215197 Eredene pp01-pp19/media/Files/E/Eredene/Annual Reports/results/annual-results-28-jul...•...

EREDENE CAPITAL PLC INVESTING IN INDIA’S INFRASTRUCTURE EREDENE CAPITAL PLC INVESTING IN INDIA’S INFRASTRUCTURE

ANNUAL REPORT & ACCOUNTS31 MARCH 2009

10 FINSBURY SQUARE7TH FLOOR LONDONEC2A 1AD

TEL: +44 (0)20 7448 8000

FAX: +44 (0)20 7149 9832

WWW.EREDENE.COM

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215197 Eredene Cover 7/21/09 11:26 AM

DIRECTORS

Sir C J Benson

The Hon C W Cayzer

D A Coltman

A J N King

N M Naik

G D Varley

SECRETARY & REGISTERED OFFICE

G D Varley ACA

7 Pilgrim Street

London, EC4V 6LB

COMPANY NUMBER

5330839

AUDITORS

BDO Stoy Hayward LLP

55 Baker Street

London, W1U 7EU

WEBSITE

www.eredene.com

SOLICITORS

Faegre & Benson LLP

7 Pilgrim Street

London, EC4V 6LB

NOMINATED ADVISER & BROKER

Numis Securities Limited

10 Paternoster Square

London, EC4M 7LT

REGISTRARS

Neville Registrars Limited

18 Laurel Lane

Halesowen, B63 3DA

COMPANY INFORMATIONANNUAL REPORT & ACCOUNTS 2009

1 Highlights

2 Chairman’s statement

5 Investment portfolio summary

6 Review of investments

15 Board of directors

16 Report of the directors

18 Statement of directors’ responsibilities

19 Report of the independent auditors

20 Consolidated income statement

21 Consolidated balance sheet

22 Consolidated statement of changes in equity

23 Consolidated cash flow statement

24 Notes forming part of the consolidated financial statements

39 Company balance sheet

40 Notes forming part of the company financial statements

215197 Eredene Cover 7/21/09 11:26 AM

1HIGHLIGHTS

ANNUAL REPORT & ACCOUNTS 2009

• Eredene Capital PLC (“Eredene”, “Eredene Group”) reports continued progress in its nineinvestments in India

• Significant milestones achieved in transforming greenfield sites into revenue generatingbusinesses

• Three investee companies are revenue generating and a fourth is taking sales deposits

• One investee company paid its first dividend to Eredene less than two years afterconstruction began on its greenfield site

• All investee companies are forecast to be revenue generating by the end of 2010

• Cash balances of £26.2m at 31 March 2009 (2007: £48.6m)

• Cash balances equate to 10.7p per share (2007: 19.9p)

• No debt at Eredene Capital PLC level and only non-recourse to Eredene Capital PLC debt atIndian investee company level

• Loss for the 15 month period of £6.4m (2007: profit of £0.2m) includes non-cash movementof £5.1m following revaluations

• Net Asset Value attributable to equity shareholders of 21.9 pence per share as at 31 March2009 (2007: 24.1p)

215197 Eredene pp01-pp19 7/21/09 11:30 AM Page 1

2 CHAIRMAN’S STATEMENT


During the period, Eredene received its first

dividend from an investment company, Sattva

Vichoor CFS, which was paid less than two

years after the start of construction. We are

confident that we have developed our

investee companies in India to a stage where

we can expect all of them to be earning

revenue by the end of 2010.

The Eredene Group specialises in investing in

India’s infrastructure, and has made

investments in three Container Freight

Stations (“CFS”), an Inland Container Depot

(“ICD”), a Third Party Logistics (“3PL”)

warehousing and distribution operation, two

Logistics Parks, an IT office infrastructure

complex and a mass low-cost housing

project.

Three of the investments are generating

revenue and a fourth is taking sales deposits.

Of the remainder, all are expected to be

revenue generating by the end of 2010.

The investment portfolio is concentrated on

the Eredene Group’s expertise in ports,

maritime services, logistics and warehousing,

but it is also diversified to a prudent degree

with urban infrastructure projects comprising

an affordable housing project and a modern IT

office infrastructure project. The portfolio is

also spread strategically across India’s major

economic centres and geographic zones.

Eredene has established strong local

partnerships in India, including an exclusive

joint venture partnership in nine eastern States

with shipping and tea conglomerate Apeejay

Surrendra Group, with whom we have made

two joint investments. The Eredene Group has

also made second investments with its

partners in Gujarat State, Contrans Logistic,

and with Eredene’s partners in Tamil Nadu

State, the Sattva Business Group – testament

to the strength of these relationships.

Looking ahead, Eredene has identified a

pipeline of additional investments, both with

its existing partners and with other potential

joint venture partners.

The Eredene Group has sufficient cash in

hand to progress all of its current investments.

Going forward, one of the options to grow

Eredene is for it to manage third party funds.

Work continues in Europe, the Gulf and Asia

to raise a second and independent private

fund which would be managed by Eredene, to

invest in the pipeline of additional investments

that have been identified and evaluated by our

team in Mumbai.

India’s political outlook is increasingly stable

following the May 2009 parliamentary

elections, which consolidated the Congress

Party coalition’s hold on power. With healthy

growth rates, India remains an attractive

investment destination in the current global

economic climate.

FINANCIAL HIGHLIGHTS

The Company changed its accounting reference

date from 31 December to 31 March during the

period. This change was made to align the

Company’s accounting reference date with

those of its subsidiaries and investee

companies in India. During the 15 month period

to 31 March 2009, Eredene made a loss of

£6.4m (2007: profit of £0.2m) representing

2.61p per share (2007: gain of 0.08p per

share). As at 31 March 2009, the Group had

cash balances of £26.2m (2007: £48.6m)

representing 10.7p per share (2007: 19.9p) and

a Net Asset Value (“NAV”) attributable to equity

shareholders of £53.7m (2007: £59.0m)

representing 21.9p per share (2007: 24.1p).

IN CHALLENGING MARKET CONDITIONS, I

AM PLEASED TO REPORT CONTINUED

PROGRESS TOWARDS ACHIEVING OUR

MEDIUM TERM GOAL OF TRANSFORMING

ALL NINE OF OUR INVESTMENTS IN INDIA

INTO REVENUE GENERATING

BUSINESSES.


3CHAIRMAN’S STATEMENT


As an investment company, Eredene’s

performance is primarily judged by the change

in its net asset value per share. Eredene’s

NAV per share has fallen by 9% in the

15 months to 31 March 2009, primarily due to

unrealised fair value adjustments. Ernst &

Young India performed an independent,

fair-value valuation exercise on Eredene’s

non-consolidated investments in India as at

31 March 2009 which led to a downwards fair

value adjustment of £5.1m (2007: gain of

£1.8m). Much of that adjustment was caused

by the decline in value of Matheran Realty due

to falling land prices in Mumbai. Whilst the fall

in NAV is disappointing, it compares

favourably to the fall in indices such as the

FTSE 100 which declined by 39% over the

same period.

SIGNIFICANT MILESTONES

Although there is still much work to be done,

Eredene has achieved significant milestones in

its goal of transforming each of its

investments from green field sites into revenue

generating businesses. During the year under

review:

• The CFS at Vichoor near Chennai in Tamil

Nadu State, Eredene’s first joint venture with

the Sattva Business Group, paid its maiden

dividend in March 2009.

• Land was acquired near Ennore Port, also in

Tamil Nadu State, for a second joint venture

CFS with the Sattva Business Group.

• Eredene’s joint venture CFS at Pipavav in

Gujarat State with Contrans Logistic has been

revenue earning since mid-2008 and achieved

record traffic in March 2009.

• Land was acquired and an operating

licence granted for an Inland Container Depot

at Baroda, also in Gujarat State, a second

project with Contrans Logistic.

• Construction started at Eredene’s two

Logistics Parks in east India, both part of a

joint venture with Apeejay Surrendra Group.

First revenues are expected by the end of

2009.

• In Q3 2009, MJ Logistic is set to open the

first phase of its sophisticated 549,000 square

feet warehousing operation featuring cold

storage, automated cargo handling and

computer controlled racking at Palwal near

Delhi.

• In the first phase of Matheran’s project to

build low-cost homes near Mumbai, over

3,000 apartments are under construction of

which more than 80% have already been

pre-sold.

• A 77,000 square feet office tower in

Bangalore, a joint venture with Sribha

Infrastructure Solutions (formerly named

Symcon), is nearing completion.

ECONOMIC AND POLITICAL OUTLOOK

India’s economy has inevitably been affected

by the global economic crisis, but while much

of the world has plunged into recession,

India’s has fared far better. GDP grew at 6.7%

for the fiscal year 2008-09 while much of the

world was experiencing negative growth.

Container traffic, one of the primary profit

drivers for Eredene’s ports services

businesses, is forecast to continue to grow in

2009-10, albeit the growth rate is not

expected to be as high as in previous years.

Total cargo handling capacity of Indian ports

is forecast to increase to 1.5 billion tonnes by

2012 from the present 0.8 billion tonnes.

The Indian political landscape looks

increasingly stable following the parliamentary

elections in the world’s largest democracy in

May 2009. The Congress Party, led by

INDIA’S ECONOMY HAS INEVITABLY BEEN

AFFECTED BY THE GLOBAL ECONOMIC

CRISIS, BUT WHILE MUCH OF THE WORLD

HAS PLUNGED INTO RECESSION, INDIA’S

HAS FARED FAR BETTER. GDP GREW AT

6.7% FOR THE FISCAL YEAR 2008-09

WHILE MUCH OF THE WORLD WAS

EXPERIENCING NEGATIVE GROWTH.


4 CHAIRMAN’S STATEMENT


Dr Manmohan Singh, fought the elections on

a manifesto of development and poverty

alleviation. The result consolidated the

Congress Party’s hold on power and

increased its majority in the lower house. This

gives the Prime Minister a solid mandate for

completing his economic liberalisation and

development agenda, much of which was left

incomplete in the last Government due to the

conflicting agendas of his coalition partners.

Immediately after the elections, the new

Government announced that investment in

infrastructure and policy initiatives to

encourage private investment in infrastructure

will be among the top priorities. According to

Government estimates, India needs to invest

some $500 billion in its infrastructure by 2012

– primarily in roads, rail, ports, airports and

energy – in order to remain competitive.

Indian stocks rose in a post-election market

rally on expectations that the ruling coalition’s

decisive victory would lead to further

economic liberalisation, more privatisations,

financial sector reforms and increased

infrastructure spending.

PROJECT PIPELINE

Among possible future projects, the Eredene

Group is part of a consortium bidding to build

and operate a major new container terminal at

the southern port of Ennore. Eredene is

bidding for the project with Spain’s leading

port operator, Barcelona-based Grup Marítim

TCB SL, Spanish construction group

Obrascón Huarte Lain SA and GE Mauritius

Int Holdings, a subsidiary of America’s GE

Equipment Services. Eredene would hold a

22% interest in the consortium, if the bid is

successful.

There are four other port projects in the

pipeline, one potential airport deal, and

opportunities to invest in existing CFS

operations at two of India’s busiest ports. The

Eredene Group is also exploring several

options to invest in Logistics Parks including

one on a railway which would link into India’s

planned new rail Dedicated Freight Corridor.

As Eredene has allocated most of the funds

that it raised in 2006 to its existing

investments, an exercise is under way to raise

capital to invest in these new opportunities.

One of several options being explored is to

raise an independent second fund to finance

these and other future investments which

would be managed by Eredene.

CONCLUSION AND OUTLOOK

The year has seen a number of our

investments move into the revenue generating

stage and we were particularly pleased to

receive our first dividend from an investee

company. Sattva Vichoor CFS delivered a

dividend within two years of construction first

starting at its CFS. Looking forward, we

anticipate that by the end of 2010 all our

investee companies will be revenue

generating.

Finally, I would like to take this opportunity to

thank our shareholders for their continued

confidence in the Eredene Group, and I would

also like to convey my thanks to our

employees and advisers for their dedicated

work and loyalty during the past year.

DAVID COLTMAN

NON-EXECUTIVE CHAIRMAN

30 JUNE 2009

THE YEAR HAS SEEN A NUMBER OF OUR

INVESTMENTS MOVE INTO THE REVENUE

GENERATING STAGE AND WE WERE

PARTICULARLY PLEASED TO RECEIVE

OUR FIRST DIVIDEND FROM AN INVESTEE

COMPANY.



5

Baroda

Pipavav

Mumbai

Bangalore

Kalinganagar

Haldia

��

Chennai

Ennore

��

�

�

New Delhi

Punjab

Uttaranchal

�

Amount

Investment Portfolio Allocated Sector Location Progress

� Sattva Vichoor CFS £0.9m Container Logistics Chennai, Tamil Nadu Revenue generating & dividend paying

� Sattva Conware CFS £5.0m Container Logistics Ennore, Tamil Nadu Land acquisition phase

Contrans Logistic (formerly Box-Trans): £7.9m

� Project One: Pipavav CFS Container Logistics Pipavav, Gujarat Operational & revenue generating

� Project Two: Baroda ICD Container Logistics Baroda, Gujarat Land acquisition phase

Apeejay Infra-Logistics: £7.9m

� Project One: Haldia Logistics Park Logistics Park Haldia, West Bengal Construction phase

� Project Two: Kalinganagar Logistics Park Logistics Park Kalinganagar, Orissa Construction phase

� MJ Logistic Services £11.0m Warehousing & Third Northern India Operational & revenue generating

Party Logistics

Sribha Infrastructure Solutions £2.1m Office Infrastructure Bangalore & Chennai Construction phase

(formerly Symcon)

Matheran Realty & Gopi Resorts £16.4m Urban Development Mumbai region Construction & pre-sales phase

INVESTMENT PORTFOLIO SUMMARY



6 REVIEW OF INVESTMENTS

� Sattva Vichoor CFS

Eredene’s first investment with the Sattva

Business Group, a Container Freight Station

at Vichoor near Chennai, progressed from a

greenfield site to paying its first dividend in

less than two years.

