Inspiration Hlt Regulatory News (IHC)

23 Feb 2007 07:02

India Hospitality Corp.23 February 2007 FOR IMMEDIATE RELEASE 23 February 2007 INDIA HOSPITALITY CORP India Hospitality Corp files consolidated financial statements for the period ending December 31, 2006. New York, NY. - February 23, 2007 - India Hospitality Corp. (LSE: IHC), todayannounced that it has filed consolidated financial statements for the period May12, 2006 (inception) to December 31, 2006. For the period from May 12, 2006 toDecember 31, 2006, the company generated an operating loss of $844,525 andpre-tax profit of $1,266,390 or $0.08 per share. As of December 31, 2006, thecompany had $99.6 million in cash. About India Hospitality Corp. India Hospitality Corp. is a Special Purpose Acquisition Corporation (SPAC)created to initially pursue partnerships only of an Indian business, businessesor assets focused on the hospitality, leisure, tourism, travel and relatedindustries, including but not limited to hotels, resorts, timeshares, servicedapartments and restaurants. While the company's potential partnerships couldcome from any of these sectors, the primary focus will be on the hospitalityindustry. It expects to pursue these initiatives initially only in India. In August of 2006, the company raised $100 million in an IPO and is listed onthe Alternative Investment Market, "AIM", a market operated by the London StockExchange, under the ticker IHC. The company is sponsored by Hayground Cove AssetManagement LLC, a New York-based investment management firm with approximately$2.0 billion under management. Jason Ader, the company's Chief ExecutiveOfficer and Chairman of the Board is the Chief Executive Officer of HaygroundCove Asset Management. Mr. Ader has a strong background in the leisure andhospitality industries. Prior to founding Hayground Cove, he was Senior ManagingDirector at Bear Stearns & Co., Inc., supervising coverage of the lodging andhospitality industry and was a top ranked analyst by Institutional InvestorMagazine's All-American Research Team for nine consecutive years. This press release contains certain forward-looking statements. Statementscontaining expressions such as "may," "will," "project," "might," "expect,""believe," "anticipate," "intend," "could," "would," "estimate," "potential,""continue," or "pursue," or the negative or other variations thereof orcomparable terminology used in India Hospitality Corp.'s press releases and inits reports filed with the Securities and Exchange Commission are intended toidentify forward-looking statements. These forward-looking statements, which areincluded in accordance with the Safe Harbor provisions of the Private SecuritiesLitigation Reform Act of 1995, may involve known and unknown risks,uncertainties and other factors that may cause India Hospitality Corp.'s actualresults and performance in future periods to be materially different from anyfuture results or performance suggested by the forward-looking statements inthis press release. Although India Hospitality Corp. believes the expectationsreflected in such forward-looking statements are based upon reasonableassumptions, it can give no assurance that actual results will not differmaterially from these expectations. These risks, uncertainties and other factorsare discussed in India Hospitality Corp.'s final prospectus, copies of which areavailable from the company upon request Readers are cautioned not to place unduereliance on forward-looking statements, which speak only as of the date of thispress release. India Hospitality Corp. does not undertake, and specificallydisclaims any obligation, to publicly release the result of any revisions thatmay be made to any forward-looking statements to reflect the occurrence ofanticipated or unanticipated events or circumstances after the date of suchstatements. FOR FURTHER INFORMATION CONTACT: Investor Relations Contact:Integrated Corporate RelationsWilliam Schmitt203-682-8265 Buchanan CommunicationsRichard Darby, Isabel Podda+44 207 466 5000 Chairman's Statement Business Outlook in India The Indian financial markets are at or near all-time highs as economic andcorporate governance reforms have become the focal point of governmental andregulatory authorities. We continue to believe India is positioned to become oneof the world's most influential economic centers and is gaining a significantrole in the world economy. • The Indian economy is growing at more than 8 percent a year, the second fastest growth in the world after China's 10 percent. • India's middle class of 300 million is the size of the total population of the United States and 10 times that of Canada, and is expected to grow to 500 