PMEA.L Regulatory News (PMEA)

29 Apr 2008 07:01

PME African Infrastructure Opps PLC29 April 2008 29 April 2008 PME AFRICAN INFRASTRUCTURE OPPORTUNITIES PLC ("PME" or the "Company") Results for the period from 19 June 2007 (date of incorporation) to 31 December 2007 PME African Infrastructure Opportunities plc (AIM: PMEA.L; PMEW.L), aninvestment company established to invest in sub-Saharan African infrastructureand infrastructure related industries, announces its results for the period from19 June 2007 (date of incorporation) to 31 December 2007. Highlights • At the year end no investments had completed, however, as at 28 April 2008, the Company has committed up to US$46 million in two investment opportunities in the telecommunications sector, representing 27 per cent. of the net capital to be invested. o Early focus on the telecommunications sector, expected to benefit from spectacular increase in mobile penetration, linked to continued economic growth in sub-Saharan Africa • Opportunities in advanced stages of negotiation, covering another telecommunications opportunity and two opportunities within the transportation sector which, if completed, will commit a further US$49 million of equity (pre-gearing) • Further four opportunities in less advanced stages of negotiation, covering housing, energy and transportation, with total equity required of approximately US$75 million • Recent IMF Africa survey reports limited impact of global financial market turbulence in sub-Saharan Africa region and growth rates for 2008 projected at 6.5 per cent, with oil exporters expected to grow at slightly less than 10 per cent; economic outlook remains very favourable • NAV per share at year end of 97 cents David von Simson, Chairman of PME African Infrastructure Opportunities plc,said: "As one of the few, if not the only, listed overseas investment fund inthe sub-Saharan infrastructure market, we have made excellent progress inestablishing ourselves within that market. The nature of infrastructureinvestment, combined with the extra diligence and political analysis required toconduct business in an emerging market, has been a challenge well met by theinvestment team, and it is very pleasing to see the results of their effortsculminating in some interesting transactions as well as a very advancedpipeline." Further enquiries: Principle Capital on behalf of Anne Dalen +44 20 7240 3222PME InfrastructureManagers Limited Smith & Williamson Azhic Basirov +44 20 7131 4000Corporate Finance Limited Fairfax I.S. PLC James King +44 20 7598 5368 Bell Pottinger Dan de Belder +44 20 7861 3232 On behalf ofHelvetica (Isle of Man)Company Limited Clara Parisot +41 798 249 788 Note to Editors: - PME African Infrastructure Opportunities plc ('PME') is a company investing in sub-Saharan African infrastructure and infrastructure related industries. Its shares were admitted to AIM in July 2007 raising US$180.5 million. - PME was established to invest in sub-Saharan African infrastructure and infrastructure related industries with a view to generating attractive returns, principally through capital growth. It is targeting opportunities arising from years of under investment in sub-Saharan African infrastructure where that infrastructure will be instrumental in allowing the continent's economic development to continue to grow. - The Investment Manager is PME Infrastructure Managers Limited ("PMEIM"). The Investment Manager is responsible for identifying new investment opportunities. - PMEIM is a joint venture between Principle Capital Holdings S.A. (AIM: PCX.L), Unicos Partners LLP (holding company of the Helvetica Group of companies), Masazane Capital (Pty) Limited and the interests of Richard Bouma, CEO of PMEIM. Chairman's Statement These are our first results since the Company's admission to trading on AIM on12 July 2007, and I am pleased to welcome shareholders to the Company. The period to 31 December 2007, on which we report, covers a short timeframeprior to the Company having completed any investment and, therefore, thefinancial results warrant little comment at this stage. However, the mainhighlight for me is the excellent progress the Company is making in investingits capital. Since the year end, we have announced two significant transactions,with cumulative commitments of up to US$46 million, representing 27 per cent. ofthe net issue proceeds of the placing. The Company has three transactions underadvanced negotiation with commitments of up to a further US$49 million(pre-gearing) and another four transactions progressing well, with a potentialcommitment of a further US$75 million. During the period under review, the Company retained the funds raised (net ofexpenses) on deposit in US Dollars. Deposit interest earned averagedapproximately 4.9% per annum. At the year end, no investments had completed andaccordingly none is recognised on the balance sheet. After management andadministration fees and other expenses, the net profit for the period wasUS$1.854 million. The Company had no borrowings and, in line with its dividendpolicy stated at the time of admission, the Board is not proposing a dividend. On behalf of shareholders and the Board, I should like to thank the staff of ourInvestment Manager, both in Europe and in the field, for their hard work inoften difficult circumstances. David von SimsonChairman29 April 2008 Report of the Investment Manager PME African Infrastructure Opportunities plc ("PME") was admitted to trading onAIM on 12 July 2007, with the objective of investing in early stageinfrastructure