The investee company declared a 5% interim

dividend during the period and significantly

exceeded its budget for the period, handling a

total of over 25,000 TEUs (20-foot equivalent

units) in container volume.

Sattva Vichoor provides a full range of CFS

services – 75,000 square feet of bonded

warehousing for exports and imports, secured

and paved stacking areas for containers, a

facility for assembly from kit parts, stacking

cranes, computer-driven tracking systems and

prime office facilities.

The 25-acre facility is situated in the industrial

hinterland of two large ports, 17 kilometres

from Chennai and 12 kilometres from Ennore.

A second container terminal at Chennai Port

is planned to start operations this year and

the port has also recently announced plans to

build a third container terminal. The third

terminal, called Chennai’s mega container

terminal, is planned to have a 5 million TEU

capacity with a quay length of 2 kilometres

and a berth of 22 metres, India’s deepest.

The Eredene Group has invested £850,000

for a 49% stake in Sattva CFS & Logistics Pvt

Ltd, the company operating Sattva Vichoor

CFS (www.sattva.in).

CONTAINER FREIGHT STATION NEAR CHENNAIPAYS FIRST DIVIDEND

Amount invested:£0.9m

Current ownership stake:49%

Sector:Container Logistics

Location:Chennai, Tamil Nadu, South East India

Progress to date:Revenue generating & dividend paying

Chennai �


7REVIEW OF INVESTMENTS

Sattva Conware CFS �

WORK STARTED ON NEW CONTAINER FREIGHTSTATION FOR ENNORE PORT

Eredene’s second investment with the Sattva

Business Group is another CFS in the

southern State of Tamil Nadu, which is

currently under development and will serve

the port of Ennore.

The Sattva Conware CFS is located on a

State Highway near the town of Ponneri to the

north of Ennore, with an initial area of 34

acres.

The site will serve initially as a large-scale

warehousing operation to meet existing

demand for storage and transport and it is

targeting its first open storage revenue by mid

2010. It is expected to be converted into a

fully fledged CFS and expanded to 60 acres in

time for the opening of Ennore’s new

container terminal scheduled for 2012.

Ennore Port, 24 kilometres north of Chennai,

was set up to ease the congestion at Chennai

Port. Ennore Port began operations in 2001

and a tender process is currently underway –

with the Eredene Group engaged in one of

the bids – for the construction of a new

1,000-metre container terminal with an

estimated capacity of 1.5m TEUs per annum.

The Chennai-Ennore region is the centre of

India’s automobile industry and a major

manufacturing and light industry hub. Major

global car manufacturers in the region include

BMW, Hyundai, Ford, Renault and Nissan.

The Eredene Group has allocated up to

£5 million for this investment and had a stake

of 90% as at 31 March 2009. This stake will

be reduced to 74% provided Sattva Conware

achieves certain milestones with the final

milestone being the payment of the first

dividend to Eredene.

Amount allocated to investment:£5.0m

Amount invested to 31 March 2009:£2.1m

Ownership stake at 31 March 2009:90%


Location:Ennore, Tamil Nadu, South East India

Progress to date:Land acquisition phase

Ennore�





� Contrans Logistic

Project One: Pipavav CFS

CONTAINER FREIGHT STATION AT PIPAVAV ENDSFIRST YEAR OF BUSINESS STRONGLY

The dedicated Container Freight Station at the

port of Pipavav in the western state of Gujarat

handled over 11,000 TEUs in its first financial

year to March 2009. After a slow start,

volumes have risen steadily, with a record

container throughput in March 2009.

The CFS is one of two projects being

developed with Eredene by Contrans Logistic

Pvt Ltd (formerly Box-Trans Logistics Pvt Ltd),

the other being the Baroda ICD project.

Eredene has invested £4.0m for a stake of

49% as at 31 March 2009 in the Contrans

Logistic holding company.

A total of 79 acres of land has been acquired

for the CFS on a site just 700 metres from the

port. Phase 1 of the CFS has a 96,000

square feet bonded warehouse equipped to

handle both imports and exports and a paved

container stacking yard of 21 acres.

Pipavav, located in the Saurashtra region of

Gujarat, is a major gateway to the Northern

and Western industrial regions. The Port has

good road connections and is linked to the

National Rail Network by a 380 kilometre

broad-gauge railway.

Maersk Line, which owns and operates

Pipavav, is investing in the port for aggressive

expansion, with plans to double container

volumes and triple bulk volumes in 2009-10.

The approach channel is being dredged to

accommodate larger vessels with 14.5 metre

drafts and, in April 2009, Maersk added

Pipavav to its Middle East, Mediterranean and

Europe service. Pipavav Port provides one of

the shortest sailing times to European ports

from India.

Gujarat was the first State in India to open its

ports to the private sector, with Pipavav being

the first of them, and its 1,600 kilometre

coastline, situated on the Arabian Gulf, is a

hub of development activity. Gujarat now

accounts for around 20% of India’s total

import and export activity.

Eredene’s partners in Contrans Logistic have

a successful track record in the CFS and

shipping sectors and have been operating a

CFS at the Port of Mundra in the north of

Gujarat State since 2003.

Contrans Project One:Pipavav CFS


Location:Pipavav, Gujarat, North West India

Progress to date:Operational & revenue generating

Pipavav �




Contrans Logistic �

Project Two: Baroda ICD

The second project being developed by

Contrans Logistic is an Inland Container Depot

near Baroda, also located in Gujarat State. The

planned 135-acre site is on an 800-metre wide

land corridor next to the two primary transport

routes from Delhi to Mumbai – National

Highway 8 and the main north-south rail line,

which carries the largest amount of freight

traffic in India.

The ICD licence has been granted and

logistics consultancy firm British Maritime

Technologies is working on a master plan for

the site which will include a railway siding for

loading and unloading rail freight. Indian

Railways is planning a Dedicated Freight

Corridor between Mumbai and Delhi which will

be adjacent to the Baroda ICD. More than 120

acres of land has been acquired and is in the

process of being registered by the company.

The ICD plans to open for its first customers in

2010.

An ICD provides broadly the same facilities as

a CFS – warehousing, packaging and re-

packaging, assembly from kits, customs

clearance, logistics and transport. A CFS is

normally located near a port whereas an ICD is

normally located next to a railway line.

The Eredene Group has a 49% stake in

Contrans Logistic and has allocated up to

£7.9m in total to the Contrans holding

company – which also owns and operates the

Pipavav CFS.

LAND ACQUIRED AND LICENCE GRANTED FOR NEWINLAND CONTAINER DEPOT

Contrans Project Two:Baroda ICD


Location:Baroda, Gujarat, North West India

Progress to date:Land acquisition phase

Amount allocated to Contrans in total:£7.9m

Amount invested in Contrans in total to 31 March 2009:£4.0m


Baroda �

MASTERPLAN OF BARODAINLAND CONTAINER DEPOT

MUMBAINational

Highway 8:Delhi – Mumbai

DELHI

BARODA




� Apeejay Infra-Logistics

Project One: Haldia Logistics Park

CONSTRUCTION STARTS ON LOGISTICS PARK INJOINT VENTURE WITH APEEJAY SURRENDRA

Construction is underway at a new 90-acre

Logistics Park near the port of Haldia, West

Bengal, one of Eredene’s two joint ventures

with tea, shipping and hospitality conglomerate

Apeejay Surrendra Group

(www.apeejaygroup.com).

The Logistics Park, which is being built and

operated by the joint venture company Apeejay

Infra-Logistics Pvt Ltd, is planned to have eight

acres of open storage available from Q4 2009.

Apeejay Infra-Logistics, in which Eredene has a

50% stake, is also developing a second

logistics park at Kalinganagar.

Construction of the facility is underway with

more than 90% of the boundary wall

completed. The total open storage area is

expected to increase to 10 – 15 acres by the

end of 2009 and 130,000 square feet of

bonded and domestic-use racked warehousing

are due to be constructed in 2010.

Haldia, a port on the confluence of the Haldi

and Hoogly Rivers opening onto the Bay of

Bengal and 90 kilometres downstream from

Kolkata, is one of West Bengal’s fast emerging

industrial centres with a concentration of

Petroleum, Chemical and Petrochemical plants.

The Logistics Park will provide dedicated space

for storage, packaging, transport, light

processing workshops, offices and other key

support services to Haldia’s more than 350

industrial units.

The Eredene Group has allocated a total of

£7.9m to the Apeejay Infra-Logistics joint

venture to allow it to complete the construction

of the two Logistics Parks at Haldia and

Kalinganagar.

Apeejay Infra-Logistics Project One:Haldia Logistics Park

Sector:Logistics Park

Location:Haldia, West Bengal, East India

Progress to date:Construction phase

Haldia�

MASTERPLAN OF HALDIALOGISTICS PARK




Apeejay Infra-Logistics �

Project Two: Kalinganagar Logistics Park

CONSTRUCTION UNDERWAY AT KALINGANAGARLOGISTICS PARK

Construction is also underway at Eredene’s

second project with Apeejay Surrendra Group,

a 30-acre Logistics Park to serve the

Kalinganagar industrial complex, a fast

growing steel hub in Orissa State’s Jajpur

district.

The site is being levelled and five to seven

acres of open storage facilities are expected to

be available from March 2010. A bonded and

domestic-use racked warehouse of 112,000

square feet is planned to be constructed in

2010. The park is being built and operated

by the joint venture company Apeejay

Infra-Logistics Pvt Ltd.

Orissa State, in eastern India, is undergoing

rapid industrialisation. The State Government

has identified 13 sites along its coastline for

development of various ports, and a large steel

complex is under development close to the

new Logistics Park.

The Logistics Park is expected to be the first

fully purpose-built transport and warehouse

facility to service the Kalinganagar region and it

will specifically target the in-bound and out-

bound cargo centred on the steel industry.

The location is well connected by road and rail

– 129 kilometres from the major port at

Paradip and 86 kilometres from the newly built

Dhamra Port, which will be the deepest port in

India with a draft of 18 metres when it opens

for commercial traffic in 2010. A new railway

line linking Daitari and Banshapani will enable

access from the Logistic Park to the rail

network via a proposed siding.

Apeejay Infra-Logistics Project Two:Kalinganagar Logistics Park

Sector:Logistics Park

Location:Kalinganagar, Orissa, East India


Amount allocated to ApeejayInfra-Logistics in total:£7.9m

Amount invested in Apeejay Infra-Logisticsin total to 31 March 2009:£1.9m

Ownership stake50%

Kalinganagar �

MASTERPLAN OF KALINGANAGARLOGISTICS PARK



� MJ Logistic Services

A brand new hub warehousing facility for MJ

Logistic’s Third Party Logistics business in

northern India is expected to open for its first

customers in Q3 2009 (www.mjlsl.com).

The state-of-the-art storage facility at Palwal,

strategically located on the Delhi-Agra

highway, will be linked in a hub-and-spoke

operation to warehouses in Punjab and

Uttaranchal to cover India’s entire northern

industrial heartland.

The first phase comprises 200,000 square

feet with computer controlled racked shelving

and 20,000 pallet positions of ambient

storage and 1.05 million cubic feet of

temperature controlled chambers from -25º to

+10º centigrade, all under one roof.

MJ Logistic Services Ltd, a 3PL solutions

provider in which Eredene has a stake that will

scale down to 74% from its current 90% in

line with agreed performance targets, is

targeting growing demand for 3PL services in

India.

On project completion, MJ Logistic is planned

to have total dry warehousing space of over

600,000 square feet and cold storage facility

of over 200,000 square feet.

Incorporated in 2005, MJ Logistic built its

business by providing storage, transportation

and distribution services in 500,000 square

feet of traditional leased warehousing to

customers such as Philips, Bosch, Colgate

and ITC.

A 2009 study by the Associated Chambers of

Commerce and Industry of India, forecast a

rapid growth in 3PL business in India as

companies seek better and more cost

effective management of their supply chain

processes.

The Eredene Group has allocated up to £11m

in MJ Logistic and had a stake of 90% as at

31 March 2009.

A STATE-OF-THE-ART 3PL BUSINESS FORNORTHERN INDIA

Amount allocated to investment:£11.0m

Amount invested to 31 March 2009:£7.9m


Sector:Warehousing & Third Party Logistics

Location:Delhi region, North India

Progress to date:Operational & revenue generating

New Delhi

Punjab Uttaranchal

�





A HIGH-END IT OFFICE BUILDING IN BANGALORE

Sribha Tower, a 77,000 square feet high-end

office development in the southern city of

Bangalore, is nearing completion and is

scheduled to be ready for occupancy in late

2009.

The tower is one of two ‘plug and play’ IT

offices planned to be developed by Sribha

Infrastructure Solutions Company Pvt Ltd

(formerly Symcon Global Technologies) with a

second tower planned for Chennai.