million by 2010. The increasing purchasing power of the middle class has largely been a direct result of India's recent growth. • India's economy is projected to surpass Italy's within a decade, Britain's within 15 years and within 30 years is projected to be the third largest economy in the world after the United States and China. • India's economic prospects are so bright that foreigners have invested in more than 1,000 Indian companies- a record for any country outside the U.S. We believe economic growth is likely to remain strong this year, driven bybooming investment and consumption, and most Indian economists expect 8% to 10%growth over the next five years. We believe that the Indian hospitality industry, including industries related totravel, restaurants and hotels, will sustain continued growth. • Airline Sector. India's airline sector is undergoing major changes with the rise of private Indian airlines. India's move towards an 'open skies' policy will continue to make air travel more available and affordable, benefiting both foreign and private Indian airlines. Strong growth in India's domestic airline passenger market is expected on account of the increasing purchasing power of the middle class and increasing supply from low cost carriers. Four budget airlines entered the Indian market in 2005 and four more in 2006. With more seats available, consumers can expect cheaper air fares, and demand should rise. • Restaurant Sector. The rapid growth of the Indian economy has arguably benefited the restaurant sector the most. The surge in spending power for India's middle class has led to an explosion in the restaurant business and significant expansion across the country. • Hotel Sector. Demand for hotel rooms is soaring in India as its economy blossoms. India offers only 110,000 hotel rooms-China has 10 times as many, and the United States 40 times as many. The New York metropolitan region alone has about as many rooms as all of India. The demand for hotel rooms is likely to continue to outpace supply during the next five years. We believe that these positive trends in the industries in which we are pursuingacquisitions will translate into strong results once we complete an acquisition. Corporate Governance and Responsibilities India Hospitality Corp. believes in good principles of corporate governance inaccordance with AIM rules and best practice guidance and applies the guidance tothe extent that it is practical, given the current size and nature of ourbusiness. Certain disclosures may be limited due to the lack of substantialbusiness operations during the period. Risk Management India Hospitality Corp. has not commenced any trading or investment activitiesand consists primarily of approximately $97m of cash held in trust, pending aQualified Business Combination. When a Qualified Business Combination is completed, India Hospitality Corp. willeither amend its own risk management procedures or assume those of the acquiredbusinesses if they are of the standard required by the board. Otherwise theCompany will design and implement additional controls and procedures to mitigaterisk and these will be approved by the board. The directors feel that India Hospitality Corp. has adequate controls andprocedures around cash transactions and will consider the use of hedginginstruments such as derivatives contracts to mitigate currency and interest raterisk to the business as they commence trading. The board of directors comprises5 non-executive directors and 2 executive directors and has established anInvestment Committee to oversee and approve investments prior to seekingapproval from the board. The Company engages an asset manager, Hayground Cove Asset Management LLC, whois registered with the US Securities and Exchange Commission and meets internalcontrol requirements set by the Commission. The asset manager assists indetermining and managing the risks to the business primarily throughacquisitions. Remuneration Raj Nandiwada is the Executive Director for the Company. His services areengaged via Hayground as a consultant to the Company. Christa Short is adirector of the Company and also serves on the Investment Committee of theCompany. For their services to the Company during the year Raj Nandiwada andChrista Short are entitled to $75,000 each in compensation. No other compensation was awarded to any directors or executives of the Companyduring the year. Compensation to directors and executives is discretionary anddetermined by the board. Reasonable out of pocket expenses incurred by directorsand executives in relation to their services to the Company are reimbursed bythe Company. The directors have accepted responsibility