Noida Toll Bridge Company Limited
(“Noida Toll Bridge” or the “Company”)
Interim Results for half year ended 30 September 2010
AUDITOR’S REPORT
We have audited the consolidated Statement of Financial Position of Noida Toll Bridge Company Limited and its subsidiary as at September 30 2010, its consolidated Income Statement, consolidated Statement of Comprehensive Income and consolidated Statement of Cash Flow for the half year ended on that date and related notes. These financial statements have been prepared as per the accounting polices set out therein.
Responsibilities
The management is responsible for preparing the financial statement in accordance with accounting policies set out in note 1 to the financial statement and in accordance with International Financial Reporting Standards (IFRS).
Our responsibility is to audit the financial statements in accordance with the International standards of auditing issued by the auditing Practices Board. This report, including the opinion, has been prepared for and only for the company's members and directors and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Based on our audit we shall report to you our opinion as to whether the financial statements give a true and fair view.
Basis of Opinion
We conducted our audit in accordance with International Standards on Auditing 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 to be audited. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the group’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 to be audited 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 to be audited.
Opinion
In our opinion:
- the consolidated Statement of Financial Position gives a true and fair view, in accordance with IFRS of the state of the group's affairs as at September 30, 2010
- the consolidated Income Statement and consolidated Statement of Comprehensive Income gives a true and fair view, in accordance with IFRS of the income and comprehensive income for the half year then ended, and
- the consolidated Statement of Cash Flow gives a true and fair view of the cash flows for the half year ended on that date.
For Luthra & Luthra
Chartered Accountants
Akhilesh Gupta
Partner
(M. No. 89909)
Place: Noida
Date : December 21, 2010
NOIDA TOLL BRIDGE COMPANY LIMITED AND ITS SUBSIDIARY COMPANY
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER, 2010
Note / 30 Sept, 2010US ($) / 30 Sept, 2009
US ($) / 31 March, 2010
US ($)
Assets
Non Current Assets
Property, Plant and Equipment / 2 / 1,689,414 / 1,839,545 / 1,743,773
Intangible Asset / 3 / 120,015,097 / 112,886,222 / 119,800,921
Employee Benefit / 24,127 / 109,030 / 103,247
Trade Receivable / 6 / 174,821 / 363,261 / 347,939
Loans and Advances / 4 / 57,116 / 72,429 / 67,702
121,960,575 / 115,270,487 / 122,063,582
Current Assets
Inventories / 5 / 61,585 / 58,296 / 59,851
Trade Receivables / 6 / 617,920 / 567,691 / 994,501
Loans and Advances / 4 / 5,255,618 / 3,280,848 / 4,317,011
Prepayments / 110,143 / 127,527 / 62,846
Available-for-Sale Investments / 7 / 2,625,604 / 5,850,966 / 4,966,843
Cash and Cash Equivalents / 8 / 2,971,167 / 298,878 / 815,773
11,642,037 / 10,184,206 / 11,216,825
Total Assets / 133,602,612 / 125,454,693 / 133,280,407
Equity and Liabilities
Issued Capital / 9 / 42,419,007 / 42,419,007 / 42,419,007
Securities Premium / 10 / 32,334,899 / 30,234,881 / 32,177,308
Debenture Redemption Reserve / 10 / 394,153 / 255,964 / 326,711
Net Unrealised Gains Reserve / 10 / 34,403 / 96,749 / 1,132
General Reserve / 10 / 11,197 / 10,469 / 11,142
Effect of Currency Translation / 10 / (1,324,145) / (4,685,263) / (1,584,376)
Retained earnings (Profit & Loss Account ) / 6,620,171 / 6,793,268 / 8,362,533
Total / 80,489,685 / 75,125,075 / 81,713,457
Minority Interest / - / 6,975 / -
Total Equity / 80,489,685 / 75,132,050 / 81,713,457
Non Current Liabilities