Sribha’s sister company, SGT Global, a

leading provider of IT, business process

outsourcing, call centres and engineering

services, has agreed to lease approximately

half the space in the first tower

(www.sgtglobal.com).

Designed to accommodate more than 800

people, the tower is located off the

Bangalore-Hosur National Highway, adjacent

to the Electronics City IT precinct.

A second, similar development is planned in

Bangalore and also two further IT office

towers in Chennai.

The Eredene Group has invested £2.1m for a

36.5% stake in Sribha Infrastructure Solutions

Company Pvt Ltd.

Amount invested:£2.1m

Ownership stake:36.5%

Sector:Office Infrastructure

Location:Bangalore and Chennai


Sribha Infrastructure Solutions

Bangalore



Matheran Realty and Gopi Resorts

A total of 73 apartment buildings with retail

and commercial units are under construction

at Matheran Realty’s mass affordable housing

project at Tanaji Malusare City, Karjat, near

Mumbai (www.tmcity.in).

The new township is being constructed by

Matheran Realty’s subsidiary Gopi Resorts

and is the first of a number of projects to

develop affordable homes on a large scale for

Mumbai’s increasingly prosperous blue collar

workers.

It is proposed to develop the township in

partnership with the Mumbai Metropolitan

Region Development Authority (MMRDA) and

a letter of intent has been received from the

MMRDA.

Work is taking place on about 80 acres with

5.7 million square feet of residential buildings,

retail and commercial units planned. The

project also includes provision of associated

infrastructure for the township, including

internal roads, water and sewage treatment

plants, street lighting, and water and electricity

supply.

The 73 buildings under construction are at

various stages of completion. At the end of

May 2009, all the foundations were laid and

35 of the buildings were at first or second

floor level. Three others were at third floor

level and one was at the fourth floor.

More than 2,500 units were sold following the

inaugural sales launch and the township is

expected to be sufficiently developed for first

residents to move in by the end of 2009.

NEW TOWNSHIP WITH LOW-COST HOUSING NEARMUMBAI


Amount allocated in total to MatheranRealty & Gopi Resorts:£16.4m

Amount invested in total to 31 March 2009in Matheran Realty & Gopi Resorts:£12.7m

Ownership stake at 31 March 2009:63.3% – Matheran Realty Pvt Ltd – Total

of direct & indirect stakes32.2% – Gopi Resorts Pvt Ltd (MRPL

subsidiary) – direct stake

Sector:Urban development

Location:Mumbai Region, Maharashtra, West India

Progress to date:Construction and pre-sales phase

Mumbai



SIR CHRISTOPHER BENSON

NON-EXECUTIVE DIRECTOR

Sir Christopher Benson has been involved in

real estate investment and development

throughout his career. He gained significant

development experience with Arndale and

thereafter became Managing Director of

MEPC. He has been chairman of MEPC,

Royal & Sun Alliance, Boots the Chemist,

Costain and Albright & Wilson. He was also

chairman of the London Docklands

Development Corporation.

THE HON CHARLES CAYZER


Charles Cayzer is an Executive Director of

Caledonia Investments plc, one of the largest

Investment Trusts listed on the London Stock

Exchange. Having gained experience of

merchant banking, commercial banking and

corporate and project finance with Baring

Brothers, Cayzer Irvine & Co and Cayzer

Limited, Charles was appointed a director of

Caledonia in 1985, where he has responsibility

for Caledonia’s real estate investments. He is

also a director of The Varun Shipping

Company Limited in India.

DAVID COLTMAN

NON-EXECUTIVE CHAIRMAN

David Coltman has over 40 years of

international experience in major and complex

logistics projects, including recently in India.

After 14 years at British Airways (BA), he

moved to British Caledonian where he

became Chief Executive. After its acquisition

by BA he moved to United Airlines, where

from 1995 to 2001 he was Chief Marketing

Officer and Executive Officer of the UAL

Corporation, based in Chicago. Mr Coltman is

the Chairman of Edinburgh Worldwide

Investment Trust plc, and the Senior

Independent Director of John Menzies plc, a

leading international logistics company with

significant interests in India.

ALASTAIR KING

CHIEF EXECUTIVE AND FOUNDER

Alastair King qualified as a solicitor and

practised in London and Central Asia with

Baker & McKenzie. From 1999 to 2002, he

held several senior positions within NewMedia

SPARK plc, an early stage technology venture

capital investor. From February 2002, he was

Managing Director of Galahad Capital plc,

then an AIM-quoted cash shell, which

completed the acquisition of Shambhala Gold

Limited in December 2003 and changed its

name to Galahad Gold plc. Mr King left the

board of Galahad Gold in December 2004. He

holds an MSc in finance from London

Business School and founded Eredene

Capital PLC in January 2005.

NIKHIL NAIK


Nikhil Naik heads Eredene Capital PLC’s

advisory team in India. He was until March

2006 Regional Director of P&O in India and he

has a successful record in sourcing and

managing large infrastructure projects

throughout South Asia. An Indian national, Mr

Naik led P&O’s activities in South Asia for two

years. He was an employee of P&O for 10

years during which he held a number of senior

positions, including that of CEO of Mundra

International Container Terminal at Mundra

Port, a substantial port operator in Western

India.

GARY VARLEY

FINANCE DIRECTOR

Gary Varley is a Chartered Accountant with

board level experience in sectors including

private equity and real estate development.

He joined PricewaterhouseCoopers in 1994,

where he practised in the firm’s audit,

management consultancy and forensic

accounting divisions. As well as a number of

board level commercial roles, he was

previously a Principal with the AIM quoted

venture capital investor NewMedia SPARK plc

where he sat on the fund’s investment

committee. Prior to joining Eredene on its

formation, he was Finance Director of

Nicholas King Homes plc, a UK residential

property developer.

BOARD OF DIRECTORS 15

Sir Christopher Benson The Hon Charles Cayzer David Coltman Alastair King Nikhil Naik Gary Varley


16


REPORT OF THE DIRECTORSfor the period ended 31 March 2009

The directors present their report together with the audited financial

statements for the 15 month period ended 31 March 2009.

The Company has changed its accounting reference date from

31 December to 31 March. This change has been made to align the

Company’s accounting reference date with those of its subsidiaries

and investee companies in India.

RESULTS AND DIVIDENDSThe income statement is set out on page 20 and shows the result for

the period.

The directors do not recommend the payment of a dividend

(2007: £Nil).

PRINCIPAL ACTIVITIES, REVIEW OF BUSINESS AND FUTURE

DEVELOPMENTS

Business review and principal activities

The Group invests in infrastructure projects in India, further detailed

information on which is provided in the Review of Investments on

pages 6 to 14.

The results for the Group show a loss for the period of £6.4m (2007:

profit of £0.2m). As at 31 March 2009, the Group had cash balances

of £26.2m (2007: £48.6m) and a Net Asset Value (“NAV”) attributable

to equity shareholders of £53.7m (2007: £59.0m), representing 21.9p

per share (2007: 24.1p).

As an investment company, Eredene’s performance is primarily judged

by the change in its net asset value per share. Eredene’s NAV per

share has fallen by 9% in the fifteen months to 31 March 2009. Whilst

this fall is disappointing, it compares favourably to the fall in indices

such as the FTSE 100 which has fallen by 39% over the same period.

Investing Policy

Eredene Capital PLC is an equity investor in Indian infrastructure

operating companies and holds its investments as part of an

investment portfolio. Its investment portfolio includes minority stakes

which are accounted for as investments and majority stakes which are

consolidated. It has no restrictions or maximum exposure limits on its

investments and would intend, on average, to hold its investments for

at least seven years until the underlying business reached full maturity.

Its investment policy is focused on:

• Indian infrastructure – primarily investment in Ports and Port

Services, Logistics and Warehousing, Transportation and Real

Estate sectors.

• Investment in businesses with a potential to generate substantial

capital growth providing a long-term capital appreciation and a

steady dividend yield.

• Target individual investments typically up to US$35m and equity

holdings of greater than 20%.

• Active role in investments through board participation and by

sourcing experienced and trusted local partners. The Management

Team of Eredene has significant experience in the target sectors.

• Investment in a diversified portfolio of infrastructure assets and

further diversification via balanced regional geographical exposure

within India with a range of co-investment partners.

• Gearing utilised at SPV level with the investee company raising debt

with no recourse to Eredene.

Principal risks and uncertainties

The execution of the Group’s strategy is subject to a number of risks

and uncertainties which include:

• Infrastructure and real estate investments are early stage, long-

term, illiquid investments and so the Group may not be able to exit

at the time and at the price which it had forecast. The Group seeks

to mitigate those risks by diversifying its portfolio across different

sectors, different cities in India and different partners.

• Investment in India is subject to a number of government rules and

regulations governing foreign investment and changes in those

rules may adversely affect the Group’s investments. The Group

monitors this risk by seeking advice from specialist lawyers and tax

advisors in India and by structuring its investments accordingly.

• The Group places its funds with financial institutions and so is

exposed to credit risk. The Group manages that risk by placing

funds primarily with institutions with a Standard & Poors credit

rating of AA or higher.

• The Group receives interest income on its variable rate bank

balances and fixed rate treasury deposits. A reduction in interest

rates would reduce the Group’s interest income.

• The Group invests in Indian companies and the fair value of those

investments is denominated in Indian Rupees. A movement in

foreign exchange rates would affect the carrying value of those

investments and the unrealised gain or loss.

The Board will continue to monitor and, where possible, control the

risks and uncertainties which could affect the business.


17


REPORT OF THE DIRECTORSfor the period ended 31 March 2009

FINANCIAL INSTRUMENTS

Details of the use of financial instruments by the Company and its

subsidiary undertakings are contained in note 17 of the financial

statements.

POLICY AND PRACTICE ON THE PAYMENT OF CREDITORS

The Group’s policy is to settle terms of payment with suppliers when

agreeing the terms of each transaction, ensure that suppliers are

made aware of the terms of payment and abide by the terms of

payment.

The number of average days purchases of the Group represented by

trade creditors at 31 March 2009 was 24 days (2007: 18 days).

GOING CONCERN

The directors consider that the Group has adequate resources to

continue in operational existence for the foreseeable future. For this

reason, they continue to adopt the going concern basis in preparing

the financial statements.

AUDITORS

All of the current directors have taken all the steps that they ought to

have taken to make themselves aware of any information needed by

the Company’s auditors for the purposes of their audit and to

establish that the auditors are aware of that information. The directors

are not aware of any relevant audit information of which the auditors

are unaware.

BDO Stoy Hayward LLP have expressed their willingness to continue

in office and a resolution to re appoint them will be proposed at the

annual general meeting.

By order of the Board

G D VARLEY

COMPANY SECRETARY

30 JUNE 2009


18


STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The directors are responsible for keeping proper accounting records

which disclose with reasonable accuracy at any time the financial

position of the Company and its subsidiaries (together referred to as

the “Group”), for safeguarding the assets of the Company, for taking

reasonable steps for the prevention and detection of fraud and other

irregularities and for the preparation of a Directors’ Report which

complies with the requirements of the Companies Act 1985.

The directors are responsible for preparing the Annual Report and the

financial statements in accordance with the Companies Act 1985. The

directors are also required to prepare financial statements for the

Group in accordance with International Financial Reporting Standards

as adopted by the European Union (IFRSs) and the rules of the

London Stock Exchange for companies trading securities on the

Alternative Investment Market. The directors have chosen to prepare

financial statements for the Company in accordance with UK

Generally Accepted Accounting Practice.

GROUP FINANCIAL STATEMENTSInternational Accounting Standard 1 requires that financial statements

present fairly for each financial year the Group’s financial position,

financial performance and cash flows. This requires the faithful

representation of the effects of transactions, other events and

conditions in accordance with the definitions and recognition criteria

for assets, liabilities, income and expenses set out in the International

Accounting Standards Board’s ‘Framework for the preparation and

presentation of financial statements’. In virtually all circumstances, a

fair presentation will be achieved by compliance with all applicable

IFRSs. A fair presentation also requires the directors to:

• consistently select and apply appropriate accounting policies;

• present information, including accounting policies, in a manner that

provides relevant, reliable, comparable and understandable

information; and

• provide additional disclosures when compliance with the specific

requirements in IFRSs is insufficient to enable users to understand

the impact of particular transactions, other events and conditions

on the entity’s financial position and financial performance.

PARENT COMPANY FINANCIAL STATEMENTSCompany law requires the directors to prepare financial statements for

each financial year which give a true and fair view of the state of

affairs of the Company and of the profit or loss of the Company for

that period. In preparing these financial statements, the directors are

required to:

• select suitable accounting policies and then apply them

consistently;

• prepare the financial statements on the going concern basis unless

it is inappropriate to presume that the Company will continue in

business;

• make judgements and estimates that are reasonable and prudent;

and

• state whether applicable accounting standards have been followed,

subject to any material departures disclosed and explained in the

financial statements.

Financial statements are published on the Group’s website in

accordance with legislation in the United Kingdom governing the

preparation and dissemination of financial statements, which may vary

from legislation in other jurisdictions. The maintenance and integrity of

the Group’s website is the responsibility of the directors. The

directors’ responsibility also extends to the ongoing integrity of the

financial statements contained therein.


19


REPORT OF THE INDEPENDENT AUDITORS

INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERSOF EREDENE CAPITAL PLCWe have audited the Group and Parent Company financial statements

(the “financial statements’’) of Eredene Capital PLC for the period

ended 31 March 2009 which comprise the consolidated income

statement, the consolidated and company balance sheets, the

consolidated cash flow statement, the consolidated statement of

changes in equity and the related notes. These financial statements

have been prepared under the accounting policies set out therein.