for preparation of the financialstatements for the financial period which give a true and fair view of the stateof affairs of the Company and of the profit of the Company for that period. Inpreparing those financial statements, the directors accept responsibility for: • Selecting suitable accounting policies and then applying them consistently; • Making judgments and estimates that are reasonable and prudent; and • Preparing the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The directors accept responsibility for keeping proper accounting records whichdisclose with reasonable accuracy at any time the financial position of theCompany and to enable them to ensure that the financial statements comply withthe laws of the Cayman Islands. They also accept responsibility for safeguardingthe assets of the Company and hence for taking reasonable steps for theprevention and detection of fraud and other irregularities. Approved and signed for on behalf of the board. JASON N. ADER, CHAIRMAN INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF INDIA HOSPITALITY CORP. We have audited the consolidated financial statements of India Hospitality Corp.for the year ended 31 December 2006 which comprise Consolidated IncomeStatement, the Consolidated Balance Sheet, the Consolidated Cash Flow Statement,the Consolidated Statement of Changes in Equity and the related Notes 1 to 13.These consolidated financial statements have been prepared under the accountingpolicies set out therein. This report is made solely to the Company's members. Our audit work has beenundertaken so that we might state to the Company's members those matters we arerequired to state to them in an auditors' report and for no other purpose. Tothe fullest extent permitted by law, we do not accept or assume responsibilityto anyone other than the company and the company's members as a body, for ouraudit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditors The directors are responsible for preparing the Annual Report and theconsolidated financial statements in accordance with International FinancialReporting Standards (IFRS) as adopted by the European Union. Our responsibilityis to audit the consolidated financial statements in accordance withInternational Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the consolidated financial statementsgive a true and fair view and whether the consolidated financial statements havebeen properly prepared in accordance with Note 1 of the financial statements. We read other information contained in the Annual Report and consider whether itis consistent with the audited consolidated financial statements. The otherinformation comprises only the directors' report. We consider the implicationsfor our report if we become aware of any apparent misstatements or materialinconsistencies with the consolidated financial statements. Our responsibilitiesdo not extend to any other information. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing(UK and Ireland) issued by the Auditing Practices Board. An audit includesexamination, on a test basis, of evidence relevant to the amounts anddisclosures in the consolidated financial statements. It also includes anassessment of the significant estimates and judgments made by the directors inthe preparation of the group financial statements, and of whether the accountingpolicies are appropriate to the group's circumstances, consistently applied andadequately disclosed. We planned and performed our audit so as to obtain all the information andexplanations which we considered necessary in order to provide us withsufficient evidence to give reasonable assurance that the consolidated financialstatements are free from material misstatement, whether caused by fraud or otherirregularity or error. In forming our opinion we also evaluated the overalladequacy of the presentation of information in the consolidated financialstatements. Opinion In our opinion: • the consolidated financial statements give a true and fair view, in accordance with IFRS as adopted by the European Union, of the state of the group's affairs as at 31 December 2006 and of its profit for the year then ended; • the consolidated financial statements have been properly prepared in accordance with Note 1. Ernst & Young LLPRegistered auditorLondon21 February 2007 CONSOLIDATED INCOME STATEMENTFor the period 12 May 2006 to 31 December 2006 For the period from 12 May 2006 to 31 December 2006 Note $ Administrative expenses 4 (844,525) Operating loss (844,525)Finance revenue 2,110,915 Profit before tax 1,266,390Income tax - Profit for the period attributable to equity holders of the parent 1,266,390 Note $ per shareEarnings per share