and infrastructure related projects throughout sub-SaharanAfrica. Deal Flow The number of opportunities that have been reviewed by the Investment Managerand that also meet PME's investment criteria has been encouraging. TheInvestment Manager has reviewed some twenty four opportunities in thetelecommunications, energy, transportation, housing, mining and constructionsectors, the majority of which have been located in PME's ten focus countries.Of these twenty four, eight have been rejected as not meeting PME's investmentcriteria, further information is awaited on five, four are undergoing duediligence and seven have received approval from the Board of PME. Of theseseven, one opportunity was lost to a competing bid and another did not meet oneof the conditions imposed relating to country risk. Of the remaining five thathave received PME Board approval, two have been concluded and three are at veryadvanced stages of negotiation. Completed Transactions TMP Uganda As announced on 1 February 2008, PME completed its first transaction, in thetelecommunications sector, in Uganda, committing US$2.5 million with an optionto invest a further US$17.5 million. TMP Uganda is a telecommunications start up which has been awarded licences toprovide telecommunications services throughout Uganda. It aims to be the numberone broadband provider in the country by delivering high quality broadbandservices using a WiMax technology platform. PME's initial investment gives it acontrolling interest in TMP Uganda with 82% of the equity. TMP Uganda was established by TMP Management AS ("TMPM"), which remains ashareholder in the company as well as managing TMP Uganda through a managementservices agreement. TMPM is a Norwegian based spin-off of the multinationaltelecommunications giant, Telenor ASA and has a wealth of experience in buildingand managing large telecommunications networks in developing countries andparticularly Africa. Dovetel On 17 March 2008, PME announced its investment of up to US$26 million in Dovetel(T) Limited ("Dovetel") pursuant to which PME would acquire 65% of the equity inDovetel. Dovetel is a telecommunications start-up business in Tanzania which has receivedits national licence to provide telecommunications services throughout thecountry. Dovetel will deploy a fully converged next generation ("3G") networkand aims to deliver high quality broadband, data and voice services throughoutthe country using a CDMA technology platform. Dovetel has signed a managementservice contract with TMPM, the same company PME is working with in its Ugandaninvestment. TMP Uganda, Dovetel and the relationship with TMP are at the heart of PME'stelecommunications strategy. We believe that Uganda's and Tanzania's continuedeconomic development and the spectacular growth in mobile penetration rates areinextricably linked. By investing in the next phase of this growth, thesenetworks will bring IP-based voice, broadband and data connectivity to anincreasing number of the countries' populations. Transactions at advanced stages of negotiation following PME Board approval The early focus on telecommunications has been due, in part, to the fact thattwo of the potential transactions were at an advanced stage of development whenpresented to PME and also that the sector, being well regulated, facilitatesexecution. For this reason, one of the other transactions approved by the Boardof PME is in the same sector but full details will only be provided when theconditions precedent to its completion have been met. It comprises the roll-outof a GSM network in the Great Lakes region of East Africa under which PME hasundertaken to provide US$10 million of funding. Given the diversification criteria set out in PME's Admission Document, theremainder of the investments that have either been approved by the Board of PMEor are under due diligence by the Investment Manager fall outside thetelecommunications sector. Of these, the most advanced transactions that havereceived PME Board approval are in the transportation sector. The first of these is the acquisition of a 50 per cent. stake in a South Africanprovider of operations and maintenance (O&M) services to companies and railoperators in South and sub-Saharan Africa. It owns, inter alia, a fleet oflocomotives that it "wet leases" to its clients providing crew, maintenance andinsurance in addition to the unit. The strategy behind the acquisition is toutilise this company as an expert service provider to support PME's acquisitionof stakes in railway concessions in sub-Saharan Africa. The second transaction complements the first and comprises the acquisition of 12new General Electric locomotives that will be "dry leased" to the abovereferenced company for it to lease on, on a "wet" basis to its clients. The leadtime to order locomotives of this type is 18-24 months and with the rapiddevelopment of rail traffic in Africa to support the export of mineral resourcesbeing required in increasing quantities by the emerging economies of China andIndia, as well as the traditional markets in North America and Europe, webelieve that the demand for such traction power will increase in a similarmanner. Indeed, a number of the locomotives have already been prospectivelyplaced out on work. We are in discussions with a number of lenders to provideappropriate gearing in respect of the purchase of these locomotives, althoughPME is likely to commit to the purchase prior to securing the gearing. Status of remaining transactions under Investment Manager due diligence Transportation: The two