Notes to the Interim Financial Statements

1              General Information

PME African Infrastructure Opportunities plc (the "Company") was incorporated and is registered and domiciled in the Isle of Man under the Isle of Man Companies Acts 1931 to 2004 on 19 June 2007 as a public limited company with registered number 120060C. The investment objective of PME African Infrastructure Opportunities plc and its subsidiaries (the "Group") was to achieve significant total return to investors through investing in various infrastructure projects and related opportunities across a range of countries in sub-Saharan Africa. On 19 October 2012 the shareholders approved the revision of the Company's investing policy which is now to realise the remaining assets of the Company and to return both existing cash reserves and the proceeds of realisation of the remaining assets to shareholders.

The Company's investment activities were managed by PME Infrastructure Managers Limited (the "Investment Manager") to 6 July 2012. No alternate has been appointed therefore the Board of Directors has assumed responsibility for the management of the Company's remaining assets. The Company's administration is delegated to Mainstream Fund Services (IOM) Limited (the "Administrator"). The registered office of the Company is Millennium House, 46 Athol Street, Douglas, Isle of Man, IM1 1JB.

Pursuant to its AIM admission document dated 6 July 2007, there was an original placing of up to 180,450,000 Ordinary Shares with Warrants attached on the basis of 1 Warrant for every 5 Ordinary Shares. Following the close of the placing on 12 July 2007, 180,450,000 Shares and 36,090,000 Warrants were issued. The Warrants lapsed in July 2012. The Shares of the Company were admitted to trading on AIM, a market of the London Stock Exchange, on 12 July 2007 when dealings also commenced.

Financial Year End

The financial year end for the Company is 31 December in each year.

Dividends

In the period to 30 June 2019 the Company declared and paid dividends of US$nil (2018: US$nil).

Going concern

In assessing the going concern basis of preparation of the interim financial statements for the period ended 30 June 2019, the Directors have taken into account the status of current negotiations on the realisation of the remaining assets and the general working capital facility of up to €400,000 as explained in note 4. The Directors consider that the Group has sufficient funds and the ability to raise further funds for its ongoing operations for the foreseeable future and therefore have continued to adopt the going concern basis in preparing these interim financial statements.

2              Summary of Significant Accounting Policies

2.1           Basis of preparation

The accounting policies applied by the Company in the preparation of these condensed financial statements are the same as those applied by the Company in its financial statements for the year ended 31 December 2018, except for the adoption of new and amended standards and interpretations as set out below.

These interim financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union. They do not include all of the information required for full annual financial statements and should be read in conjunction with the financial statements of the Company as at and for the year ended 31 December 2018, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union.

In accordance with IFRS 10, 'Consolidated financial statements', the Directors have concluded that the Company meets the definition of an investment entity and therefore it does not consolidate its subsidiaries, instead it accounts for its subsidiaries at fair value through profit or loss in accordance with IAS 39, 'Financial instruments: recognition and measurement' and prepares separate company financial statements only.

The interim financial statements for the six months ended 30 June 2019 are unaudited. The comparative interim figures for the six months ended 30 June 2018 are also unaudited.

3              Financial Assets at Fair Value through Profit or Loss

The following subsidiaries of the Company which are classified as financial assets at fair value through profit or loss are held at fair value in accordance with IFRS 10:

The following company is an indirect investment of the Company and is included within the fair value of the direct investments:

The following table shows a reconciliation of the opening balances to the closing balances for fair value measurements:

* The bank account for PME Locomotives (Mauritius) Limited was closed during 2017 and all money transferred to the Company's bank account. The Company is therefore responsible for its subsidiary's creditors at the period end (note 9).

** PME TZ Property (Mauritius) Limited declared a dividend of US$269,640 in August 2018 of which US$81,198 was offset against the intercompany loan with the Company.

Assets carried at amounts based on fair value are defined as follows:

·      Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).

·      Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).

·      Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

The fair values of all financial assets at fair value through profit or loss are determined using valuation techniques which include significant unobservable inputs. The principal asset remaining in the Group is the Dar-es-Salaam property. Accordingly, the fair values are classified as level 3.  There were no transfers between levels during the current period or prior year. The valuation techniques and the significant unobservable inputs are shown below.

4              Secured Loan

On 3 May 2019 the Company entered into a secured loan agreement with Optas GmbH ("Optas") to provide a facility of up to €400,000 to assist with general working capital. The loan is secured on the Company's cash receivables, is repayable within 18 months and attracts interest at a rate of 6% per annum on the utilised facility and 1% on the remaining unutilised facility. Interest payable by the Company for the six months ended 30 June 2019 amounted to US$1,623. As at 30 June 2019 EUR 180,000 (US$204,760) has been drawn down on this facility.

Paul Macdonald holds 50% of Optas's issued share capital, therefore Optas is deemed to be a related party of the Company and the loan is a related party transaction.