for continuing operationsBasic, for profit for the year attributable to ordinary equity holders of 7 0.08the parent CONSOLIDATED BALANCE SHEETAs at 31 December 2006 31 December 2006 Note $ASSETSCurrent assetsCash 3 99,592,211Other receivables 6 430,447Prepaid expenses 127,298Total assets 100,149,956 EQUITY & LIABILITIESEquity attributable to equity holders of the parentCalled up share capital 8 21,334Share premium account 98,523,828Retained profit 1,266,390Total equity 99,811,552 Current liabilitiesFinancial liabilities - loans due to related parties 9 6,000Accrued expenses 5 332,404Total liabilities 338,404Total equity and liabilities 100,149,956 CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the period 12 May 2006 to 31 December 2006 Share Capital Share premium Retained Total equity earnings $ $ $ $On incorporation - - - -Profit for the period - - 1,266,390 1,266,390Total income and expense for the period - - 1,266,390 1,266,390attributable to equity holders of the parentIssue of share capital 23,417 102,982,835 - 103,006,252Redemption of share capital (2,083) - - (2,083)Transaction costs recognised directly in equity - (4,459,007) - (4,459,007)As at 31 December 2006 21,334 98,523,828 1,266,390 99,811,552 CONSOLIDATED CASH FLOW STATEMENTFor the period 12 May 2006 to 31 December 2006 For the period from 12 May 2006 to 31 December 2006 $Operating activitiesOperating loss (844,525)Working capital adjustments:Increase in prepaid expenses (127,298)Increase in accrued expenses 332,404Net cash flow from operations (639,419) Investing activitiesInterest received 1,680,468Cash flows from investing activities 1,680,468 Financing activitiesIssue of share capital 103,006,252Redemption of share capital (2,083)Proceeds from borrowings 6,000AIM admission expenses (4,459,007)Cash flows from financing activities 98,551,162Net increase in cash 99,592,211Cash at incorporation -Cash at 31 December 2006 99,592,211 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Company information and basis of preparation Company information The consolidated financial statements of India Hospitality Corp. for the yearended 31 December 2006 were authorized for issue in accordance with a resolutionof the directors on 13 February 2007. The Company was incorporated in the CaymanIslands on 12 May 2006 and its shares are publicly traded on the AlternativeInvestment Market of the London Stock Exchange (IHC LN). As of 31 December 2006,the company had a wholly owned operating subsidiary incorporated in Mauritius.The Company expects to conduct business, including the making of acquisitions,through its Mauritius subsidiary. The principle activities of the Group aredescribed in Note 12. Basis of preparation The consolidated financial statements ("financial statements") have beenprepared on a historical cost basis and are presented in US dollars. Thefunctional currency of the Company is US dollars. Statement of compliance The consolidated financial statements of India Hospitality Corp. and all itssubsidiaries have been prepared in accordance with International FinancialReporting Standards (IFRS). Basis of consolidation All intra-group balances, transactions, income and expenses and profits andlosses resulting from intra-group transactions that are recognised in assets areeliminated in full. Subsidiaries are fully consolidated from the date ofacquisition, being the date on which the Group obtains control, and continue tobe consolidated until the date that such control ceases. 2. Summary of significant accounting policies Loans and borrowings Loans and borrowings are initially recognized at fair value less directlyattributable transaction costs. After initial recognition, loans and borrowingsare subsequently measured at amortised cost using the effective interest ratemethod. Cash Cash in the balance sheet comprises cash at bank and in hand. Taxation The Company is incorporated as a tax exempt company under Cayman Islands law andis not subject to any taxes in the Cayman Islands. No income tax is chargeableto the income statement or the statement of changes in equity in the currentperiod. Revenue recognition Revenue is recognized to the extent that it is probable that the economicbenefits will flow to the Company and the revenue can be reliably measured. Finance revenue Revenue is recognized as interest accrues (using the effective interest methodthat is the rate that exactly discounts estimated future cash receipts throughthe expected life of the financial instrument to the net carrying amount of thefinancial asset). Equity transaction costs Transaction costs directly attributable to the issue of share capital uponadmission to AIM are recorded in the share premium account. 