transactions in this sector, described above, whilejustified in themselves, would also provide support to the opportunities we areactively working on for PME to acquire stakes and a management role in two railconcessions. The first, in East Africa, comprises rail networks in two adjoining countrieslinking a port to their interiors and to neighbouring countries. The concessionis privately held and while significant operational improvements have beenimplemented, the business is in need of senior management to provide strategicdirection and financial expertise, additional capacity on the network and aninjection of capital. We are working with the current stakeholders to win themandate to provide these resources but there is interest from competing entitiesso the outcome is not guaranteed. The second concession was mentioned in the Admission Document and discussionswith the key stakeholders are continuing with the assistance of our localpartners. We have submitted a proposal, supported by Letters of Interest frompotential strategic and financial partners, to the government entity that hasoversight of this concession and the Company appears to be well positioned tosecure an attractive mandate but, again, there is competition from anothercompany so success is not certain. Housing: We have signed a memorandum of understanding with a company in Angolato create a joint venture to develop housing in the country to be occupied bythe employees of international oil companies. PME would have a 75 per cent.stake in this company and discussions are currently underway to negotiate afinancial structure that will provide an acceptable risk profile for theCompany. Energy: We are also negotiating a memorandum of understanding with the Ministryof Energy, Water and Mines in an East African country covering a proposal forPME to build, own and operate a 20 MW hydro electric power project. Once the MOUis signed we will work with a strategic partner to revalidate the existingfeasibility study, agree a construction programme and operating procedures. Pipeline To date, the Company has completed transactions with a potential equitycommitment of up to US$46 million to two projects, has given approval for finalnegotiations on a further three projects, which would take the total commitmentsto up to US$95 million (before any gearing on the locomotives mentioned above).The four further projects under negotiation mentioned above, if completed, wouldincrease those total commitments to up to US$170 million, or, substantially allof the net proceeds raised last July. While concentrating on completing theabove referenced projects, we are continuing to review other opportunities in anumber of sectors, some of which appear to be very interesting. We arecomfortable that deal flow will continue to be strong for the foreseeablefuture. Outlook Despite gloomy forecasts for the world economy, mostly attributable to theafter-shock of the US sub-prime credit crisis, the economic outlook forsub-Saharan Africa remains solid. Provided commodity prices remain strong, theEconomist Intelligence Unit estimates that growth in the region should buck theglobal trend in 2008 with output rising a record 6.4%. The IMF's recent Africasurvey underlined this report with projection of 6.5% GDP growth in sub-SaharanAfrica and in the oil exporting countries this averages a staggering 10%. One of the significant contributors to this growth is the continuing strongdemand for raw materials by China and India with Africa being one of the primarysources. A report by the Financial Times in January 2008 estimated that thereare some 800 Chinese state companies operating in Africa at the current time. A summit, at the beginning of April 2008, between India and delegations from 14African countries culminated with the signing of the Delhi Declaration and theAfrica-India Framework for Cooperation, setting out cooperation in agriculture,food security, technology, trade, energy and education. Further, Indian PrimeMinister Manmohan Singh announced duty-free access to Indian markets for theworld's 50 least-developed countries, 34 of which are located in Africa. PrimeMinister Singh also said India would more than double the size of credit linesto projects in Africa, from $2.15 billion in 2003 to 2004 to $5.4 billion in2008 to 2009, and boost grants and aid to the continent to $500 million in thenext five to six years. From PME's perspective, the increased Chinese and Indian interest in Africa ispositive, not least because it has a tendency to encourage internationalinvestors who have previously been wary of the continent, to look at it moreseriously. It is certainly evident that since PME listed last July we have metwith a number of financial institutions who are increasingly interested ininvesting a portion of their funds into Africa. Obviously, Africa will still experience problems as recent events in Kenya andthe continuing crises in Zimbabwe, Darfur and eastern DRC clearly demonstrate.However, at two and a half times the size of the United States, seven times thesize of India and comprising over 40 countries, sub-Saharan Africa is a largeand diverse region in which a growing number of governments are showing improvedpolitical stability and a willingness to implement sound economic policies.These developments, together with increased capital inflows and debt reliefwill, in our opinion, provide increasing opportunities for investment ininfrastructure related projects that have the potential to generate superiorrisk adjusted returns. PME Infrastructure