Interest-bearing Loans and Borrowings / 11 / 29,532,154 / 35,542,578 / 36,386,090
Provisions / 12 / 109,788 / 1,916,450 / 2,130,417
Deferred Tax Liability / 13 / 5,382,880 / 1,719,408 / 3,717,031
Current Liabilities
Interest-bearing Loans and Borrowings / 11 / 5,241,777 / 5,408,259 / 2,358,443
Trade and Other Payables / 14 / 5,751,735 / 3,125,884 / 2,950,115
Provisions / 12 / 2,792,505 / 239,472 / 620,687
Provision for Taxes / 4,302,088 / 2,370,592 / 3,404,167
Total Liabilities / 53,112,927 / 50,322,643 / 51,566,950
Total Equity and Liabilities / 133,602,612 / 125,454,693 / 133,280,407
In terms of our report of even date On Behalf of the Board of Directors
For Luthra & Luthra
Chartered Accountants
Harish Mathur
Akhilesh Gupta Director DirectorCEO
Partner
(M. No 89909)
Place: Noida T. K. BanerjeePooja Agarwal
Date: 21.12.2010 CFOCompany Secretary
NOIDA TOLL BRIDGE COMPANY LIMITEDAND ITS SUBSIDIARY COMPANY
CONSOLIDATED INCOME STATEMENT FOR THE HALF YEAR ENDED 30 SEPTEMBER 2010
Note / Half Year ended30 Sept, 2010
US ($) / Half Year ended
30 Sept, 2009
US ($) / Year ended
31 Mar, 2010
US ($)
Toll Revenue / 7,602,816 / 7,212,967 / 14,955,580
License Fee / 1,385,712 / 1,232,656 / 2,737,895
Miscellaneous Income / 25,896 / 28,046 / 161,110
Total Income / 9,014,424 / 8,473,669 / 17,854,585
Operating and Administrative Expenses
- Operating Expenses / 15 / 464,609 / 561,602 / 1,082,920
- Administrative Expenses / 15 / 1,678,442 / 1,800,161 / 3,738,572
- Depreciation / 2 / 165,198 / 213,942 / 412,074
- Amortisation / 3 / 363,103 / 315,703 / 644,554
Total Operating and Administrative Expenses / 2,671,352 / 2,891,408 / 5,878,120
Group Operating Profit from Continuing Operations / 6,343,072 / 5,582,261 / 11,976,465
Finance Income
- Profit on Sale of Investments / 136,153 / 16,624 / 221,856
Interest & Dividend / -
Finance Charges / 16 / (3,260,255) / (3,305,128) / (5,448,710)
(3,124,102) / (3,288,504) / (5,226,854)
Profit/(Loss) from Continuing Operations before taxation / 3,218,970 / 2,293,757 / 6,749,611
Income Taxes:
- Current Taxes / (872,755) / (598,583) / (1,450,819)
- Deferred Tax / 13 / (1,605,818) / (694,398) / (2,507,222)
Profit/(Loss) after tax for the period / 740,397 / 1,000,776 / 2,791,570
Attributable to
Equity Shareholders / 740,397 / 993,873 / 2,791,570
Minority Interest / - / 6,903 / -
740,397 / 1,000,776 / 2,791,570
Profit per share
- basic and diluted / 17 / .004 / 0.005 / 0.015
In terms of our report of even date On Behalf of the Board of Directors
For Luthra & Luthra
Chartered Accountants
Akhilesh Gupta Harish Mathur
Partner Director Director CEO
(M. No 89909)
T. K. BanerjeePooja Agarwal
Place: Noida CFOCompany Secretary
Date: 21.12.2010
NOIDA TOLL BRIDGE COMPANY LIMITEDAND ITS SUBSIDIARY COMPANY
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 30SEPTEMBER, 2010
Half Year ended30 Sept, 2010
US ($) / Half Year ended
30 Sept, 2009
US ($) / Year ended
31 Mar, 2010
US ($)
Gain on fair valuation of available for sale investments / 33,271 / 95,973 / 356
Debenture Redemption Reserve / (65,842) / (51,305) / (108,904)
Effect of Currency translation / 419,477 / 4,238,218 / 9,124,521
Net Gain/(losses) recognised directly in equity / 386,906 / 4,282,886 / 9,015,973
Profit for the period / 740,397 / 1,000,776 / 2,791,570
Total Comprehensive Income / 1,127,303 / 5,283,662 / 11,807,543
Attributable to
Equity Shareholders / 1,127,303 / 5,276,759 / 11,807,543
Minority Interest / - / 6,903 / -
714,366 / 5,283,662 / 11,807,543
In terms of our report of even date On Behalf of the Board of Directors
For Luthra & Luthra
Chartered Accountants
Akhilesh Gupta Harish Mathur
Partner Director Director CEO
(M. No 89909)
T. K. BanerjeePooja Agarwal
Place: Noida CFOCompany Secretary
Date: 21.12.2010
NOIDA TOLL BRIDGE COMPANY LIMITEDAND ITS SUBSIDIARY COMPANY
CONSOLIDATED STATEMENT OF CASH FLOW FOR THE HALF YEAR ENDED 30th SEPTEMBER, 2010