3. Cash $ Cash in Trust Account (a)(b) 97,918,925Cash in Working Capital Account 1,673,286 99,592,211 a) Cash in the Trust Account is held in trust by the Trustee, ContinentalTransfer and Trust Company. The cash is restricted for use and is only releasedto the Company on the consummation of the Company's first approved businesscombination. If no business combination is consummated, the Trust Account willbe distributed solely to the Shareholders that participated in the Offering ofshares on Admission to AIM. Details of the potential distribution are outlinedin the AIM Admission Document dated July 26, 2006. The first $500,000 of accruedinterest was released from the Trust Account on September 20, 2006 andtransferred for use in the Working Capital account. b) Cash in the Trust Account was invested at an average annualized interest rateof approximately 5.30%. 4. Administrative Expenses $ Financial advisor fee (Banyan Tree Capital) 140,000Travel expenses 129,523Directors & officers insurance 90,927Sponsor fee (Hayground) 70,000Nomad fee (Deutsche Bank) 50,000Audit fee (Ernst & Young LLP) 102,404Remuneration to directors and officers 150,000Legal expenses 20,507Bank charges 786Investor relations fees 90,378 844,525 5. Accrued Expenses $ Due to Financial advisor 20,000Due to Sponsor 10,000Due to Nomad 50,000Due to auditors 102,404Due to directors and officers 150,000 332,404 6. Other receivables Other receivables comprise interest receivable on the trust and working capitalbank accounts. The credit risk in relation to this receivable is the default ofthe counterparty and the maximum exposure is the carrying value of thereceivable. 7. Earnings per share Earnings per share figures are calculated in accordance with IAS 33, Earningsper Share. Basic earnings per share amounts are calculated by dividing profitfor the period attributable to ordinary equity holders of the Company by theweighted average number of ordinary shares outstanding during the period. Thefollowing reflects the income and share data used in the total operations basicearnings per share computations: Profit attributable to equity holders of the parent $ 1,266,390Weighted average number of ordinary shares for basic earnings per share 15,995,351 There are no dilutive instruments in issue 8. Share Capital Authorised 31 December 2006 $200,000,000 ordinary shares of $0.001 200,000 Allotted, called up and fully paid 31 December 2006 $4,166,667 ordinary shares of $0.001 each 4,16717,166,667 units of $0.001 each 17,167 21,334 The Company was incorporated and registered in the Cayman Islands on 12 May2006. On incorporation, one subscriber share of $0.001 was issued at a price of$0.001. On 30 May 2006, 6,250,000 ordinary shares were issued at a price of$0.001 and one subscriber share was repurchased by the Company at $0.001. The Company will dissolve and promptly distribute the amount held in the trustaccount if the Company does not consummate a Qualified Business Combinationwithin 12 months after the Admission Date (or, if extended by a majority ofvotes cast at a general meeting of ordinary shareholders at which a quorum ispresent). A Qualified Business Combination is a business combination which,either by itself or when combined with all of our previous businesscombinations, has an aggregate Transaction Value of at least 50% of the initialamount held in the trust account. $96,750,002 was initially held in trust. A unit comprises 1 ordinary share and 2 warrants. The nominal value of theshares is $.001 and the warrants is nil. There are 34,333,334 warrantsoutstanding at December 31, 2006. Each warrant is exercisable for one ordinaryshare at $5. The warrants will become exercisable on the later of: 1) thecompletion of a Qualified Business Combination or 2) one year after theAdmission Date, if a business combination, but not a qualified businesscombination, has occurred before that date (or, if extended by a majority ofvotes cast at a general meeting of ordinary shareholders at which a quorum ispresent). All shares are ordinary shares and rank equally. Share capital: Share capital:At the beginning of the period -Issued during the period 23,416,667Redeemed during the period (2,083,333)At the end of the period 21,333,334 9. Loans due to related party $6,000 unsecured loan from Hayground Cove Asset Management LLC ("Hayground") Theloan is unsecured and bears no interest. The loan is repayable upon call byHayground. The fair value of the loan is not materially different to the bookvalue. 