Managers LimitedInvestment Manager Income Statement For the period from 19 June 2007 (date of incorporation) to 31 December 2007 Note US$'000---------------------------------- ------- -------------- Revenue ----------------------------------- ------- -------------- Investment Manager's fees 5 (1,025)Other administration fees and expenses 6 (1,075)---------------------------------- ------- --------------Administrative expenses (2,100)---------------------------------- ------- -------------- Operating loss (2,100)---------------------------------- ------- -------------- Finance income 3,966Foreign exchange loss (9)Finance costs (3)---------------------------------- ------- --------------Net finance income 3,954---------------------------------- ------- -------------- Profit before income tax 1,854---------------------------------- ------- -------------- Income tax expense ----------------------------------- ------- --------------Profit for the period attributable to equity holders ofthe Company 1,854---------------------------------- ------- -------------- Earnings per share (cent) for profit attributable tothe equity holders of the Company during the period ------- ------------------------------------------------Basic 7 1.027---------------------------------- ------- --------------Diluted 7 0.995---------------------------------- ------- -------------- All items in the above statement derive from continuing operations. All incomeis attributable to the equity holders of PME African InfrastructureOpportunities plc. Balance SheetAT 31 December 2007 Note US$'000-------------------- ------ -------------AssetsCurrent assetsTrade and other receivables 8 648Cash and cash equivalents 174,666-------------------- ------ -------------Total assets 175,314-------------------- ------ ------------- EquityCapital and reserves attributable to equity holders ofthe Company:Issued share capital 9 1,805Distributable reserve 173,102-------------------- ------ -------------Total equity 174,907-------------------- ------ ------------- Current liabilitiesTrade and other payables 12 407-------------------- ------ -------------Total liabilities 407-------------------- ------ -------------Total equity & liabilities 175,314-------------------- ------ ------------- Statement of Changes in Shareholders' Equity Notes Share capital Share premium Distributable Total reserve US$'000 US$'000 US$'000 US$'000----------- ------ ---------- ---------- ---------- ---------- Balance at 19 - - - -June 2007Shares issuedin the period 9 1,805 178,645 - 180,450Share issueexpenses 9 - (7,397) - (7,397)Cancellationof sharepremium 9 - (171,248) 171,248 -Profit for theperiod - - 1,854 1,854----------- ------ ---------- ---------- ---------- ----------Balance at 31December 2007 1,805 - 173,102 174,907----------- ------ ---------- ---------- ---------- ---------- Cash Flow Statement For the period from 19 June 2007 (date of incorporation) to 31 December 2007 Note US$'000--------------------- ----- -------------Operating activitiesProfit for the period 1,854Adjustments for:Investment income (3,966)Foreign exchange loss 9--------------------- ----- -------------Operating loss before changes in working capital (2,103) Increase in trade and other receivables (386)Increase in trade and other payables 407--------------------- ----- -------------Cash outflows from operating activities (2,082)--------------------- ----- ------------- Investing activitiesInterest received 3,704--------------------- ----- -------------Cash inflows from investing activities 3,704--------------------- ----- ------------- Financing activitiesProceeds from the issue of ordinary share capital (net ofissue costs) 173,053--------------------- ----- ------------- Cash inflows from financing activities 173,053--------------------- ----- ------------- Net increase in cash and cash equivalents 174,675Cash and cash equivalents at 19 June 2007 -Foreign exchange losses on cash and cash equivalents (9)--------------------- ----- -------------Cash and cash equivalents at 31 December 2007 174,666--------------------- ----- ------------- Notes to the Financial Statements 1 General Information PME African Infrastructure Opportunities plc (the "Company") was incorporatedand registered in the Isle of Man under the Isle of Man Companies Acts 1931 to2004 on 19 June 2007 as a public limited company with registered number 120060C.The Company's investment objective is to achieve significant total return toinvestors through investing in various infrastructure projects and relatedopportunities across a range of countries in sub-Saharan Africa. The Company's investment activities are managed by PME Infrastructure ManagersLimited (the "Manager"). The Company's administration is delegated to GalileoFund Services Limited (formally Anglo Irish Fund Services Limited) (the"Administrator"). The registered office of the Company is 3rd Floor, BritanniaHouse, St George's Street, Douglas, Isle of Man, IM1 1EJ. Pursuant to a prospectus dated 6 July 2007 there was an original placing of upto 180,450,000 Ordinary Shares with Warrants attached on the basis of 1 Warrantfor every 5 Ordinary Shares. Following the close of the placing on 12 July 2007180,450,000 Shares and 36,090,000 Warrants were issued. The Shares of the Company were admitted to trading on the Alternative InvestmentMarket of the London Stock Exchange ("AIM") on 12 July 2007 when dealings alsocommenced. The Company's agents and the Manager perform all significant functions.Accordingly, the Company itself has no employees. Financial Year End The financial year end of the Company is 31 December in each year. The firstaccounting period of the Company is for the period ended 31 December 2007. 