accounting policies applied by the Group in these interim consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 March 2022.

6. Critical accounting estimates and assumptions

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense.

Actual results may differ from these estimates. In preparing these interim consolidated financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 March 2022.

During the six months ended 30 September 2022 management reassessed its estimates in respect of:

Valuation of financial instruments

The Group holds investments in several unquoted Indian infrastructure companies. The Directors' valuations of these investments, as shown in note 11 and note 12, are based on a discounted cash flow methodology or recent transaction prices, prepared by the Company's Asset Manager (Franklin Park Management). The valuations are inherently uncertain and realisable values may be significantly different from the carrying values in the financial statements.

The methodology is principally based on company-generated cash flow forecasts and observable market data on interest rates and equity returns. The discount rates are determined by market observable risk free rates plus a risk premium which is based on the phase of the project concerned.

7. Financial risk management policies

The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 31 March 2022.

8. Other administration fees and expenses

9. Investment management, advisory and valuation fees

On 14 September 2016, the Company entered into a revised and restated management, valuation and portfolio services agreement (the "New Management Agreement") with Franklin Park Management, LLC ("Franklin Park" or the "Asset Manager"), the Company's existing asset manager, to effect a reduction in annual cash fees payable by IIP to the Asset Manager as at that time. The other terms of the New Management Agreement are unchanged from those of the prior agreement between the parties.

Under the New Management Agreement, the Asset Manager is entitled to a fixed annual management fee of £5,520,000 per annum (the "Annual Management Fee"), payable quarterly in arrears. In addition to the Annual Management Fee, the Asset Manager was issued with 605,716 new ordinary shares in the Company annually (the "Fee Shares"). The Fee Shares were issued free of charge, on 1 July of each calendar year for the duration of the New Management Agreement, which had an effective termination date of 30 September 2020.

Fees including the accrued Fee Shares and consulting fees for the period ended 30 September 2022 were £2,760,000 (30 September 2021: £2,962,000).

10. Basic and diluted earnings per share

Basic earnings/(loss) per share are calculated by dividing the loss attributable to shareholders by the weighted average number of ordinary shares outstanding during the year.

There is no difference between basic and diluted earnings/(loss) per share.

11. Investments - designated at fair value through profit or loss

Investments, consisting of unlisted equity securities, are recorded at fair value as follows:

(i) Shree Maheshwar Hydel Power Corporation Ltd ("SMH")

(ii) India Hydropower Development Company LLC ("IHDC")

As noted in the 31 March 2022 financial statements, it is assumed that SMH has no contribution to IIP's valuation.

The investments in IHDC has been fair valued by the Directors as at 31 March 2022 using discounted cash flow techniques, as described in note 6. The discount rate adopted for the investments is the risk free rate (based on the Indian government 10-year bond yields) plus a risk premium of 2.67% for IHDC (2021: 3.02%)

All the investments valued using discounted cash flow techniques are inherently difficult to value due to the individual nature of each investment and as a result, valuations may be subject to substantial uncertainty. There is no assurance that the estimates resulting from the valuation process will reflect the actual sales price even where such sales occur shortly after the valuation date.

12. Assets held for sale

The disposal groups are made up of the following:

13. Share capital and share premium

As detailed in note 9, the Asset Manager was entitled 605,716 new ordinary shares in the Company annually (the "Fee Shares"). The Fee Shares were issued free of charge, on 1 July of each calendar year for the duration of the New Management Agreement up to the effective termination date of 30 September 2020. The Company has issued a total of 1,817,148 ordinary shares to the Asset Manager.

14. Net asset value per share

The NAV per share is calculated by dividing the net assets attributable to the equity holders at the end of the period by the number of shares in issue. 

15. Group entities

Since incorporation, for efficient portfolio management purposes, the Company has established or acquired the following subsidiary companies, with certain companies being consolidated and others held at fair value through profit or loss in line with the Amendments to IFRS 10 Consolidated Financial Statements:

16. Loans and borrowings

The Group has three fully drawn facilities. A working capital facility provided to the Company by GGIC Ltd. ("GGIC") (the "Working Capital Loan"); an unsecured bridging loan facility provided to the Company by Cedar Valley Financial (the "Bridging Loan"); and a secured term loan provided to IIP's wholly owned Mauritian subsidiary, Infrastructure India Holdco, by IIP Bridge Facility LLC (the "IIP Bridge Facility").

The Working Capital Loan was provided to the Company in April 2013 by GGIC in an amount of US$17 million and increased to US$21.5 million in September 2017. The Working Capital Loan originally carried an interest rate of 7.5% per annum on its principal amount. From 1 April 2019, the loan carries an interest rate of 15% per annum and matures on 30 June 2023.

The Bridging Loan was provided to the Company in June 2017 by Cedar Valley Financial in an amount of US$8.0 million and was subsequently increased in multiple tranches to US$64.1 million in March 2019.  The Bridging Loan originally carried an interest rate of 12% per annum on its principal. From 1 April 2019, the loan carries an interest rate of 15% per annum and matures on 30 June 2023.

The IIP Bridge Facility LLC was originally provided to IIP's wholly owned Mauritian subsidiary, Infrastructure India Holdco in April 2019 in multiple tranches totalling US$105 million, of which $7.5 million was used to repay the Bridging Loan in accordance with its terms. The IIP Bridge Facility is a secured four-year term loan. The loan accrues interest daily in a manner that yields a 15% IRR to the Lender and matures on 1 April 2023.

On 31 August 2022, IIP announced that the term loan provided by IIP Bridge Facility was being increased by US $6 million to meet urgent operational overheads at DLI as well as Group working capital needs.

17. Related party transactions

Management services and Directors' fees

Franklin Park Management LLC ("FPM") is beneficially owned by certain Directors of the Company, namely Messrs Tribone, Lulla and Venerus, and receives fees in its capacity as Asset Manager as described in note 9.

Loans and borrowings

See note 16 regarding loans from GGIC and Cedar Valley Financial, including interest charged in the year and accrued at the year-end.

18. Subsequent events

IIP agreed preliminary terms with a third party and the ascribed net minimum consideration for Distribution Logistics Infrastructure Limited ("DLI") has been the valuation applied for DLI in the accounts for the period. The proposed transaction is structured in two parts, with a deferred, performance-based, and contingent consideration, which does not contribute to the assigned DLI asset value and which the Directors expect to have a positive impact on net assets in due course. IIP has also commenced discussions with several other potential buyers of DLI and due diligence in underway.

The sale of IEL is expected to complete, and although the buyer, AVSR, has requested some additional time, there are other potential buyers for IEL undertaking due diligence

19. Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.