5              Net Asset Value per Share

The NAV per share is calculated by dividing the net assets attributable to equity holders of the Company by the number of Ordinary Shares in issue.

6              Basic and Diluted Loss per Share

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of Ordinary Shares in issue during the period.

There is no difference between basic and diluted Ordinary Shares as there are no potential dilutive Ordinary Shares.

7              Share Capital

At incorporation the authorised share capital of the Company was US$10,000,000 divided into 500,000,000 Ordinary Shares of US$0.01 each and 5,000,000 C Shares of US$1.00 each. The holders of Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

The holders of C Shares would be entitled to one vote per share at the meetings of the Company. The C Shares can be converted into Ordinary Shares on the approval of the Directors. On conversion each C share would be sub-divided into 100 C Shares of US$0.01 each and will be automatically converted into New Ordinary Shares of US$0.01 each.

Dividends and tender offers are recognised as a liability in the period in which they are declared and approved.

8              Capital Redemption Reserve

The capital redemption reserve is created on the cancellation of shares equal to the par value of shares cancelled. This reserve is not distributable.

9              Trade and Other Payables

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

The fair value of the above financial liabilities approximates their carrying amounts.

10            Operating and Administration Expenses

Administrator and Registrar fees

The Administrator receives fees on a time spent basis, subject to a minimum quarterly fee of £8,250, payable quarterly in arrears.

Administration fees expensed by the Company for the period ended 30 June 2019 amounted to US$35,020 (30 June 2018: US$26,160).

The Administrator provides general secretarial services to the Company, for which it receives a minimum annual fee of £5,000. Additional fees for management information can also be charged on a time spent basis.  For attendance at meetings not held in the Isle of Man, an attendance fee of £1,000 per day or part thereof is charged. The fees payable by the Company for general secretarial services for the period ended 30 June 2019 amounted to US$3,811 (30 June 2018: US$3,964).

Administration fees of the Mauritian subsidiaries for the period ended 30 June 2019 amounted to US$6,458 (30 June 2018: US$7,066). 

Administration fees of PME Properties Limited for the period ended 30 June 2019 amounted to US$26,087 (30 June 2018: US$21,525).

Directors' Remuneration

The maximum amount of basic remuneration payable by the Company by way of fees to the Directors permitted under the Articles of Association is £200,000 per annum. The Directors are each entitled to receive reimbursement of any expenses incurred in relation to their appointment. The Executive Directors are currently entitled to receive annual basic salaries of £75,000.

Total fees and basic remuneration (including VAT where applicable) and expenses payable by the Company for the period ended 30 June 2019 amounted to US$103,278 (30 June 2018: US$111,633) and was split as below. Directors' insurance cover payable amounted to US$14,877 (30 June 2018: US$14,877).

11            Operating Segments

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is the person or group that allocates resources to and assesses the performance of the operating segments of an entity.  The chief operating decision-makers have been identified as the Board of Directors.

The Board reviews the Company's internal reporting in order to assess performance and allocate resources. It has determined the operating segments based on these reports. The Board considers the business on a project by project basis by type of business. The type of business is transport (railway) and leasehold property.

* Other refers to income and expenses of the Company not specific to any specific sector such as income on un-invested funds and corporate expenses.

** Other refers to income and expenses of the Company not specific to any specific sector such as income on un-invested funds and corporate expenses.

* Other assets comprise cash and cash equivalents US$46,426 and other assets US$16,439.

** Other assets comprise cash and cash equivalents US$139,141 and other assets US$26,137.

12            Risk Management

The Company's activities expose it to a variety of financial risks: market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk. The financial risks relate to the following financial instruments: financial assets at fair value through profit or loss, trade and other receivables, cash and cash equivalents, secured loan and trade and other payables.  There has been no material change in the market, credit or liquidity risk profile since the year ended 31 December 2018.

There have been no changes in risk management policies or responsibilities since the year end. The risk management is carried out by the Executive Directors.

These interim financial statements do not include all financial risk management information and disclosures required for full annual financial statements and should be read in conjunction with the financial statements of the Company as at and for the year ended 31 December 2018.

13            Related Party Transactions

Parties are considered to be related if one party has the ability to control the other party or to exercise significant influence over the other party in making financial or operational decisions. Key management is made up of the Board of Directors.

The Directors of the Company are considered to be related parties by virtue of their influence over making operational decisions. Directors' remuneration is disclosed in note 10 and the related party loan is disclosed in note 4 and note 15.

14            Income Tax Expense

The Company is resident for taxation purposes in the Isle of Man and is subject to income tax at a rate of zero per cent (2018: zero per cent).

15            Post Balance Sheet Events

Since the period end the Company has drawn down a further EUR 103,000 (US$117,830) on the Optas loan facility.