2 Summary of Significant Accounting Policies The principal accounting policies applied in the preparation of these financialstatements are set out below. 2.1 Basis of preparation These financial statements have been prepared in accordance with, and complywith, International Financial Reporting Standards (IFRS). These comprisestandards and interpretations approved by the International Accounting StandardsBoard ("IASB") together with interpretations of the International AccountingStandards and Standing Interpretations Committee approved by the InternationalAccounting Standards Committee ("IASC") that remain in effect, to the extentthat IFRS have been approved by the European Union. The financial statementshave been prepared on a going concern basis under the historical costconvention. The preparation of financial statements in conformity with IFRSrequires the use of accounting estimates. It also requires management toexercise its judgement in the process of applying the Company's accountingpolicies. The directors consider that no critical accounting estimates orassumptions have been used in the preparation of the financial statements. Standards, amendments and interpretations to existing standards that are not yeteffective, have not been early adopted and are relevant to the Company The following standards, amendments and interpretations to existing standardshave been published and are mandatory from the company's accounting periodsbeginning on or after 1 January 2008 or later periods, but the Company has notearly adopted them: • IAS 23 (Amendment), 'Borrowing costs' (effective from 1 January 2009). The amendment to the standard is still subject to endorsement by the European Union. It requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs will be removed. The Company will apply IAS 23 (Amended) from 1 January 2009 but is currently not applicable to the company as there are no qualifying assets. 2.2 Foreign currency translation The Company's investment objective is to achieve significant total return toinvestors through investing in various infrastructure projects and relatedopportunities across a range of countries in sub-Saharan Africa. Whilst each ofthese countries has its own currency, the US Dollar is anticipated to be thecurrency in which all investments are made ("The functional currency") and as aresult the currency in which the annual results are presented ("Thepresentational currency"). Monetary assets and liabilities denominated in foreign currencies as at the dateof these financial statement are translated to US Dollar at exchange ratesprevailing on that date (31 December 2007: GBP:USD 1.9973). Expenses aretranslated to US Dollar based on the average exchange rates prevailing duringthe period. All resulting exchange differences are recognised in the incomestatement. 2.3 Revenue and expense recognition Deposit interest income is recognised in the financial statements on atime-proportionate basis using the effective interest method. The effectiveinterest method is a method of calculating the amortised cost of a financialasset and of allocating the interest income over the period. Expenses are accounted for on an accruals basis. 2.4 Segmental reporting The Company's objective is to invest in various infrastructure projects across arange of countries in sub-Saharan African. During the period, the Company hasbeen operating as one segment as it has made no investments. No additionaldisclosure is included in relation to segment reporting as the Company'sactivities are limited to one business and geographic segment. 2.5 Financial assets The Company has one category of financial assets: loans and receivables. TheCompany's loans and receivables comprise 'trade and other receivables' and 'cashand cash equivalents' (notes 2.6 and 2.7). 2.6 Trade and other receivables Trade and other receivables are initially stated at fair value and subsequentlymeasured at amortised cost using the effective interest method. 2.7 Cash and cash equivalents Cash and cash equivalents comprise cash deposited with banks held with originalmaturities of less than three months. 2.8 Trade and other payables Trade and other payables are recognised initially at fair value and subsequentlyat amortised cost using the effective interest method. 2.9 Taxation The Company is resident for taxation purposes in the Isle of Man and is subjectto income tax at a rate of zero per cent. A corporate charge is payable, whichamounted to £250 in the 2007/2008 tax year. 2.10 Share capital Ordinary shares are classified as equity. Incremental costs directlyattributable to the issue of new shares are shown in equity as a deduction, netof tax, from the proceeds. 