Respective responsibilities of directors and auditorsThe directors’ responsibilities for preparing the Annual Report and

Group financial statements in accordance with applicable law and

International Financial Reporting Standards (IFRSs) as adopted by the

European Union and for preparing the parent company financial

statements in accordance with applicable law and United Kingdom

Accounting Standards (United Kingdom Generally Accepted

Accounting Practice) are set out in the statement of directors’

responsibilities.

Our responsibility is to audit the financial statements in accordance

with relevant legal and regulatory requirements and International

Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements

give a true and fair view and have been properly prepared in

accordance with the Companies Act 1985 and whether the

information given in the directors’ report is consistent with those

financial statements. We also report to you if, in our opinion, the

Company has not kept proper accounting records, if we have not

received all the information and explanations we require for our audit,

or if information specified by law regarding directors’ remuneration

and other transactions is not disclosed.

We read other information contained in the Annual Report and

consider whether it is consistent with the audited financial statements.

This other information comprises only the corporate information, the

chairman’s statement, the investment strategy, the review of

investments, the board of directors, the report of the directors and the

statement of directors’ responsibilities. We consider the implications

for our review if we become aware of any apparent misstatements or

material inconsistencies with the financial statements. Our

responsibilities do not extend to any other information.

Our report has been prepared pursuant to the requirements of the

Companies Act 1985 and for no other purpose. No person is entitled

to rely on this report unless such a person is a person entitled to rely

upon this report by virtue of and for the purpose of the Companies

Act 1985 or has been expressly authorised to do so by our prior

written consent. Save as above, we do not accept responsibility for

this report to any other person or for any other purpose and we

hereby expressly disclaim any and all such liability.

Basis of audit opinionWe conducted our audit in accordance with International Standards

on Auditing (UK and Ireland) issued by the Auditing Practices Board.

An audit includes examination, on a test basis, of evidence relevant to

the amounts and disclosures in the financial statements. It also

includes an assessment of the significant estimates and judgments

made by the directors in the preparation of the financial statements,

and of whether the accounting policies are appropriate to the Group’s

and Company’s circumstances, consistently applied and adequately

disclosed.

We planned and performed our audit so as to obtain all the

information and explanations which we considered necessary in order

to provide us with sufficient evidence to give reasonable assurance

that the financial statements are free from material misstatement,

whether caused by fraud or other irregularity or error. In forming our

opinion we also evaluated the overall adequacy of the presentation of

information in the financial statements.

OpinionIn our opinion:

• the Group financial statements give a true and fair view, in

accordance with IFRSs as adopted by the European Union, of the

state of the Group’s affairs as at 31 March 2009 and of its loss for

the period then ended;

• the Parent Company financial statements give a true and fair view,

in accordance with United Kingdom Generally Accepted

Accounting Practice, of the state of the Parent Company’s affairs as

at 31 March 2009;

• the financial statements have been properly prepared in

accordance with the Companies Act 1985; and

• the information given in the directors’ report is consistent with the

financial statements.

BDO STOY HAYWARD LLP

CHARTERED ACCOUNTANTSAND REGISTERED AUDITORS

LONDON

30 JUNE 2009


20 CONSOLIDATED INCOME STATEMENTfor the period ended 31 March 2009


20

15 monthsended Year ended

31 March 31 December2009 2007

Note £’000 £’000

Portfolio return and revenue

Change in fair value of equity investments 12 (5,125) 1,788

Gain on disposal of subsidiary 23 – 1,142

Other portfolio income 23 –

(5,102) 2,930

Revenue from services 1,461 –

Cost of sales for services (1,326) –

Gross profit 135 –

Gross profit and net portfolio return (4,967) 2,930

Administrative expenses

Other (3,451) (2,758)

Contract termination costs 4 – (2,830)

(3,451) (5,588)

Finance income 7 2,020 2,855

(Loss)/profit before taxation 4 (6,398) 197

Taxation 8 (4) 7

(Loss)/profit after taxation (6,402) 204

Attributable to:

Equity holders of the company (6,384) 204

Minority interest (18) –

(6,402) 204

(Loss)/earnings per share

Basic and diluted 9 (2.61)p 0.08p

The notes on pages 24 to 38 form part of these financial statements.


21


21


Note £’000 £’000

Non-current assets

Property, plant and equipment 10 11,216 32

Investments held at fair value through profit or loss 12 18,279 10,158

Intangible assets 11 1,043 233

Deferred income tax asset 8 43 –

Other receivables 14 23 –

30,604 10,423

Current assets

Trade and other receivables 14 647 250

Cash and cash equivalents 26,235 48,639

26,882 48,889

Total assets 57,486 59,312

Current liabilities

Trade and other payables 15 (716) (262)

Non-current liabilities

Borrowings 16 (2,000) –

Total liabilities (2,716) (262)

Total net assets 54,770 59,050

Equity

Share capital 19 24,473 24,473

Special reserve 20 32,826 32,826

Foreign exchange reserve 20 740 –

Retained (deficit)/earnings 20 (4,361) 1,751

Capital and reserves attributable to equity shareholders of the company 53,678 59,050

Minority interest in equity 1,092 –

Total equity 54,770 59,050

The financial statements were approved by the Board of Directors and authorised for issue on 30 June 2009.

A J N KING

DIRECTOR


CONSOLIDATED BALANCE SHEET at 31 March 2009


22


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYfor the period ended 31 March 2009

ForeignShare Share Special exchange

capital premium reserve reserve£’000 £’000 £’000 £’000

Year ended 31 December 2007As at 1 January 2007 24,473 35,146 – –

Cancellation of share premium account – (35,146) 32,826 –

Profit for the year and total income and expenses

recognised for the year – – – –

Share based payment – – – –

As at 31 December 2007 24,473 – 32,826 –

Fifteen months ended 31 March 2009

As at 1 January 2008 24,473 – 32,826 –

Amounts recognised directly in equity:

Exchange differences arising on translation of

foreign operations – – – 740

Net income recognised directly in equity – – – 740

Loss for the period – – – –

Total income and expenses recognised for the period – – – 740

Share based payment – – – –

Minority interest on acquisition of subsidiary – – – –

As at 31 March 2009 24,473 – 32,826 740

Retainedearnings/ Shareholders’ Minority Total

(deficit) equity interest equity£’000 £’000 £’000 £’000

Year ended 31 December 2007As at 1 January 2007 (1,039) 58,580 – 58,580

Cancellation of share premium account 2,320 – – –

Profit for the year and total income and expenses

recognised for the year 204 204 – 204

Share based payment 266 266 – 266

As at 31 December 2007 1,751 59,050 – 59,050

Fifteen months ended 31 March 2009

As at 1 January 2008 1,751 59,050 – 59,050

Amounts recognised directly in equity:

Exchange differences arising on translation of

foreign operations (2) 738 82 820

Net income recognised directly in equity (2) 738 82 820

Loss for the period (6,384) (6,384) (18) (6,402)

Total income and expenses recognised for the period (6,386) (5,646) 64 (5,582)

Share based payment 274 274 – 274

Minority interest on acquisition of subsidiary – – 1,028 1,028

As at 31 March 2009 (4,361) 53,678 1,092 54,770


215197 Eredene pp20-pp42 7/21/09 12:04 PM Page 22

23


15 monthsended Year ended


Note £’000 £’000

Cash flow from operating activities

(Loss)/profit before taxation (6,398) 197

Adjustments for:

Finance income (2,020) (2,855)

Dividend income (23) –

Profit on sale of subsidiary – (1,142)

Unrealised loss/(gain) on investments held at fair value 5,125 (1,788)

Share based payment charge 274 266

Depreciation 45 4

Amortisation 31 12

Negative goodwill (12) –

(Increase)/decrease in trade and other receivables (309) 126

Increase in trade and other payables 288 61

Decrease in provisions – (27)

Taxation paid (54) (99)

Net cash used in operating activities (3,053) (5,245)

Cash flows from investing activities

Purchase of property, plant and equipment (11,208) (36)

Purchase of intangible asset – (245)

Purchase of investments (13,245) (11,094)

Cash acquired with subsidiary net of purchase cost 156 –

Proceeds from sale of subsidiary – 12,082

Interest received 2,126 2,986

Dividends received 23 –

Net cash (used in)/generated from investing activities (22,148) 3,693

Cash flows from financing activities

Proceeds from borrowings 2,000 –

Repayment of borrowings (24) –

Net cash generated from financing activities 1,976 –

Net decrease in cash and cash equivalents (23,225) (1,552)

Cash and cash equivalents at the beginning of the period 48,639 50,191

Exchange differences on translation of foreign operations 821 –

Cash and cash equivalents at the end of the period 24 26,235 48,639


CONSOLIDATED CASH FLOW STATEMENTfor the period ended 31 March 2009


NOTES FORMING PART OF THE FINANCIAL STATEMENTSfor the period ended 31 March 2009

24


24

1. ACCOUNTING POLICIESEredene Capital PLC (the “Company”) is a company incorporated and

domiciled in the United Kingdom and quoted on the London Stock

Exchange’s AIM market. The consolidated financial statements of the

Company for the period ended 31 March 2009 comprise the Company

and its subsidiaries (together referred to as the “Group”).

Basis of preparationThe Group’s consolidated financial statements have been prepared in

accordance with International Financial Reporting Standards as

adopted for use in the EU (“IFRS”). The Company has elected to

prepare its parent Company financial statements in accordance with UK

GAAP. These are presented on pages 39 to 42.

The following accounting policies have been applied consistently in

dealing with items which are considered material in relation to the

Group’s financial statements.

The financial statements are presented in pounds sterling. They have

been prepared on the historical cost basis, except for the revaluation of

certain investments.

New accounting standards and changes to existing accountingstandardsi. Standards and interpretations effective in 2008:

Amendments to IAS 39 and IFRS 7: Reclassification of Financial

Instruments*

Amendments to IAS 39 and IFRS 7: Reclassification of Financial

Instruments – Effective Date and Transition*

IFRIC 11 – “IFRS 2 – Group and Treasury Share Transactions”*

The adoption of the above standards and interpretations did not have

any material effect on the group’s results or financial position

ii. Interpretations effective in 2008 but not relevant:

The following interpretations to published standards are mandatory for

accounting periods commencing on 1 January 2008 but are not

relevant to the group’s operations:

IFRIC 12 – “Service Concession Arrangements”*

IFRIC 14 – “IAS 19 – The limit on a defined benefit asset, minimum

funding requirements and their interaction”*

iii. Standards, amendments and interpretations to existing standards

that are not yet effective and have not been early adopted by the

group:

The following standards and amendments to existing standards have

been published and are mandatory for the Group’s accounting periods

commencing on or after 1 April 2009 or later periods, but they have not

been early adopted:

IAS 23 Borrowing Costs*

The Amendment removes the option of immediately recognising as an

expense borrowing costs that relate to qualifying assets (assets that

take a substantial period of time to get ready for use or sale). Instead,

an entity will be required to capitalise borrowing costs whenever the

conditions for capitalisation are met. The directors are of the opinion,

having assessed the impact, that it would have no material effect on the

consolidated balance sheet and the Income Statement if the Group had

adopted this standard early.

The impact of adopting the following would lead to presentational

changes only;

IAS 1 Presentation of Financial Statements: A Revised Presentation*

The Amendment to IAS 1 affects the presentation of owner changes in

equity and of comprehensive income. An entity will be required to

present, in a statement of changes in equity, all owner changes in

equity. All non-owner changes in equity (i.e. comprehensive income) are

required to be presented in one statement of comprehensive income or

in two statements (a separate income statement and a statement of

comprehensive income). In addition, the new requirements would

require the presentation of an opening comparative balance sheet when

there is a change in accounting policy. The standard does not change

the recognition, measurement or disclosure of specific transactions and

other events required by other IFRSs.

IFRS 7 Financial Instruments

This Amendment requires the analysis of each class of financial asset

and financial liability, into a three level fair value measurement hierarchy.

It requires additional disclosures in respect of those financial

instruments classified as Level Three (namely those that are measured

using a valuation technique which uses inputs that are not based on

observable market data). It also implements some changes to the

definition of and disclosures associated with liquidity risk.

IFRS 8 Operating Segments*

This standard requires an entity to adopt the ‘management approach’

to reporting on the financial performance of its operating segments.

Generally, the information to be reported would be what management

uses internally for evaluating segment performance and deciding how

to allocate resources to operating segments. Such information may be

different from what is used to prepare the income statement and

balance sheet. The standard also requires explanations of the basis on

which the segment information is prepared and reconciliations to the

amounts recognised in the income statement and balance sheet.

iv. Standards, amendments and interpretations to existing standards

that are not yet effective and not relevant for the group’s operations:

The following standards and amendments to existing standards have

been published and are mandatory for the groups accounting periods

commencing on or after 1 April 2009 or later periods, but are not

relevant to the group’s operations:

IFRIC 18 Transfer of Assets from Customers

IFRIC 17 Distributions of Non-cash Assets to Owners

IFRIC 16 Hedges of a Net Investment in a Foreign Operation*


25


25

IFRIC 15 Agreements for the Construction of Real Estate

IFRIC 13 Customer Loyalty Programmes*

* - Endorsed by the EU

Basis of consolidationThe Group’s financial statements consolidate the financial statements of

the Company and its subsidiary undertakings. Subsidiaries are entities

controlled by the Company. Control exists when the Company has the

power, directly or indirectly, to govern the financial and operating

policies of an entity so as to obtain benefits from its activities. In

assessing control, potential voting rights that presently are exercisable

or convertible are taken into account. The results of any subsidiaries

sold or acquired are included in the Group income statement up to, or

from, the date control passes. Intra-Group sales and profits are

eliminated fully on consolidation.

