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AFI Development PLC (AFRB)

  Print          Annual reports

Thursday 24 May, 2018

AFI Development PLC

1st Quarter Results

RNS Number : 0942P
AFI Development PLC
24 May 2018
 

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION

IN OR INTO THE RUSSIAN FEDERATION, THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN

 

24 May 2018

 

AFI DEVELOPMENT PLC

("AFI DEVELOPMENT" OR "THE COMPANY")

 

RESULTS FOR THE THREE MONTHS TO 31 MARCH 2018

Performance continues to improve as positive momentum is maintained

 

AFI Development, a leading real estate company focused on developing property in Russia, has today announced its financial results for the three months ended 31 March 2018.

Q1 2018 financial highlights[1]

·     Revenue for Q1 2018 increased by 4% year-on-year to US$49.4 million, including proceeds from the sale of trading properties:

-    Rental and hotel operating income increased by 22% year-on-year to US$31.2 million

-    AFIMALL City contribution stood at US$22.1 million (Q1 2017: US$19.5 million), a 13% improvement year-on-year

-    Sale of residential properties contributed US$17.9 million to total revenue[2]

·     Gross profit decreased slightly to US$15.8 million (Q1 2017: US$16.1 million)  

·     Net profit for Q1 2018 amounted to US$5.1 million, compared to US$1.0 million in Q1 2017

·     Total gross value of portfolio of properties was unchanged at US$1.42 billion   

·     Cash, cash equivalents and marketable securities as of 31 March 2018 grew to US$118.5 million (vs. US$106.0 million at end-2017)

Q1 2018 operational highlights

·     The delivery of apartments to customers commenced at AFI Residence Paveletskaya. Progress was made in the marketing of the properties with 421 residential unit pre-sale contracts (67% of units under pre-sales) signed as of 21 May 2018 

·     At Odinburg, construction works and pre-sales continue at Building 3 (phase I) and Building 6 (phase II). The last remaining apartments in Building 2 are in the process of being sold.  As of 21 May 2018, the number of signed sale contracts stood at 677 (96% of total) in Building 2, 179 (19% of total) in Building 3 and 153 (68% of total) in Building 6

·     At Bolshaya Pochtovaya, construction and pre-sale is progressing as planned. As of 21 May 2018, 115 apartments (61% of Phase I) have been pre-sold at Bolshaya Pochtovaya   

·     The construction and pre-sale of properties at Botanic Garden remains on track. As of 21 May 2018, 162 apartments (21% of Phase I) have been pre-sold to customers

·     AFIMALL City continues to record solid NOI growth, reaching US$16.8 million in Q1 2018, up from US$14.3 million in Q1 2017 (a 17% increase year-on-year) 

Commenting on today's announcement, Lev Leviev, Executive Chairman of AFI Development, said:

"We are pleased to confirm that the positive momentum of the previous year was maintained throughout the first quarter of 2018, leading to a solid set of financial results for the period. Our flagship AFIMALL City project continues to perform strongly and has contributed greatly to revenue and profit. We are confident this strong set of results leaves us well positioned to meet any potential challenges in the year ahead as we continue to advance our pipeline of projects under development."

Q1 2018 Results Conference Call:

AFI Development will hold a conference call for analysts and investors to discuss its Q1 2018 financial results on Friday, 25 May 2018.

Details for the conference call are as follows:

 

Date:                                  Friday, 25 May 2018          

 

Time:                                  3pm BST (5pm Moscow)


Dial-in Tel:                     International:           +44 (0)20 3003 2666

 UK toll free:              0808 109 0700

 US toll-free:              1 866 966 5335

 Russia toll-free:      8 10 8002 4902044

 

Password:                          AFI Development

 

The Q1 2018 investor presentation will be published on the Company's website: http://www.afi-development.com/en/investor-relations/reports-presentations by 11.00 UK (13.00 Moscow) on 25 May 2018.

- ends -

 

 

For further information, please contact:

 

AFI Development, +7 495 796 9988

Ilya Kutnov, Corporate Affairs/Investments Director (Responsible for arranging the release of this announcement)

 

Citigate Dewe Rogerson, London +44 20 7638 9571

Sandra Novakov

Aidan McGrattan

 

This announcement contains inside information.