3 Risk Management The Company's activities expose it to a variety of financial risks: market risk(including currency risk and price risk), credit risk, liquidity risk and cashflow interest rate risk. Risk management is carried out by the Managers under policies approved by theBoard of Directors. Market price risk The Company is not exposed to market pricing risk as it invests purely in cash.See interest rate risk below. Foreign exchange risk The Company's operations are conducted in jurisdictions which may generaterevenue, expenses, assets and liabilities in currencies other than US Dollars.As a result, the Company is subject to the effects of exchange rate fluctuationswith respect to these currencies. The currency giving rise to this risk isprimarily Pound Sterling. The Company's policy is not to enter into any currency hedging transactions. The table below summaries the Company's exposure to foreign currency risk as at31 December 2007: ----------------------- ---------- --------- --------- Assets Liabilities Net Assets US$'000 US$'000 US$'000---------------------- ----------- ---------- ---------US Dollar 175,249 (209) 175,040Pound Sterling 65 (198) (133)---------------------- ----------- ---------- ---------Total 175,314 (407) 174,907---------------------- ----------- ---------- --------- Credit risk Credit risk is the risk that a counterparty to a financial instrument will failto discharge an obligation or commitment that it has entered into with theCompany. The maximum exposure to credit risk is represented by the carrying amount ofeach financial asset in the balance sheet. Management does not expect anycounterparty to fail to meet its obligations. Cash transactions and balances arelimited to high-credit-quality financial institutions. Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meetingobligations associated with financial liabilities. The Company maintains sufficient cash balances for working capital requirements. Interest rate risk The Company's interest rate risk arises from the cash held in interest bearingaccounts at floating rates or short term deposits of one month or less. Trade and other receivables and payables are interest-free and have settlementdates within one year. An increase/decrease in 25 basis points in interest yields would result in anincrease/decrease in the profit for the period of approximately US$203,000. Capital Risk Management The Company's primary objective when managing its capital base is to safeguardthe Company's ability to continue as a going concern in order to provide returnsfor shareholders and benefits for other stakeholders. Consistent with others in the industry, the Company intends to leverage itscapital structure through the use of commercial borrowing and will endeavor tosecure such finance for individual portfolio investments on a non-recourse basiswhere practicable. The overall level of commercial borrowings on the Company's portfolio, at thedate on which any such borrowing is incurred, is expected to generate a debt:equity ratio in the region of 70:30 although the Directors may from time to timereview this ratio in the light of changing market circumstances and theparticular investments being made by the Company in order to maintain theoptimum level of gearing. In order to maintain or adjust the capital structure, the Company may issue newshares or liquidate investments to reduce borrowings. As at 31 December 2007, the Company did not have any debt finance. 4 Preliminary (Formation) Expenses The estimated total costs and expenses payable by the Company in connection withthe Placing and Admission (including professional fees, the costs of printingand the other fees payable including commission payable to the Placing Agent)was estimated as equal to 4.02% of the gross amount raised based on the Placingbeing fully subscribed. The actual total amount of preliminary expenses paid wasUS$7,397,085 representing 4.10% of the gross amount raised. This has beencharged to equity as share issue expenses. In accordance with the terms of the initial Placing, the Placing Agent receivedfrom the Company commission equal to 3% of the aggregate value of the amountraised by the Placing. In addition, for the initial Placing the Placing Agentreceived a corporate finance fee of £50,000. 5 Investment Manager Fees Annual fees The Investment Manager receives a management fee of 1.25% per annum of the grossasset value of the Company from Admission, payable quarterly in advance andsubject to a cap of 3% per annum of the net asset value of the Company. The Manager is also entitled to recharge to the Company all and any costs anddisbursements reasonably incurred by it in the performance of its dutiesincluding costs of travel save to the extent that such costs are staff costs orother internal costs of the Investment Manager. Accordingly, the Company isresponsible for paying all the fees and expenses of all valuers, surveyors,legal advisers and other external advisers to the Company in connection with anyinvestments made on its behalf. All amounts payable to the Investment Manager bythe Company are paid together with any value added tax, if applicable. Annual management fees payable for the period ended 31 December 2007 amounted toUS$1,025,279. Performance fees The Investment Manager is entitled to a performance fee of 20% of the net incomeand capital cash returns to the Company or any subsidiary in respect of the saleor partial sale, refinancing or restructuring of an investment in aninfrastructure project ("relevant investment") provided that the "Project test"has been passed. For these purposes, the Project test will be passed if theCompany or any subsidiary has received in cash the return of all its cashinvested in a relevant investment and a return equivalent to an internal rate ofreturn of 12% on such cash. 80% of the performance fee calculated will be payable to the Investment Managerwithin 30 days of the receipt of the relevant returns by the Company. Thebalance will be paid at the same time into an escrow account invested in moneymarket deposits. At the end of the financial period ending on 31 December 2010 and at the end ofeach financial period thereafter the Total Return will be calculated and thetotal performance fee will be calculated as 