On acquisition of a subsidiary, all of the subsidiary’s separable,

identifiable assets and liabilities existing at the date of acquisition are

recorded at their fair values reflecting their condition at that date. On

disposal of a subsidiary, the consideration received is compared with

the carrying cost at the date of disposal and the gain or loss is

recognised in the income statement. The excess of the cost of

acquisition over the fair value of the Group’s share of the identifiable net

assets is recorded as goodwill. Intercompany transactions, balances

and unrealised gains on transactions between group companies are

eliminated. Subsidiaries’ accounting policies are amended where

necessary to ensure consistency with the policies adopted by the

Group.

GoodwillGoodwill represents the excess of the cost of an acquisition over the fair

value of the net identifiable assets of the acquired subsidiary at the date

of acquisition. Goodwill on acquisitions of subsidiaries is included in

intangible assets and allocated from the acquisition date to each of the

Group’s cash generating units (“CGU”) that are expected to benefit from

the business combination. Goodwill may be allocated to CGUs in both

the acquired business and in the existing business. Goodwill is tested

annually for impairment and carried at cost less accumulated

impairment losses.

Acquired intangible assetsIntangible assets, other than goodwill, that are acquired by the Group are

stated at cost less accumulated amortisation and impairment losses. The

pipeline of investments acquired is amortised over the period in which

gains or losses on the investments made from the pipeline are expected

to be realised of ten years. The amortisation charge for the period is

included within administrative expenses.

Impairment of intangible assets (including goodwill)Goodwill is not subject to amortisation but is tested for impairment

annually and whenever events or circumstances indicate that the carrying

amount may not be recoverable. Assets that are subject to amortisation

are tested for impairment when events or a change in circumstances

indicate that the carrying amount may not be recoverable. An impairment

loss is recognised for the amount by which the carrying amount exceeds

its recoverable amount. The recoverable amount is the higher of the

asset’s fair value less costs to sell and the value in use. For the purposes

of assessing impairments, assets are grouped at the lowest levels for

which there are identifiable cash flows (i.e. cash generating units).

Property, plant and equipmentProperty, plant and equipment is stated at cost less depreciation and

impairment. Depreciation on property plant and equipment is provided

at rates calculated to write off the cost less estimated residual value of

each asset over its expected useful life. It is calculated at the following

rates:

Fixtures and fittings – 18-20% per annum straight line &

reducing balance basis

Office equipment – 14-33% per annum straight line &

reducing balance basis

Leasehold improvements – 25% per annum reducing balance

basis

Motor vehicles – 26% per annum reducing balance

basis

Financial assets• Investments held at fair value through profit or loss

Investments in which the Group has a long-term interest and over

whose operating and financial policies it exerts significant influence,

but which are held as part of an investment portfolio, the value of

which is through their marketable value as part of a basket of

investments, are not regarded as joint ventures or associated

undertakings. The treatment adopted is in accordance with IAS 39

‘Financial Instruments: Recognition and Measurement’ and the

exemptions applying to venture capital organisations in IAS 28

‘Investments in Associates’ and IAS 31 ‘Interests in Joint Ventures’.

These investments are measured at fair value through profit or loss.

Gains and losses arising from changes in the fair value of these

investments, including foreign exchange movements, are included in

profit or loss for the period.

Unquoted investments are valued using appropriate valuation

methodologies, based on the International Private Equity and Venture

Capital Guidelines, which reflect the amount for which an asset could

be exchanged between knowledgeable, willing parties on an arm’s

length basis.

• Loans and receivablesOther receivables

Other receivables are recognised and carried at amortised cost

less an allowance for any uncollectible amounts. Unless otherwise

indicated, the carrying amount of the group’s financial assets are a

reasonable approximation to their fair value.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand

and short term deposits.

1. ACCOUNTING POLICIES (CONTINUED)




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26

• Financial liabilities held at amortised costTrade and other payables

Trade payables and other payables are recognised and carried at

amortised cost and are a short term liability of the Group.

Foreign currencyForeign currency transactions of individual companies are translated at

the rates ruling when they occurred. Foreign currency monetary assets

and liabilities are translated at the rate of exchange ruling at the balance

sheet date. Any differences are taken to the income statement.

Non-monetary assets and liabilities denominated in foreign currencies

that are stated at fair value are translated at foreign exchange rates

ruling at the date the fair value was determined.

On consolidation, the assets and liabilities of the Group’s overseas

subsidiaries are translated at exchange rates prevailing on the balance

sheet date. Income and expense items are translated at the average

exchange rates for the period. Exchange differences arising, if any, are

classified as equity and translated to a foreign exchange reserve.

Foreign exchange gain/losses resulting from the retranslation of

monetary assets and liabilities are recognised in the Income Statement.

Derivative financial instrumentsDerivatives are initially recognised at fair value on the date a derivative

contract is entered into and are subsequently re-measured at their fair

value. Changes in the fair value of the instruments are recognised

immediately in the income statement.

Portfolio return and revenueChange in fair value of equity investments represents revaluation gains

and losses on the Group’s portfolio of investments.

Dividends receivable from equity shares are included within other

portfolio income and recognised on the ex-dividend date or, where no

ex-dividend date is quoted, are recognised when the Group’s right to

receive payment is established.

Revenue from services comprises the fair value of the consideration

received or receivable for the sale of goods and services in the ordinary

course of the group’s activities. This is primarily the provision of storage

and transportation services, for which revenue is recognised on

provision of services and dispatch of goods. Revenue is shown net of

value-added tax, returns, rebates and discounts.

Share-based paymentsWhere share options are awarded to employees, the fair value of the

options at the date of grant is charged to the income statement over

the vesting period. Non-market vesting conditions are taken into

account by adjusting the number of equity instruments expected to vest

at each balance sheet date so that, ultimately, the cumulative amount

recognised over the vesting period is based on the number of options

that eventually vest.

Where equity instruments are granted to persons other than

employees, the income statement is charged with fair value of goods

and services received. If it is not possible to identify the fair value of

these goods or services provided, the income statement is charged

with the fair value of the options granted.

Deferred taxDeferred tax expected to be payable or recoverable on differences at

the balance sheet date between the tax bases of assets and liabilities

and their carrying amounts for financial reporting purposes is

accounted for using the balance sheet liability method. Deferred tax

liabilities are generally recognised for all taxable temporary differences,

and deferred tax assets are recognised to the extent that it is probable

that taxable profits will be available against which deductible temporary

differences can be utilised.

Such assets and liabilities are not recognised if the temporary

differences arise from goodwill or from the initial recognition (other than

in a business combination) of other assets and liabilities in a transaction

that at the time of the transaction, affects neither the taxable profit nor

the accounting profit. Deferred tax is calculated at the rates of taxation

enacted or substantively enacted at the balance sheet date.

Pension costsThe Company contributes to directors’ and employees’ personal

money-purchase pension schemes. Contributions are charged to the

income statement in the period in which they become payable.

National Insurance on share optionsTo the extent that the share price at the balance sheet date is greater

than the exercise price on options granted under unapproved schemes,

provision for any national insurance contributions has been made

based on the prevailing rate of national insurance. The provision is

accrued over the performance period attaching to the award.

Operating leasesOperating lease rentals are charged to the income statement on a

straight-line basis over the term of the lease.

2. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATESThe preparation of the Group’s financial statements requires the

directors to make estimates and assumptions that affect the reported

amounts of assets and liabilities and the disclosure of contingent assets

and liabilities. Estimates and judgements are continually evaluated and

are based on historical experience and other factors including

expectations of future events that are believed to be reasonable under

the circumstances. Actual results may differ from these estimates.

The directors consider that the following estimates and judgements are

likely to have the most significant effect on the amounts recognised in

the financial statements.

Value of investmentsThe Group’s investments held at fair value through profit or loss are

valued based on the International Private Equity and Venture Capital

Guidelines. An independent valuer, Ernst & Young India, was engaged

to value the investments under those Guidelines. The valuations are

1. ACCOUNTING POLICIES (CONTINUED)


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27

2. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES

(CONTINUED)made based on market conditions and information about the

investment. These estimates are subjective in nature and involve

uncertainties and matters of significant judgement (e.g interest rates,

volatility and estimated cash flows).

Impairment of goodwill The Group is required to test whether goodwill has suffered any

impairment on at least an annual basis. The recoverable amount is

determined using value in use calculations. The use of this method

requires the estimation of future cash flows and the selection of a suitable

discount rate in order to calculate the present value of these cash flows.

Share-based paymentsThe charge for share-based payments is calculated in accordance with

the analysis described in note 21. The option valuation model used

requires highly subjective assumptions to be made including the future

volatility of the Company’s share price, expected dividend yields, risk-

free interest rates and expected staff turnover. The directors draw on

external sources to aid them in the determination of the appropriate

data to use in such calculations.

3. SEGMENTAL ANALYSISThe Group’s only activity is infrastructure and real estate investment in

India. The Group’s revenue, profit before taxation and net assets are

attributable to this single activity.

4. LOSS BEFORE TAXATIONThis is arrived at after charging and (crediting):

15 months 12 monthsended ended


£’000 £’000

Staff costs (see note 5) 1,218 795

Depreciation of tangible fixed assets 45 4

Amortisation of intangible fixed assets 31 12

Foreign exchange differences (169) 3

Hire of other assets – operating leases 2 1

Auditors’ remuneration

– audit services 57 58

– non-audit services

– tax advisory – 9

– other services 17 27

The Income Statement for the period ended 31 March 2009 includes,

for the first time, the results of the Company’s two newly acquired

Indian subsidiaries – MJ Logistic Services Ltd and Sattva Conware Pvt

Ltd. The Income Statement for the prior period does not include the

results of those subsidiaries.

The Income Statement for the prior period to 31 December 2007

includes an amount of £2,830,000 for contract termination costs,

including professional fees. These costs relate to the termination in

June 2007 of the Group’s advisory agreement with Saffron Capital

Advisers Limited (‘Saffron’), which had a term of seven years from

10 April 2006. As part of this agreed termination, Eredene paid Saffron

£2.39m and Saffron Capital Securities Limited (‘SCSL’) US$500,000,

which was set-off against a loan of US$500,000 (book value £274,000)

owed by SCSL to Eredene. These arrangements with SCSL had no

impact on Eredene’s net cash position. Under the terms of the Saffron

and SCSL agreement, all previously existing agreements between

Eredene and Saffron were terminated.

5. EMPLOYEESStaff costs (including Indian subsidiaries) consist of:



£’000 £’000

Wages and salaries 883 494

Equity settled share-based payments 216 256

Social security costs 70 13

Other pension costs 49 32

1,218 795

The average number of employees and directors (including Indian

subsidiaries) during the period was as follows:



Number Number

Management and administration 16 8

Warehouse and distribution 18 –

34 8

Staff numbers have increased following the acquisition of the Group’s

Indian subsidiary investment MJ Logistic Services Ltd (“MJ Logistic”).

MJ Logistic accounts for 8 of the management and administrative staff

and all 18 of the warehouse and distribution staff.

6. DIRECTORS' REMUNERATION



£’000 £’000

Directors’ emoluments 497 384

Company contributions to directors’

money purchase pension schemes 36 19

533 403




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28

6. DIRECTORS' REMUNERATION (CONTINUED)The Group made contributions to two directors’ own money purchase

pension schemes in 2009 (2007: 2).

Emoluments of the highest paid director for the 15 months ended

31 March 2009 were £227,000 (12 months ended 31 December

2007: £162,000). Company pension contributions of £21,000

(2007: £11,000) were made to a money purchase scheme on his

behalf.

Included in the directors’ emoluments figure is an amount of £44,000

(2007: £35,000) paid to Caledonia Group Services Limited for the

services of the Hon C Cayzer as a non-executive director. Caledonia

Group Services is a subsidiary of Caledonia Investments plc which is a

shareholder in the Company. The Cayzer Trust Company is a related

party to Caledonia Investments plc and is a shareholder in that

company. The Hon C Cayzer, who is a director of the Company, is a

director and has a beneficial interest in both Caledonia Investments plc

and the Cayzer Trust Company Limited.

Of the share based payment charge (see note 21), £209,000 relates to

directors (2007: £256,000). The directors are the key management

personnel of the Group.

7. FINANCE INCOME



£’000 £’000

Interest receivable on short term

bank deposits 2,020 2,855

8. TAXATION



£’000 £’000

Recognised in the income statement

Current tax expense

UK corporation tax – –

Adjustment for overprovision in prior period – (7)

Deferred tax

Movement in deferred tax asset 4 –

Income tax charge/(credit) 4 (7)

The tax assessed for the period differs from the standard rate of

corporation tax in the UK applied to the Group profit/(loss) before tax.