Half Year ended30 Sept, 2010
US ($) / Half Year ended
30 Sept, 2009
US ($) / Year ended
31 Mar, 2010
US ($)
A. Cash Flow from Operating Activities
Receipts from Customers / 9,475,490 / 7,788,489 / 16,985,405
Payment to Suppliers and Employees / (1,893,907) / (2,675,491) / (4,614,851)
Deposits, Advances and Staff Loan / 5,992 / 5,998 / 15,180
Purchase of Inventories / (20,245) / (43,607) / (63,852)
Income Tax Paid / (865,022) / (523,564) / (1,521,168)
Net Cash from/(used in) Operating Activities (A) / 6,702,308 / 4,551,825 / 10,800,714
B. Cash Flow from Investment Activities
Purchase of Fixed Assets / (140,775) / (11,778) / (55,895)
Purchase of ‘Available for Sale’ Investments / (15,768,645) / (4,043,435) / (19,203,548)
Proceeds from sale of ‘Available for Sale’ Investments / 18,242,733 / 2,289,911 / 18,715,944
Proceeds from Sale of Fixed Assets / 6,468 / 27 / 22,263
Net Cash from/ (used in) Investment Activities (B) / 2,339,781 / (1,765,275) / (521,236)
C. Cash flow from Financing Activities
Minority Interest (Issue of Shares) / - / -
Repayment of Term Loan to Banks, Financial Institutions and Others / (5,206,155) / (1,354,873) / (6,325,431)
Interest and Finance Charges Paid / (1,739,149) / (1,341,965) / (3,388,451)
Net Cash from/ (used in) Financing Activities (C) / (6,945,304) / (2,696,838) / (9,713,882)
Net Increase/ (Decrease) in Cash and Cash Equivalents (A+B+C) / 2,096,785 / 89,712 / 565,596
Net Foreign Exchange Difference / 75,423 / 12,828 / 53,839
Cash and Cash Equivalents (Opening Balance) - Refer Note – 8 / 798,959 / 196,338 / 196,338
Cash and Cash Equivalents (Closing Balance) - Refer Note – 8 / 2,971,167 / 298,878 / 815,773
In terms of our report of even date On Behalf of the Board of Directors
For Luthra & Luthra
Chartered Accountants
Akhilesh Gupta Harish Mathur
Partner Director Director CEO
(M. No 89909)
T. K. BanerjeePooja Agarwal
Place: Noida CFOCompany Secretary
Date: 21.12.2010
1
NOIDA TOLL BRIDGE COMPANY LIMITEDAND ITS SUBSIDIARY COMPANY
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 30 SEPTEMBER, 2010
(in US$)
Issued capital/ Securities Premium
/ Debenture Redemption Reserve / Unrealised gain Reserve / General Reserve / Effect of currency Translation / Retained Earning / Total
Equity / Minority Interest / Total Equity
As at April 1, 2009 / 42,419,007 / 28,508,021 / 192,970 / 776 / 9,871 / (7,184,334) / 5,850,700 / 69,797,010 / - / 69,797,010
Comprehensive Income / - / 993,873 / 993,873 / 6,903 / 1,000,776
Gain on fair valuation of available for sale investments / - / - / - / 95,973 / - / - / - / 95,973 / 95,973
Creation of Debenture Redemption Reserve / - / - / 51,305 / - / - / (51,305) / - / - / -
Difference for currency translation / - / 1,726,860 / 11,689 / 598 / 2,499,071 / - / 4,238,219 / 72 / 4,238,291
As At Sept 30, 2009 / 42,419,007 / 30,234,881 / 255,964 / 96,749 / 10,469 / (4,685,263) / 6,793,268 / 75,125,075 / 6,975 / 75,132,050
As At April 1, 2010 / 42,419,007 / 32,177,308 / 326,711 / 1,132 / 11,142 / (1,584,376) / 8,362,533 / 81,713,457 / - / 81,713,457
Comprehensive Income / - / - / - / - / 740,397 / 740,397 / - / 740,397
Gain on fair valuation of available for sale investments / - / - / - / 33,271 / - / - / - / 33,271 / - / 33,271
Creation of Debenture Redemption Reserve / - / - / 65,842 / - / - / - / (65,842) / - / - / -
Interim Dividend* / - / - / - / - / - / - / (2,072,672) / (2,072,672) / (2,072,672)
Dividend Tax / - / - / - / - / - / - / (344,245) / (344,245) / - / (344,245)
Difference for currency translation / - / 157,591 / 1,600 / - / 55 / 260,231 / - / 419,477 / - / 412,937
As At Sept 30,2010 / 42,419,007 / 32,334,899 / 394,153 / 34,403 / 11,197 / (1,324,145) / 6,620,171 / 80,489,685 / - / 80,489,685
* Dividend of US$ 0.01 per share has been recognized during the period, being the interim dividend declared by the Board of Directors.