20% of the Total Return multipliedby the weighted average number of Ordinary Shares in issue during the period,provided that the Total Return exceeds the NAV test, being the proceeds of thePlacing Shares increased at a rate of 12% per annum on an annual compound basisfrom the date of Admission to the Relevant End Date. Total return is thedifference between the net asset value per Ordinary Share as at the lastbusiness day of the relevant financial period and the net proceeds of theplacing shares divided by the number of placing shares. Performance fees payable for the period ended 31 December 2007 amounted toUS$nil. 6 Other Administration Fees and Expenses US$'000----------------------------- -------------------Audit 30Directors' Remuneration 144Other expenses 901----------------------------- -------------------Other administration fees and expenses 1,075----------------------------- ------------------- Included within other administration fees and expenses are the following: Nominated Adviser As Nominated Adviser to the Company for the purposes of the AIM Rules, theNominated Adviser receives a Nominated Adviser fee of £30,000 (plus VAT) perannum payable quarterly in advance. The total fee payable for the period ended31 December 2007 amounted to US$33,680. Broker fees As Broker to the Company for the purposes of the AIM Rules, the Broker receivesan annual retainer of £50,000 (plus VAT) payable half yearly in advance with thefirst payment becoming due on 1 January 2008. Custodian fees The Custodian receives a fixed monthly fee of £875 payable quarterly in arrears.The fee payable in the period ended 31 December 2007 is US$11,059. Administrator and Registrar fees The Administrator receives a fee of 10 basis points per annum of the net assetsof the Company between £0 and £50 million; 8.5 basis points per annum of the netassets of the Company between £50 and £100 million and 7 basis points per annumof the net assets of the Company in excess of £100 million, subject to a minimummonthly fee of £4,000 and a maximum monthly fee of £12,500 payable quarterly inarrears. The Administration fee payable by the Company for the period ended 31 December2007 is US$83,379. The Administrator provides general secretarial services to the Company, forwhich it receives a minimum annual fee of £5,000. Additional fees, based on timeand charges, will apply where the number of Board meetings exceeds four perannum. For attendance at meetings not held in the Isle of Man, an attendance feeof £750 per day or part thereof will be charged. The fees payable by the Companyfor general secretarial services for the period ended 31 December 2007 isUS$5,965. The Administrator may utilise the services of a CREST accredited registrar forthe purposes of settling share transactions through CREST. The cost of thisservice will be borne by the Company. The CREST service provider is entitled toreceive an annual registration fee from the Company of £2 per Shareholderaccount subject to an annual minimum charge of £4,500. The fees payable by theCompany for the services provided by CREST in the period ended 31 December 2007is US$9,339. Directors' Remuneration The maximum amount of remuneration payable to the Directors permitted under theArticles of Association is £200,000 per annum. The Directors are each entitledto receive reimbursement of any expenses incurred in relation to theirappointment. The Directors fees payable by the Company for the period ended 31 December 2007is US$145,954 and Directors insurance cover payable is US$87,373. Other expenses In addition to the fees above, there are legal fees, professional fees,directors insurance and other sundry expenses payable by the Company. Theseother expenses total US$753,903 payable in the period ended 31 December 2007. 7 Basic and Diluted Earnings per Share (a) Basic Basic earnings per share are calculated by dividing the profit attributable toequity holders of the Company by the weighted average number of ordinary sharesin issue during the period. 2007----------------------------- ------------------- Profit attributable to equity holders of the Company 1,854(US$'000)Weighted average number of ordinary shares in issue 180,450(thousands) ------------------------------------------------Basic earnings per share (cent per share) 1.027----------------------------- ------------------- (b) Diluted Diluted earnings per share is calculated by adjusting the weighted averagenumber of ordinary shares outstanding to assume conversion of all dilutivepotential ordinary shares. The company has one category of dilutive potentialordinary shares: warrants. A calculation is done to determine the number ofshares that could have been acquired at fair value (determined as the averageannual market share price of the company's shares) based on the proceeds thatwould be received assuming all the warrants are exercised. The number of sharescalculated as above is compared with the number of shares that would have beenissued assuming the exercise of the warrants. 