The differences are explained below:



£’000 £’000

(Loss)/profit on ordinary activities before tax (6,398) 197

(Loss)/profit on ordinary activities at the

standard rate of corporation tax in the

UK for the period of 28.4% (2007: 30%) (1,817) 59

Effects of:

Expenses not deductible for tax purposes 103 429

Capitalised expenses deductible for

tax purposes 3 –

Depreciation less than/(in excess of)

capital allowances 3 (2)

Non-taxable losses/(gains) on investments

and disposal of subsidiary 1,455 (879)

Non-UK recoverable overseas losses 300 -

Non-taxable dividend income (7) -

Tax losses (utilised)/carried forward (36) 404

Non-taxable finance income – (11)

Adjustment for overprovision in prior period – (7)

Tax charge/(credit) for period 4 (7)

The change in the tax rate applied compared to the previous year

reflects the reduction in the UK corporation tax rate from 1 April 2008.

Deferred taxNo deferred tax has been recognised on unutilised taxable losses. The

potential unrecognised asset is £1,222,000 (2007: £1,348,000).

9. LOSS PER SHARE AND NET ASSETS PER SHAREThe calculation of the basic and diluted loss per share is based on the

loss for the period attributable to equity shareholders of £6,384,000

(2007 profit: £204,000) and the weighted average number of shares in

issue during the period of 244,728,000 (2007: 244,728,000). The effect

of all potential ordinary shares under option is non-dilutive due to the loss

for the period. Details of the share options issued, which could be dilutive

in the future, are set out in note 21.

The calculation of net asset value per share is based on the net assets

attributable to equity shareholders of £53,678,000 (2007: £59,050,000)

and the number of shares in issue at the period end of 244,728,000

(2007: 244,728,000).


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29

10. PROPERTY, PLANT AND EQUIPMENTLand Fixtures Office

& Motor & equip-buildings Vehicles fittings ment Total

£'000 £'000 £'000 £'000 £'000

Cost

At 1 January 2008 – – 7 29 36Additions 11,112 64 7 18 11,201Acquisition of subsidiary – – 16 13 29

Exchange differences – – 1 1 2

At 31 March 2009 11,112 64 31 61 11,268

Depreciation

At 1 January 2008 – – – 4 4Provided for in the period 2 13 12 18 45

Exchange differences – 1 1 1 3

At 31 March 2009 2 14 13 23 52

Net book value

At 31 March 2009 11,110 50 18 38 11,216

CostAdditions and at

31 December 2007 – – 7 29 36

DepreciationProvided for in the year

and at 31 December 2007 – – – 4 4

Net book value

At 31 December 2007 – – 7 25 32

11. INTANGIBLE ASSETS

AcquiredIntangible

Goodwill Asset£’000 £’000

Period ending 31 March 2009

CostAt 1 January 2008 – 245

Acquisitions 841 –

At 31 March 2009 841 245

Aggregate amortisation and impairmentAt 1 January 2008 – 12

Amortisation charge for period – 31

At 31 March 2009 – 43

Net book value

At 31 March 2009 841 202

Year ending 31 December 2007

Cost

Acquisitions and at 31 December 2007 – 245

Aggregate amortisation and impairment

Amortisation charge for year ended

31 December 2007 – 12

Net book value

At 31 December 2007 – 233

Acquired intangible assetIn June 2007, Eredene acquired Aboyne Mauritius Limited (‘Aboyne

Mauritius’) for the sum of £245,000. The assets acquired by Eredene

were a deal pipeline of potential projects involving equity commitments

of up to £100m together with the exclusive engagement of a team

headed by Mr Nikhil Naik. Since June 2007, Eredene has invested

through Aboyne Mauritius which in turn has invested in joint ventures

with developers.

The pipeline of investments acquired is amortised over the period in

which gains or losses on the investments made from the pipeline are

expected to be realised of ten years. The amortisation charge for the

period is included within administrative expenses. There were no events

or changes in circumstances during the period which indicated that the

carrying amount may not be recoverable.

GoodwillGoodwill arose on the acquisition of MJ Logistic Services Ltd on

7 January 2008. Further detail on the acquisition of MJ Logistic

Services Ltd is provided in note 23.

The recoverable value of goodwill has been determined using value in

use calculations based on cash flow projections in respect of the cash

generating unit towards which the goodwill was allocated. The goodwill

arising in the period was allocated in full towards the Group’s subsidiary,

MJ Logistic Services Ltd.




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30

The following key assumptions were used to determine value in use:

At 31 March 2009

Discount factor 16.9%

Perpetuity growth rate 4%

The assumptions used in the calculation were based on past

experience and forecasts of future performance. The cashflow

projection was based on a period which commenced on 1 April 2009

and continued for five years. The calculation of value in use determined

that there was no impairment of goodwill during the period.

The key assumptions used in the value in use calculation were:

• Revenue growth rates.

• Gross margin.

• Operating expenses.

• Discount rate.

• Growth rate used to extrapolate cash flows beyond the five year

period covered by management’s projections.

Projections were denominated in the same currency as the

denomination of the goodwill balance to eliminate the effect of

fluctuating exchange rates. Revenue growth rates used in

management’s projections are based on management’s estimate of

growth in the markets served, taking into account the current economic

uncertainties. Gross margins and operating expenses are based on

historical values and future expected values. The discount rate applied

to the cash flows is based on a risk free rate adjusted for a risk premium

to reflect both the increased risk associated with investing in equities

and the systematic risk of the specific cash-generating unit. Long term

growth rate is based upon the expected growth rate for the industry

and the Indian economy.

Sensitivity analysis has determined that no reasonably possible change

in the key assumptions used will result in significant impairment and that

there is sufficient headroom in all of the key assumptions before the

carrying value becomes impaired.

12. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR

LOSSThe Group has the following investments held at fair value through profit

or loss, all of which are incorporated in India:

Profit/ Date

Class Net (loss) of

of Assets/ before financial

shares (liabilities) tax state- % held % held

held £'000 £'000 ments 31/3/09 31/12/07

Apeejay Infra-

Logistics Pvt Ltd Ord. 1,962 – 31/3/08 50% –

Matheran Realty

Pvt Ltd A 10,485 (221) 31/3/08 63% 55%

Gopi Resorts

Pvt Ltd A & B (49) (33) 31/3/08 32% –

Contrans Logistic

Pvt Ltd Ord. 2,271 (64) 31/3/08 49% 40%

Sattva CFS &

Logistics Pvt Ltd Ord. 1,054 36 31/3/08 49% 49%

Sribha Infrastructure

Solutions Company

Pvt Ltd Ord. 303 (63) 31/3/08 37% –

The Group’s investment in Matheran Realty Pvt Ltd (“Matheran”) at

31 March 2009 is held through a direct holding of 45% in Matheran and

an indirect holding of 18% via the Group’s 44% holding in Alibante

Developments Ltd which itself held 42% of Matheran. Matheran also

has a holding of 68% in Gopi Resorts Pvt Ltd.

At 31 March 2009 the cost and valuation of the Group’s investments

was as follows:

Unrealisedgain/(loss) Fair

Cost at 1/1/08 – value at31/3/09 31/3/09 31/3/09

£’000 £’000 £’000

Apeejay Infra-Logistics Pvt Ltd 1,937 229 2,166

Matheran Realty Pvt Ltd 10,128 (5,504) 4,988

Gopi Resorts Pvt Ltd 2,542 1,748 4,290

Contrans Logistic Pvt Ltd 4,002 (1,706) 2,782

Sattva CFS & Logistics Pvt Ltd 880 611 2,430Sribha Infrastructure Solutions

Company Pvt Ltd 2,126 (503) 1,623

21,615 (5,125) 18,279

11. INTANGIBLE ASSETS (CONTINUED)


31


31

At 31 December 2007 the cost and valuation of the Group’s

investments was as follows:

Unrealisedgain Valuation

Cost at 1/1/07 – at31/12/07 31/12/07 31/12/07

£’000 £’000 £’000

Matheran Realty Pvt Ltd 5,992 363 6,355

Sattva CFS & Logistics Pvt Ltd 647 939 1,586

Contrans Logistic Pvt Ltd 1,731 486 2,217

8,370 1,788 10,158

The investments were independently valued at 31 March 2009 by Ernst

& Young India. The investments are valued using appropriate valuation

methodologies, in accordance with the International Private Equity and

Venture Capital Guidelines endorsed by the British & European Venture

Capital Associations, which reflect the amount for which an asset could

be exchanged between knowledgeable, willing parties on an arm’s

length basis. The companies in which the Group has invested are at

various stages of development. The methodologies used in the

valuation of these investments include Earnings Multiples, Net Assets,

Discounted Cash Flow and Price of Recent Investment.

Price of Recent Investment – where the investment being valued was

itself made recently, its cost will generally provide a good indication of

fair value. Where there has been a recent investment in the investee

company then the price of that investment can provide an indication of

the valuation.

Earnings Multiple – this methodology involves the application of an

earnings multiple to the earnings of the business being valued in order

to derive a value for the business. This methodology is appropriate

where the business has an identifiable stream of continuing earnings

that can be considered to be maintainable. A number of earnings

multiples may be used including price/earnings and enterprise

value/earnings before interest, tax, depreciation and amortisation.

Net Assets – this methodology involves deriving the value of a business

by reference to the value of its assets. The assets and liabilities may be

adjusted to reflect the fair value of those assets and liabilities as at the

valuation date.

Discounted Cash Flow – this methodology involves deriving the value of

a business by calculating the present value of expected future cash

flows. The cash flows and the terminal value are those of the underlying

business rather than from the investment itself. A suitable discount rate

is estimated based on the weighted average cost of capital of the

business.

The actual methodologies used vary from investment to investment with

the independent valuers applying an appropriate methodology based

on the particular circumstances of the underlying business.

The movements in non-current investments were as follows:

£’000

Carrying value at 31 December 2006 13,882

Disposals on sale of subsidiary (13,882)

Purchases, at cost 8,370

Unrealised gains on investments 1,788

Carrying value at 31 December 2007 10,158

Purchases, at cost 13,246

Unrealised losses on investments (5,125)

Carrying value at 31 March 2009 18,279

At 31 March 2009, the Group had a commitment to invest a further

£361,000 in Contrans Logistic Pvt Ltd and that investment was

completed in April 2009.

13. INVESTMENTS IN SUBSIDIARY UNDERTAKINGS The Company had the following principal subsidiaries during the period

in which it held ordinary shares:

Country Ownership

Nature of of 31/3/ 31/12/

Company name business Incorporation 2009 2007

MJ Logistic Distribution

Services Ltd warehouse

operator India 90% –

Sattva Conware Container

Pvt Ltd freight station

operator India 90% –

Aboyne Investment

Mauritius Ltd holding co. Mauritius 100% 100%

Bandra Investment


Coloba Investment


Ennore Investment


Haldia Investment


Juhu Investment


Pipavav Investment


12. INVESTMENTS HELD AT FAIR VALUE THROUGH PROFIT OR

LOSS (CONTINUED)




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32

14. TRADE AND OTHER RECEIVABLES

31 March 31 December2009 2007£’000 £’000

Amounts falling due within one year:

Trade receivables 360 –

Other receivables 5 41

Prepayments and accrued income 64 209

Income tax receivable 112 –

Other taxes and social security receivable 106 –

647 250

Amounts falling due in more than one year:

Other receivables 23 –

23 –

15. TRADE AND OTHER PAYABLES

31 March 31 December2009 2007£’000 £’000

Trade payables 238 94

Other taxes and social security payable 61 16

Other payables 96 –

Accruals and deferred income 321 152

716 262

16. BORROWINGS

31 March 31 December2009 2007£’000 £’000

Non-current:

Bank borrowing 1,975 –

Other borrowing 25 –

2,000 –

All borrowings relate to amounts borrowed by the Group’s subsidiary

MJ Logistic Service Ltd. The debt is non-recourse to the parent

company.

17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENTThe Group finances its activities through the cash and short term

deposits generated through the placing of its shares on the London

Stock Exchange’s Alternative Investment Market. No debt funding has

been taken at the parent company level.

The Group’s financial instruments comprise investments held at fair

value through profit or loss, cash and cash equivalents and other items

such as trade and other payables and receivables which arise from its

operations. The Group does not trade in financial instruments. The

Group had no hedging transactions outstanding at the period end.

The main type of risk that the Group is exposed to is market risk.

Market risk involves the potential for losses and gains and includes

price risk, interest rate risk and currency risk.

Capital risk managementThe Group’s objectives when managing capital are to safeguard the

Group’s ability to continue as a going concern in order to provide

returns for shareholders and benefits for other stakeholders and to

maintain an optimal capital structure to reduce the cost of capital. In

order to maintain or adjust the capital structure, the Group may adjust

the amount of dividends paid to shareholders, return capital to

shareholders, issue new shares and increase or decrease debt.

Currency riskThe Group is exposed to currency risk as its investments may be

denominated in Indian Rupees and may be made in phased stages.

The Group hedges its pending investment commitments when it has

reasonable certainty of the timing and quantum of the transfer and

where it considers hedging is appropriate.

The Group’s investments are held in the accounts at fair value and that

fair value was determined by Ernst & Young India as part of an

independent fair valuation exercise. The value of the investments was

estimated in Indian Rupees as all the Group’s investee companies

operate in India. A 5% adverse change in the Pound Sterling/Indian

Rupee exchange rate would have led to an increase in the unrealised

fair value loss of £870,000.