1
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)Corporate Information
Noida Toll Bridge Company Limited (NTBCL) is a public limited company incorporated and domiciled in India on 8th April 1996 with its registered office at Toll Plaza, DND Flyway, Noida - 201301, Uttar Pradesh, India. The equity shares of NTBCL are publicly traded in India on the National Stock Exchange and Bombay Stock Exchange. NTBCL launched the issue of global depository receipts (GDRs) represented by equity shares in March 2006 which are traded on Alternate Investment Market (AIM) of the London Stock Exchange.
The NTBCL has been set up to develop, establish, construct, operate and maintain a project relating to the construction of the Delhi Noida Toll Bridge under the “Build-Own-Operate-Transfer” (BOOT) basis. The Delhi Noida Toll Bridge comprises the Delhi Noida Toll Bridge, adjoining roads and other related facilities, the Ashram flyover which has been constructed at the landfall of the Delhi Noida Toll Bridge and the Mayur Vihar Link and it operates under a single business and geographical segment (Refer Note 25).
For all periods up to and including the half year ended 30 September 2010, the Group prepared its financial statements in accordance with Indian Generally Accepted Accounting Practice (Indian GAAP). To launch the GDRs in alternate investment market (AIM) of the London Stock Exchange, the group was required to prepare financial statements for all periods commencing from 1st April 2002 in accordance with International Financial Reporting Standards (IFRSs). Accordingly, the Group had prepared financial statements from 1 April 2002, which complies with IFRSs applicable for periods beginning on or after 1 January 2005.
(b) Service Concession Arrangement entered into between IL&FS, NTBCL and NOIDA
A ‘Concession Agreement’ entered into between the NTBCL, Infrastructure Leasing and Financial Services Limited (IL&FS, the promoter company) and the New Okhla Industrial Development Authority, Government of Uttar Pradesh, conferred the right to the Company to implement the project and recover the project cost, through the levy of fees/ toll revenue, with a designated rate of return over the 30 years concession period commencing from 30 December 1998 i.e. the date of Certificate of Commencement, or till such time the designated return is recovered, whichever is earlier. The Concession Agreement further provides that in the event the project cost together with the designated return is not recovered at the end of 30 years, the concession period shall be extended by 2 years at a time until the project cost and the return thereon is recovered. The rate of return is computed with reference to the project costs, cost of major repairs and the shortfall in the recovery of the designated returns in earlier years. As per the certification by the independent auditors, the total recoverable amount comprises project cost and 20% designated return. NTBCL shall transfer the Project Assets to the New Okhla Industrial Development Authority in accordance with the Concession Agreement upon the full recovery of the total cost of project and the returns thereon.
Further details of concession agreement are given in Note 25.
(c)Basis of preparation
The consolidated financial statements of Noida Toll Bridge Company Limited and its subsidiary (‘the Group’) have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations as laid down by the International Financial Reporting Interpretations Committee (IFRIC)
These consolidated financial statements have been drawn up in accordance with the going-concern principle and on a historical cost basis, except for available-for sale investments that have been measured at fair value. The presentation and grouping of individual items in the balance sheet, the income statement and the cash flow statement, as well as the changes in equity, are based on the principle of materiality.
(d) Significant accounting judgments and estimates
The preparation of financial statements in conformity with IFRS requires management to make estimates , Judgements and assumptions. Judgements and estimates 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.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Judgements
In the process of applying the Group's accounting policies, management has made the following judgments, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements:
Recognition of Concession Agreement as an Intangible Asset
(i)Basis of accounting for the service concession
The Group has determined that IFRIC 12 Service Concession Arrangements is applicable to the Concession Agreement and hence has applied it in accounting for the concession. The directors have determined that the intangible asset model in IFRIC 12 Service Concession Arrangement is applicable to the concession. In particular, they note that users pay tolls directly so the grantor does not have the primary responsibility to pay the operator.