2007----------------------------- -------------------Profit attributable to equity holders of the Company 1,854(US$'000) ------------------------------------------------ Weighted average number of ordinary shares in issue 180,450(thousands)Adjustments for:Warrants 5,961----------------------------- -------------------Weighted average number of ordinary shares for dilutedearnings per 186,411share (thousands) ------------------------------------------------Diluted earnings per share (cent per share) 0.995----------------------------- ------------------- 8 Trade and Other Receivables US$'000------------------------ -------------Receivable bank interest 262Prepaid expenses 227Sundry debtors 159------------------------ -------------Trade and other receivables 648------------------------ ------------- 9 Share Capital Ordinary Shares of 1c each Number US$------------------------ ------------- -------------Authorised 500,000,000 5,000,000Issued 180,450,000 1,804,500------------------------ ------------- ------------- C Shares of US$1 each Number US$------------------------ ------------- -------------Authorised 5,000,000 5,000,000Issued - ------------------------- ------------- ------------- At incorporation the authorised share capital of the Company was US$10,000,000divided into 500,000,000 ordinary shares of US$0.01 each and 5,000,000 C Sharesof US$1.00 each. The holders of ordinary shares are entitled to receive dividends as declaredfrom time to time and are entitled to one vote per share at meetings of theCompany. The holders of C Shares are entitled to one vote per share at the meetings ofthe Company. The C Shares will be converted into Ordinary shares on the approvalof the Directors. On conversion each C share will be sub-divided into 100 CShares of US$0.01 each and will be automatically converted into New Ordinaryshares of US$0.01 each. On 12 July 2007, the Company raised a gross amount of US$180,450,000 followingthe admission of the Company's ordinary shares to the Alternative InvestmentMarket ("AIM"). The Company placed 180,450,000 Ordinary Shares of US$0.01 parvalue, at an issue price of US$1.00 per share, and 36,090,000 warrants on a 1warrant per 5 ordinary shares basis. A registered holder of a Warrant has the right to subscribe for Ordinary Sharesof US0.01 each in the Company in cash on 30 April in any of the years 2008 to2012 for a price of US$1.25 each. 10 Share Premium US$'000------------------------ ------------------------Share premium arising on issue of ordinary shares 178,645Transaction costs on issue of ordinary shares (7,397)Transfer to distributable reserves (171,248)------------------------ ------------------------As at 31 December 2007 ------------------------- ------------------------ The Company's initial share premium has arisen on the issue of the Company'sordinary shares and represents the difference between the issue price of US$1.00and the par value of US$0.01 per share. Related transaction costs have been deducted from the proceeds. On 21 December 2007 the value of the Share Premium account was cancelled andtransferred to distributable reserves following the approval of the applicationto the High Court in the Isle of Man. 11 Net Asset Value per Share Net assets attributable to equity holders of the Company (US$) 174,906,553Shares in issue 180,450,000----------------------------------- -------------NAV per share (US$) 0.97----------------------------------- ------------- The NAV per share is calculated by dividing the net assets attributable toequity holders of the Company by the number of ordinary shares in issue. 12 Trade and Other Payables US$'000------------------------ -------------Administration fees payable 41Audit fee payable 30CREST service provider fee payable 4Custodian fee payable 5Directors fee payable 111Other sundry creditors 216------------------------ ------------- 407------------------------ ------------- 13 Contingent Liabilities and Commitments There were no contingent liabilities or commitments as at the balance sheetdate. 14 Related Party Transactions Parties are considered to be related if one party has the ability to control theother party or to exercise significant influence over the other party in makingfinancial or operational decisions. The Directors of the Company are considered to be related parties by virtue oftheir influence over making operational decisions. See Note 6 for fees payableto the Directors in the period. Brian Myerson, a director of the Company, is chief executive officer ofPrinciple Capital Group and is joint chairman of the Investment Manager, PMEInfrastructure Managers Limited. Principle Capital Group is the joint owner ofthe Investment Manager. Fees payable to the Investment Manager are disclosed inNote 6. Lawrence Kearns, a director of the Company, is non-executive director of theAdministrator. Fees payable to the Administrator during the period are disclosedin Note 6. 15 Post Balance Sheet Events On 1 February 2008, the Company announced the TMP Uganda transaction whichincludes a commitment to invest $2.5 million in a wireless telecommunicationsstart-up in pilot project in Uganda. In April 2008, the Ugandan regulatoryauthority approved the acquisition by the Company of an 82% equity stake in TMPUganda Limited and to date a total of $895,000 of the $2.5 million has beenadvanced. On 17 March 2008, the Company announced the Dovetel transaction which includes acommitment to invest up to $26.0 million in a wireless telecommunicationsstart-up in Tanzania. In April 2008, the Tanzania Communications RegulatoryAuthority issued an invoice totalling $1,118,760 for the necessary NationalLicence & Spectrum and the Company duly settled it on behalf of Dovetel (T)Limited "Dovetel" and by doing so, secured its 65% equity stake in Dovetel. 16 Copies of Annual Report The full audited accounts for the period ended 31 December 2007 will be sent to shareholders and will be available from the Company's registered office at Third Floor, Britannia House, St George's Street, Douglas, Isle of Man IM1 1JE. 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