At 31 March 2009

UK US IndianFinancial assets Sterling Dollars Rupees

£’000 £’000 £’000

Fair value through

income statement

Investments held at fair

value through profit

or loss – – 18,279

Loans and receivables

Other receivables due

in more than one year – – 23

Cash and cash

equivalents 14,511 10,175 1,549

Trade receivables – – 360


in less than one year 2 – 3

14,513 10,175 20,214


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33

At 31 December 2007

UK US IndianFinancial assets Sterling Dollars Rupees

£’000 £’000 £’000

Fair value through

income statement

Investments held at fair

value through profit

or loss – – 10,158

Loans and receivables

Cash and cash

equivalents 48,639 – –


in less than one year 12 – –

48,651 – 10,158

At 31 March 2009

Financial UK US Indianliabilities Sterling Dollars Rupees

£’000 £’000 £’000

Financial liabilities held

at amortised cost

Borrowings – – 2,000

Trade payables 102 – 136

Other payables – – 96

Accruals 131 – 190

233 – 2,422

At 31 December 2007

Financial UK US Indianliabilities Sterling Dollars Rupees

£’000 £’000 £’000

Financial liabilities held

at amortised cost

Trade payables 94 – –

Accruals 152 – –

246 – –

Credit riskCredit risk is managed through the company and its direct subsidiaries

depositing funds primarily with banks with a Standard & Poor’s rating of

AA or higher. Where a bank’s credit rating is reduced to less than AA

then the Group will seek to move funds from that bank as term deposits

expire. At 31 March 2009, 79% of the Group’s cash balances were

placed with entities with a credit rating of AA or higher (31 December

2007: 100%).

The Group’s Indian subsidiaries place funds with Indian banks whose

credit rating may be less than AA. The funds placed with the BBB rated

entity were placed by MJ Logistic Services Ltd.

Cash at bank and 31 March 31 Decemberbank term deposits 2009 2007

£’000 £’000

Standard & Poors credit rating

AAA 8,791 –

AA 11,941 48,639

A 3,954 –

BBB 1,546 –

Other 3 –

26,235 48,639

Trade receivables represent amounts owed to the Group’s Indian

subsidiary MJ Logistic Services Ltd. Over 90% of the balance

outstanding at 31 March 2009 was due from entities with the highest

Standard & Poors CRISIL rating of AAA. No trade receivables were

considered impaired as at 31 March 2009 and no bad debts had been

written off in the period ended 31 March 2009.

Price riskThe Group has invested in unquoted Indian infrastructure and real

estate companies. Those investments are held at fair value and the

value of those investments may be affected by market conditions.

Management continues to monitor this risk. A 10% fall in the value of

these investments would have increased the loss for the period by

£1,828,000.

Liquidity riskAs the Group is primarily equity funded and has high cash reserves,

liquidity risk is deemed to be low. The Group’s Indian subsidiary,

MJ Logistic Services Ltd had borrowings of £2,000,000 as at

31 March 2009.

Between BetweenMaturity of Less than 1 1 and 2 2 and 5financial liabilities year years years

£’000 £’000 £’000

At 31 March 2009

Borrowings – 1,940 60


Other payables 96 – –


655 1,940 60

At 31 December 2007



246 – –


17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

(CONTINUED)



34


34

Interest rate riskThe Group has interest bearing financial assets in the form of fixed rate

bank deposits with maturities of less than six months and floating rate

current account balances.

Non-interest Floatingbearing rate Fixed rate

financial financial financialassets assets assets£’000 £’000 £’000

At 31 March 2009

Investments held at

fair value through

profit or loss 18,279 – –

Other receivables

due in more than

one year 23 – –

Cash and cash

equivalents 324 971 24,940

Trade receivables 360 – –

Other receivables

due in less than

one year 5 – –

18,991 971 24,940

At 31 December 2007

Investments held at

fair value through

profit or loss 10,158 – –

Cash and cash

equivalents – 6,121 42,518

Other receivables

due in less than

one year 12 – –

10,170 6,121 42,518

The average rate at which the fixed rate assets were fixed in 2009 was

4.20% (2007: 5.75%) and the average period for which the assets were

fixed was 58 days (2007: 54 days).

A 5% reduction in the interest rate earned during 2009 would have

reduced the finance income for the period by approximately £101,000

(2007: £143,000).

The Group has financial liabilities in the form of fixed and floating rate

borrowings and non-interest bearing trade payables, other payables

and accruals.

Non-interest Floatingbearing rate Fixed rate

financial financial financialliabilities liabilities liabilities

£’000 £’000 £’000

At 31 March 2009

Borrowings 25 1,932 43


Other payables 96 – –


680 1,932 43

At 31 December 2007



246 – –

Fair value of financial assets and liabilitiesThere is no material difference between the carrying value and fair value

of the Group’s aggregate financial assets and liabilities.

18. PROVISION FOR LIABILITIES National insurance on share options

31 March 31 December2009 2007£’000 £’000

At beginning of period – 27

Released to income statement – (27)

At end of period – –

The eventual liability to National Insurance on share options is

dependent on the following factors:

• the market price of the Company’s shares at the date of exercise;

• the number of options that will be exercised; and

• the prevailing rate of National Insurance at the date of exercise.

19. CALLED UP SHARE CAPITAL

31 March 31 December2009 2007£’000 £’000

Authorised

400,000,000 (2007: 400,000,000)

ordinary shares of 10p each 40,000 40,000

Allotted, called up and fully paid

244,728,000 (2007: 244,728,000)

ordinary shares of 10p each 24,473 24,473

There were no shares issued during the period (2007: nil).

17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

(CONTINUED)


35


35

Options granted under Individual Option AgreementsAt 31 March 2009 the following number of share options were

outstanding in respect of the ordinary shares as granted under

individual share option agreements:

Date of Number of Price pergrant shares Period of option share

7 February 2005 1,956,000 Expire 10/2/15 25p

10 May 2006 9,549,986 Expire 10/5/16 25p

23 June 2008 6,500,000 Expire 23/6/18 19.25p

Options granted under the approved share option planAt 31 March 2009 the following share options were outstanding in

respect of the ordinary shares as granted under the approved share

option plan.

Date of Number of Price pergrant shares Period of option share

5 October 2006 198,346 Expire 5/10/16 30.25p

Further information on share options is provided in note 21.

20. RESERVESAt the Company’s Annual General Meeting on 18 July 2007, a

resolution was passed to seek the cancellation of the Company’s share

premium account which was approved by the High Court of Justice on

21 November 2007.

The amount of the share premium account was applied firstly in

eliminating the deficit on the Company’s profit and loss account as at

31 August 2007 of £2,320,000. The balance remaining of £32,826,000

was credited to the special reserve account.

The following describes the nature and purpose of each reserve within

equity:

Share premium account – the share premium account arose on the

issue of shares by the Company at a premium to their nominal value.

Special reserve account – the special reserve account was created on

the cancellation of the share premium account balance. Subject to

undertakings given to the High Court for the protection of creditors, the

Company will be able to use the special reserve account to make

market purchases of its own shares.

Retained earnings – the retained earnings represents cumulative net

gains and losses recognised in the Group Income Statement.

Foreign exchange reserve – arises on the translation of foreign

subsidiaries from Indian Rupees to Sterling.

21. SHARE-BASED PAYMENTEredene Capital PLC has issued equity-settled share based options

under individual option agreements and under an HMRC approved

scheme.

Individual Option Agreements1,956,000 options granted in 2005 were outstanding at 31 March

2009. These options have an exercise price of 25 pence per share and

became exercisable on 10 May 2006. The options may be exercised at

any time up to 10 February 2015.

9,549,986 options granted in 2006 were outstanding at 31 March

2009. These options have an exercise price of 25 pence per share and

became exercisable in full on 10 May 2009. The options may be

exercised at any time up to 10 May 2016.

428,274 of the options issued in 2006 were to non-employees of the

Group and relate to corporate finance services rendered. Those options

represent £10,000 of the total share based payment charge for the

period.

6,500,000 options granted in 2008 were outstanding at 31 March

2009. These options have an exercise price of 19.25 pence per share.

The options become exercisable in respect of one third of the ordinary

shares over which they are granted on the first, second and third

anniversary of 23 June 2008. The options will become exercisable in

respect of all of the ordinary shares in respect of which they are granted

in the event of an offer for the Company becoming unconditional in all

respects. To the extent that an option becomes exercisable, it may be

exercised at any time up to 23 June 2018.

HMRC Approved Scheme198,346 approved options were granted in 2006. These options have

an exercise price of 30.25 pence per share. The approved options

become exercisable in respect of one third of the ordinary shares over

which they are granted on the first, second and third anniversary of

5 October 2006. To the extent that an option becomes exercisable, it

may be exercised at any time up to 5 October 2016.

Weighted Weightedaverage averageexercise exercise

price Number price Number2009 2009 2007 2007

Outstanding at the

beginning of period 25.1p 11,704,332 25.1p 13,947,672

Granted during the

period 19.3p 6,500,000 – –

Lapsed during the

period – – 25.0p (2,243,340)

Outstanding at the

end of the period 23.0p 18,204,332 25.1p 11,704,332

The weighted average contractual life of options outstanding at the end

of the period was 10 years (2007: 10 years).

Of the total number of options outstanding at the end of the period

9,134,688 (2007: 5,545,344) had vested and were exercisable at the

end of the period.

No share options were exercised during the period (2007: Nil).


19. CALLED UP SHARE CAPITAL (CONTINUED)



36


36

6,500,000 share options were granted during the period (2007: nil). The

weighted average fair value of each option granted during the period

was 1.77p.

The following information is relevant in the determination of the fair value

of options granted during the period under the equity share based

remuneration agreements entered into by the Company.

2008 Issue

Equity-settled

Option pricing model used – Black Scholes

Share price at grant date (pence) 19.25

Exercise price (pence) 19.25

Weighted average contractual life (years) 5

Expected volatility 14%

Expected dividend yield 4.69%

Risk-free interest rate 4.32%

The volatility assumption, measured at the standard deviation of

expected share price returns, is based on a market average volatility

rate.

The share-based remuneration expense comprises:

31 March 31 December2009 2007£’000 £’000

Equity-settled schemes 274 266

22. COMMITMENTSThe Group had future minimum total commitments under non-

cancellable operating leases as set out below:

31 March 31 December2009 2007£’000 £’000

Operating leases which expire:

Less than one year 7 –

Later than one year and no later

than five years 507 180

23. BUSINESS COMBINATIONSAcquisitions in periodOn 7 January 2008, the Group acquired 90% of the ordinary share

capital of MJ Logistic Services Ltd, a logistic services company

operating in North India. The acquired business contributed revenue of

£1,461,000 and net loss of £157,000 to the Group for the period from

7 January 2008 to 31 March 2009. The group’s revenue and profit

would not have been materially different if the acquisition had occurred

on 1 January 2008 rather than 7 January 2008.

Further information on MJ Logistic Services Ltd is set out on page 12.

Details of net assets acquired and goodwill are as follows:

£’000

Purchase consideration

– Cash paid 7,913

– Direct costs relating to the acquisition 30

Total purchase consideration 7,943

Fair value of net assets acquired 7,891

Less Minority Interest (10%) (789)

(7,102)

Goodwill 841

The assets and liabilities as of 7 January 2008 arising from the

acquisition are as follows. There was no material difference between the

carrying value and fair value of the acquiree’s assets and liabilities.

Acquiree’s carrying amount

£’000

Cash and cash equivalents 7,967

Property, plant and equipment 18

Investments 5

Trade and other receivables 217

Trade and other payables (173)

Borrowings (143)

Net assets 7,891

Minority interests (10%) (789)

Net assets acquired 7,102

Purchase consideration settled in cash 7,943

Cash and cash equivalents in subsidiary acquired (7,848)

Cash outflow on acquisition 95

On 3 November 2008, the Group acquired 90% of the ordinary share

capital of Sattva Conware Pvt Ltd, a special purpose vehicle company

which will develop and operate a Container Freight Station to serve the

ports of Ennore and Chennai. The acquired business contributed no

revenue and a net loss of £26,000 to the Group for the period from

3 November 2008 to 31 March 2009. The group’s revenue and profit

would not have been materially different if the acquisition had occurred

on 1 January 2008 rather than 3 November 2008 as Sattva Conware is

not yet trading.

21. SHARE-BASED PAYMENT (CONTINUED)


37


37

Further information on Sattva Conware Pvt. Ltd. is set out on page 7.

Details of net assets acquired and goodwill are as follows:

£’000

Total purchase consideration – cash paid 2,136

Fair value of net assets acquired 2,387

Less Minority Interest (10%) (239)

(2,148)

Negative goodwill 12

The assets and liabilities as of 3 November 2008 arising from the

acquisition are as follows. There was no material difference between the

carrying value and fair value of the acquiree’s assets and liabilities.

Acquiree’s carrying amount

£’000

Cash and cash equivalents 2,387

Net assets 2,387

Minority interests (10%) (239)

Net assets acquired 2,148

Purchase consideration settled in cash 2,136

Cash and cash equivalents in subsidiary acquired (2,387)

Cash inflow on acquisition 251

There were no acquisitions in the year ended 31 December 2007.

Disposal in prior periodIn June 2007, the Company sold its subsidiary Eredene Mauritius

Limited, which held its then entire investment portfolio, to K2 Property

Limited (‘K2’), a subsidiary of Yatra Capital Limited for a total

consideration of £12.25m cash.

Of this consideration, Eredene received £9.75m in respect of its interest

in the three projects in which it had invested. Eredene had invested

£8.16m in these projects at the date of disposal (excluding related deal

costs). K2 assumed the deferred consideration of £5.5m for these

projects.