10. Related Party Disclosures The Company's Chairman and Chief Executive Officer, Mr. Jason Ader, is alsoChief Executive Officer of Hayground (and is also a major shareholder in that company). During the period, the Company entered into the following transactions with Hayground: The Company received a loan from Hayground as described in note 9. As described in note 11, Hayground has contracted contingently to provideservices to the Company. The directors and officers of the Company during the year and their shareholdingin the Company at year end were: Director ShareholdingJason Ader- Chairman and CEO (Executive Director)(1) -Andrew Sasson - Director and COO (Executive Director) 35,088Christa Short - Non-executive director 75,000Pawan Munjal - Non-executive director 35,088Anthony Juliano - Non-executive director 35,088Mavinder Puri - Non-executive director 35,088Rajeev Talwar - Non-executive director 35,088(2) (1) Mr. Jason Ader does not directly own any shares in the Company. He is thebeneficial owner of a proportion of the shares owned by funds in which heinvests and manages. The total amount of shares held by Hayground relatedcompanies and managed funds is 8,322,394. (2) held on his behalf by Hayground Cove. During the period Christa Short and Raj Nandiwana were entitled to $75,000 eachfor services to the Company. Raj Nandiwana is the Senior Vice President, NewBusiness Development engaged by the Company as a consultant and is consideredkey management personnel of the Company. During the period the Company purchased directors and officers insurance onbehalf of the directors and officers of the Company, refer to note 4. No furthershort-term employee benefits, post employment benefits, other long termbenefits, termination benefits or share based payments were paid or are payableat period end to directors or officers of the company. 11. Future Commitments The Company entered into the following agreements on 30 May 2006: Services Agreement Under this agreement, Hayground agreed to provide certain related administrativeservices to the Company for a monthly fee capped at $10,000. It has and willcontinue to: • Provide administrative services as may be required from time to time, including the administration of the Company's day-to-day activities, accounting and controller-related services; and • Make available to the Company the services of certain of Hayground's directors and other employees. Strategic Advisory agreement Under this agreement, Banyan Tree Capital Limited has been appointed exclusivestrategic advisor which will provide advisory services to the Company and itsMauritius subsidiary with regard to the acquisition of assets for a monthly feecapped at $20,000. As part of the consideration for its advisory services,Hayground is required to provide 166,667 shares out of their shares in theCompany to Banyan Tree Capital, subject to satisfaction of each of the followingconditions: • The completion of a Qualified Business Combination; • The date that is one year after the completion of a Qualified Business Combination (the"Trigger Date") has passed; and • Our ordinary share price is greater than 1.0x the Sensex hurdle rate on the Trigger Date or, if our ordinary share price is below the Sensex hurdle rate on the Trigger Date, the ordinary share price must have exceeded the Sensex hurdle rate for 20 consecutive trading days at any time prior to that date. The Sensex hurdle rate is defined as the Sensex index performance over the duration of time from the closing date of this offering to the Trigger Date. Banyan Tree will also be transferred additional ordinary shares equal in valueto US$700,000, based on the Strike Price (as defined below) at such timefollowing the Trigger Date, as our ordinary share price reaches a price that isequal to a 150% threshold above $6 offering price (the "Strike Price"). Themaximum number of shares transferred under this award is 46,667. The right ofBanyan Tree Capital to receive the ordinary shares will expire 36 months fromJuly 26, 2006. 12. Principal activities of the Group The Group intends to acquire, through one or more stock purchase, acquisitionsor other business combinations, businesses or assets in India focused on thehospitality, leisure, tourism, travel and related industries, including but notlimited to hotels, resorts, timeshares, services apartments and restaurants. The company has not commenced trading or investing activities during the year. 13. Interests in subsidiary undertakings During the period the company formed a new wholly owned subsidiary, IHCMauritius Corp. which is incorporated in Mauritius and has not commenced anytrading or investment activities. IHC Mauritius Corp. has issued 100 ordinaryshares with a nominal value of $1 each. This information is provided by RNS The company news service from the London Stock Exchange