In order to facilitate the recovery of the project cost and 20% designated returns through collection of toll and development rights, the grantor has guaranteed extensions to the terms of the Concession, initially set at 30 years. The Group has received an “in-principle” approval for development rights from the grantor. However the Group has not yet entered into any agreement with the grantor which would constitute an assurance from the grantor to facilitate the recovery of shortfalls. Management recognizes that the development right agreement when executed will give rise to intangible assets in their own right.
Disclosures for Service Concession Arrangement as prescribed under SIC 29 Service Concession Arrangements – Disclosure have been incorporated into the financial statements.
(ii)Significant assumptions in accounting for the intangible asset
On completion of construction of the Delhi Noida Toll Bridge (6 February 2001), the rights under the Concession Agreement have been recognized as an intangible asset, received in exchange for the construction services provided. Construction costs include besides others, expenditure incurred and provisions for outstanding capital commitments on the Ashram Flyover, which was significantly completed on the date of recognition of the intangible asset. This section of the bridge was commissioned on 30th October 2001. The intangible asset received has been measured at fair value of the construction services as of US$ 112,391,294 as on the date of commissioning. The Group has recognized a profit of US$ 32,591,491, which is the difference between the cost of construction services rendered (the cost of the project asset of US$ 79,799,802) and the fair value of the construction services.
The Directors have concluded that as operators of the bridge, they have provided construction services to NOIDA, the grantor, in exchange for an intangible asset, i.e. the right to collect toll from road-users during the Concession period.
Accordingly, the Group has measured the intangible asset at cost, i.e. the fair value of the construction services as at 6 February 2001, the date of completion of construction and commissioning of the asset.
The key assumptions used in establishing the cost of the intangible asset are as follows:
Construction of the DND Flyway commenced in 1998 and was completed on 6 February 2001. The exchange of construction services for an intangible asset is regarded as a transaction that generates revenue and costs, which have been recognized by reference to the stage of completion of the construction. Contract revenue has been measured at the fair value of the consideration receivable. Hence in each of the years of construction, construction revenue has been calculated at cost plus 17.5% and the corresponding construction profit has been recognized through retained earnings.
Management has capitalised qualifying finance expenses until the completion of construction.
The intangible asset is assumed to be received only upon completion of construction. Until then, management has recognised a receivable for its construction services. The fair value of construction services have been estimated to be equal to the construction costs plus margin of 17.5% and the effective interest rate of 13.5% for lending by the grantor. The construction industry margins range between 15-20% and management has determined that a margin of 17.5% is both conservative and appropriate. The effective interest rate used on the receivable during construction is the normal interest rate which grantor would have paid on delayed payments.
The intangible asset has been recognised on the completion of construction, i.e. 6th February 2001.
The management considers that they will not be able to earn the designated return under the Concession Agreement over 30 years. The company has an assured extension of the concession as required to achieve project cost and designated returns (see Note 1(b) above). The company has estimated the life of the bridge to be of 100 years. Intangible asset is being amortised over the same useful life under unit of usage method.
Development rights will be accounted for as and when exercised.
Construction of the Mayur Vihar Link commenced in 2006-07. NTBCL has obtained land from Noida for the construction of the Mayur Vihar Link vide Supplement to Noida Land Lease Deed executed between them. As per the terms of said lease deed Mayur Vihar Link Road will form part of Noida Bridge Project and the expenditure incurred by NTBCL on it shall be included in the cost of Noida Bridge with respect to the concession agreement. As the Mayur Vihar Link fall under the jurisdiction of Delhi Government, Municipal Corporation of Delhi vide confirmation agreement dated 9th January 2005 agreed not to declare the Mayur Vihar Link as public street and to recognize the right of NTBCL to operate and maintain the Mayur Vihar Link as a private street and charge user the fees in respect thereof. This right has been recognized as an intangible asset, received in exchange for the construction services provided to the grantor of the concession agreement. The intangible asset received has been measured at fair value of construction services as of US $ 15,961,837. The Group has recognized a profit of US $ 3,662,423 which is the difference between the cost of construction services rendered (the cost of project asset of US$ 12,299,414) and the fair value of the construction services.