The remaining balance of the £12.25m was in respect of a

reimbursement of £2.50m, for a deposit of £2.53m which Eredene paid

when it entered into a conditional term sheet to invest in a development

in Bangalore.

The profit on disposal of Eredene Mauritius Limited was as follows:

£’000 £’000

Cash proceeds 12,250

Net assets disposed of:

Investments 13,882

Other receivables 2,531

Other payables (5,473)

(10,940)

Disposal costs (168)

Profit on disposal 1,142

24. NOTES SUPPORTING THE CASH FLOW STATEMENTCash and cash equivalents for the purposes of the cash flow statement

comprises:

2009 2007£’000 £’000

Cash available on demand 1,295 6,121

Short-term deposits 24,940 42,518

26,235 48,639

25. CONTINGENCIESThe Group has received a communication threatening legal action from

a shareholder and director of one of the companies in which the Group

has invested, Matheran Realty Pvt Ltd. The shareholder has also

obtained an order from the Mumbai Company Law Board ordering that

the current shareholding pattern, composition of the board of directors

and fixed assets of Matheran Realty Pvt Ltd and Gopi Resorts Pvt Ltd

are maintained unchanged. The claims are unsubstantiated and the

directors are of the opinion, having taken advice from legal counsel, that

the likelihood of a material claim being found against the Group is

remote.

26. RELATED PARTY TRANSACTIONSThe Group has entered into an investment advisory agreement with

Eredene Infrastructure Pvt Ltd, a company owned by Mr Nikhil Naik

who is a director of the Company. Investment advisory fees totalling

£852,000 (2007: £469,000) were paid during the fifteen month period.

This amount was used to pay the operating costs of the Mumbai

advisory team including the office costs, travel costs and staff costs for

a team of six. There were no amounts payable at the period end.

During the fifteen month period, the Company charged an amount of

£151,000 (2007: £39,000) to Glendevon King Ltd (formerly King Capital

Management Ltd) relating to the use of office space at the Company’s

offices on normal commercial terms. Alastair King, a director of the

Company, is a director and the sole shareholder of Glendevon King Ltd.


23. BUSINESS COMBINATIONS (CONTINUED)


38 NOTES FORMING PART OF THE FINANCIAL STATEMENTSfor the period ended 31 March 2009


The group makes minority equity investments as set out in note 12.

These investments are not equity accounted for (as permitted by IAS28)

but are related parties. The total amounts included for these

investments are:

2009 2007£’000 £’000

Income statement

Change in fair value of equity investments (5,125) 1,788

Gain on disposal of subsidiary – 1,142

Other portfolio income 23 –

Balance sheet

Investments held at fair value through

profit or loss 18,279 10,158

27. POST BALANCE SHEET EVENTSThe Group invested a further £361,000 in Contrans Logistic Pvt Ltd in

April 2009 and a further £175,000 in Apeejay Infra-Logistics Pvt in June

2009. Both investments were in line with the expected phasing of

investment tranches.

26. RELATED PARTY TRANSACTIONS (CONTINUED)


39COMPANY BALANCE SHEET

at 31 March 2009



Note £’000 £’000

Fixed assets

Tangible fixed assets 5 25 32

Investments 6 37,690 15,835

37,715 15,867

Current assets

Debtors 7 59 196

Cash at bank and in hand 20,250 41,961

20,309 42,157

Creditors: amounts falling due within one year 8 (215) (247)

Net current assets 20,094 41,910

Total assets less current liabilities 57,809 57,777

Net assets 57,809 57,777

Capital and reserves

Share capital 9 24,473 24,473

Special reserve 10 32,826 32,826

Profit and loss account 10 510 478

Shareholders’ funds 11 57,809 57,777

The financial statements were approved by the Board of Directors and authorised for issue on 30 June 2009.

A J N KING

DirectorThe notes on pages 40 to 42 form part of these financial statements.


40 NOTES FORMING PART OF THE EREDENE CAPITAL PLC COMPANY FINANCIAL STATEMENTSfor the period ended 31 March 2009


1. ACCOUNTING POLICIESThe following principal accounting policies have been applied:

Basis of preparationThe financial statements have been prepared under the historical cost

convention and in accordance with UK GAAP and the Companies Act

1985.

Fixed asset investmentsInvestments in subsidiary undertakings are stated at cost less any

allowance for impairment.

Share-based paymentsWhere share options are awarded to employees, the fair value of the

options at the date of grant is charged to the profit and loss account

over the vesting period. Non-market vesting conditions are taken into

account by adjusting the number of equity instruments expected to vest

at each balance sheet date so that, ultimately, the cumulative amount

recognised over the vesting period is based on the number of options

that eventually vest.

Where equity instruments are granted to persons other than

employees, the profit and loss account is charged with fair value of

goods and services received. If it is not possible to identify the fair value

of these goods or services provided, the profit and loss account is

charged with the fair value of the options granted.

The charge for share-based payments is calculated in accordance with

the analysis described in note 21 to the Group financial statements. The

option valuation model used requires highly subjective assumptions to

be made including expected volatility, dividend yields, risk-free interest

rates and expected staff turnover. The directors draw on a variety of

external sources to aid in the determination of the appropriate data to

use in such calculations.

Deferred taxDeferred tax balances are recognised in respect of all timing differences

between the recognition of gains and losses in the accounts and their

recognition for tax purposes. Deferred tax balances are not discounted.

Pension costsThe Company contributes to directors and employees personal money-

purchase pension schemes. Contributions are charged to the profit and

loss account in the period in which they become payable.

Cashflow StatementThe Company has used the exemption under FRS1 Cashflow

Statements, not to prepare a cashflow statement, as a consolidated

cashflow statement is included in the financial statements of its ultimate

holding company which are publicly available.

National Insurance on Share OptionsTo the extent that the share price at the balance sheet date is greater

than the exercise price on options granted, provision for any National

Insurance contributions has been made based on the prevailing rate of

National Insurance. The provision is accrued over the performance

period attaching to the award.

Operating leasesOperating lease rentals are charged to the profit and loss account on a

straight-line basis over the term of the lease.

Related party disclosuresThe Company has taken advantage of the exemption conferred by

Financial Reporting Standard 8 ‘Related party disclosures’, not to

disclose transactions with other group companies.

2. EMPLOYEESStaff costs (including directors) consist of:



£’000 £’000

Wages and salaries 638 494

Equity settled share-based payments 216 256

Social security costs 57 13

Other pension costs 49 32

960 795

The average number of employees (including directors) during the

period was as follows:



Management and administration 8 8

3. DIRECTORS’ REMUNERATION



£’000 £’000

Directors’ emoluments 497 384

Company contributions to directors’

money purchase pension schemes 36 19

533 403

The Company made contributions to two directors’ own money

purchase pension schemes in 2009 (2007: 2).

Emoluments of the highest paid director for the 15 month period were

£227,000 (2007: £162,000). Company pension contributions of

£21,000 (2007: £11,000) were made to a money purchase scheme on

his behalf.


41NOTES FORMING PART OF THE EREDENE CAPITAL PLC COMPANY FINANCIAL STATEMENTS

for the period ended 31 March 2009


Included in the directors’ emoluments figure for the 15 month period is

an amount of £44,000 (2007: £35,000) paid to Caledonia Group

Services Ltd for the services of the Hon C Cayzer as a non-executive

director. Caledonia Group Services is a subsidiary of Caledonia

Investments plc which is a shareholder in the Company. The Cayzer

Trust Company is a related party to Caledonia Investments plc and is a

shareholder in that company. The Hon C Cayzer, who is a director of the

Company, is a director and has a beneficial interest in both Caledonia

Investments plc and the Cayzer Trust Company Ltd.

Of the share based payment charge, £209,000 relates to directors

(2007: £256,000).

4. LOSS FOR THE FINANCIAL PERIODThe Company has taken advantage of Section 230 of the Companies

Act 1985 and has not included its profit and loss account in these

financial statements. The loss for the period dealt with in the profit and

loss account of the Company was £242,000 (year ended 31 December

2007: loss of £2,319,000).

5. TANGIBLE FIXED ASSETS

Fixturesand Office

fittings equipment Total£’000 £’000 £’000

Cost

At 1 January 2008 7 29 36

Additions – 7 7

Disposals – – –

At 31 March 2009 7 36 43

Depreciation

At 1 January 2008 – 4 4

Charge in the period 2 12 14

At 31 March 2009 2 16 18

Net book value

At 31 March 2009 5 20 25

At 31 December 2007 7 25 32

6. FIXED ASSET INVESTMENTSInvestments in subsidiary undertakingsThe Company had the following principal subsidiaries during the period:

Class ofCountry of shares Ownership

Incorporation held 2009 2007

Aboyne Mauritius

Holding Ltd Mauritius Ordinary 100% 100%

Bandra Mauritius


Coloba Mauritius


Ennore Mauritius


Haldia Mauritius


Juhu Mauritius


Pipavav Mauritius


2009 2007£’000 £’000

Cost

At beginning of period 15,835 9,779

Additions 21,855 15,835

Disposals – (9,779)

At end of period 37,690 15,835

Additions represent subscriptions for shares in Aboyne Mauritius

Holding Ltd, Bandra Mauritius Holding Ltd, Coloba Mauritius Holding

Ltd, Ennore Mauritius Holding Ltd, Haldia Mauritius Holding Ltd, Juhu

Mauritius Holding Ltd and Pipavav Mauritius Holding Ltd.

7. DEBTORS

31 March 31 December2009 2007£’000 £’000

Other debtors due within one year 18 41

Prepayments and accrued income 41 155

59 196

3. DIRECTORS’ REMUNERATION (CONTINUED)


42 NOTES FORMING PART OF THE EREDENE CAPITAL PLC COMPANY FINANCIAL STATEMENTSfor the period ended 31 March 2009


8. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

31 March 31 December2009 2007£’000 £’000

Trade creditors 102 94

Other taxes and social security 13 16

Accruals and deferred income 100 137

215 247

9. SHARE CAPITALDetails of the share capital of the Company are included in note 19 to

the Group financial statements.

10. RESERVES

Special Profit andReserve loss account

£’000 £’000

At 1 January 2008 32,826 478

Loss for the period – (242)

Share-based payment – 274

At 31 March 2009 32,826 510

11. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS’

FUNDS

2009 2007£’000 £’000

Loss for the period (242) (2,319)

Share based payment 274 266

32 (2,053)

Opening shareholders’ funds 57,777 59,830

Closing shareholders’ funds 57,809 57,777

12. COMMITMENTS UNDER OPERATING LEASESThe Company had annual commitments under non-cancellable

operating leases as set out below:

2009 2007£’000 £’000

Operating leases which expire:

Between two and five years 66 66

13. RELATED PARTY TRANSACTIONSDetails of the Company’s related party transactions are included in note

26 to the Group financial statements.

Forward-looking statementsThe following is not part of the Financial Statements. This document may contain forward-looking statements with respect to certain of the plans

and current goals and expectations relating to the future financial condition, business performance and results of Eredene Capital PLC. By their

nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances that are beyond the

control of Eredene Capital PLC including, amongst other things, UK domestic and global economic and business conditions, market related risks

such as fluctuations in interest rates, foreign exchange rates, inflation, the impact of competition, delays in implementing proposals, the timing,

impact and other uncertainties of future investments, the impact of tax or other legislation and other regulations in the jurisdictions in which Eredene

Capital PLC and its affiliates operate. As a result, Eredene Capital PLC’s actual future condition, business performance and results may differ

materially from the plans, goals and expectations expressed or implied in these forward-looking statements.


DIRECTORS

Sir C J Benson

The Hon C W Cayzer

D A Coltman

A J N King

N M Naik

G D Varley

SECRETARY & REGISTERED OFFICE

G D Varley ACA

7 Pilgrim Street

London, EC4V 6LB

COMPANY NUMBER

5330839

AUDITORS

BDO Stoy Hayward LLP

55 Baker Street

London, W1U 7EU

WEBSITE

www.eredene.com

SOLICITORS

Faegre & Benson LLP

7 Pilgrim Street

London, EC4V 6LB

NOMINATED ADVISER & BROKER

Numis Securities Limited

10 Paternoster Square

London, EC4M 7LT

REGISTRARS

Neville Registrars Limited

18 Laurel Lane

Halesowen, B63 3DA

COMPANY INFORMATIONANNUAL REPORT & ACCOUNTS 2009

1 Highlights

2 Chairman’s statement

5 Investment portfolio summary

6 Review of investments

15 Board of directors

16 Report of the directors

18 Statement of directors’ responsibilities

19 Report of the independent auditors

20 Consolidated income statement

21 Consolidated balance sheet

22 Consolidated statement of changes in equity

23 Consolidated cash flow statement

24 Notes forming part of the consolidated financial statements

39 Company balance sheet

40 Notes forming part of the company financial statements

215197 Eredene Cover 7/21/09 11:26 AM Page 2

EREDENE CAPITAL PLC INVESTING IN INDIA’S INFRASTRUCTURE EREDENE CAPITAL PLC INVESTING IN INDIA’S INFRASTRUCTURE

ANNUAL REPORT & ACCOUNTS31 MARCH 2009

10 FINSBURY SQUARE7TH FLOOR LONDONEC2A 1AD

TEL: +44 (0)20 7448 8000

FAX: +44 (0)20 7149 9832

WWW.EREDENE.COM

Designed & Printed by Perivan 215197

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