 

About AFI Development

Established in 2001, AFI Development is one of the leading real estate development companies operating in Russia.

AFI Development is listed on the Main Market of the London Stock Exchange and aims to deliver shareholder value through a commitment to innovation and continuous project development, coupled with the highest standards of design, construction and quality of customer service.

AFI Development focuses on developing and redeveloping high quality commercial and residential real estate assets across Russia, with Moscow being its main market. The Company's existing portfolio comprises commercial projects focused on offices, shopping centres, hotels and mixed-use properties, and residential projects. AFI Development's strategy is to sell the residential properties it develops and to either lease the commercial properties or sell them for a favourable return.

AFI Development is a leading force in urban regeneration, breathing new life into city squares and neighbourhoods and transforming congested and underdeveloped areas into thriving new communities. The Company's long-term, large-scale regeneration and city infrastructure projects establish the necessary groundwork for the successful launch of commercial and residential properties, providing a strong base for the future.

Legal disclaimer

Some of the information in these materials may contain projections or other forward-looking statements regarding future events, the future financial performance of the Company, its intentions, beliefs or current expectations and those of its officers, directors and employees concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and business.

You can identify forward looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could," "may" or "might" or the negative of such terms or other similar expressions. These statements are only predictions and that actual events or results may differ materially. Unless otherwise required by applicable law, regulation or accounting standard, the Company does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Company, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia and market change in the industries the Company operates in, as well as many other risks specifically related to the Company and its operations. 

 

Executive Chairman's statement

Building on the positive momentum of 2017, the macroeconomic environment in Russia continued to stabilise into Q1 2108, as reflected by improved GDP growth projections and low inflation.

Supported by these positive trends, our financial performance continued to improve, with revenue growing 4% year-on-year to US$49.4 million for the quarter. The rental and hotel operating income increased 22% year-on-year to US$31.2 million, reflecting the strong performance of AFIMALL City. Our gross profit for the quarter was US$15.8 million. 

We are pleased to report that we have started the delivery of pre-sold apartments in Phase I of our AFI Residence Paveletskaya project. The construction and pre-sales at our other residential projects, namely, Odinburg, Bolshaya Pochtovaya and Botanic Garden are also progressing to plan.

Projects update

AFIMALL City

 

Continued improvement in the performance of AFIMALL City is reflected in increased revenue, up 13% year-on-year to US$22.1 million for the quarter, and NOI, up 17% year-on-year to US$16.8 million. Occupancy at the end of the quarter reached 90%, from 89% at the end-2017.

 

Recent new openings at AFIMALL City include a boutique of Russian designers' apparel "the House of Russian Fashion", Van Cliff men's fashion and Adolfo Dominguez women's fashion outlets.

 

Odinburg


At the Odinburg residential development, Building 3 (Phase I) and Building 6 (Phase II) are under construction and currently being marketed to customers. The last remaining apartments at the delivered Building 2 of Phase I are in the process of being sold. 

 

As of 21 May 2018, 677 apartments (96% of total) were sold in Building 2, 179 (19% of total) in Building 3 and 153 (68% of total) in Building 6. 

 

AFI Residence Paveletskaya (Paveletskaya II)

 

In Q1 2018, Phase I of the AFI Residence Paveletskaya development was commissioned and delivery of apartments to customers commenced. Meanwhile, construction works and marketing of apartments and special units continues to plan. As of the date of publication of this report, 421 contracts for pre-sales of both apartments and "special units" have been signed (67% of Phase I and Phase II combined).

 

Bolshaya Pochtovaya

 

During Q1 2018 the construction and marketing of the project progressed according to plan and as of 21 May 2018, 115 apartments (61% of Phase I) had been pre-sold to customers.

 

Botanic Garden

The construction and pre-sales are also progressing at Botanic Garden. As of 21 May 2018, 166 apartments (21% of Phase I) have been pre-sold to customers

Aquamarine III (Ozerkovskaya III)

In Q1 2018 the Company successfully completed the disposal of Buildings 2 and 4 to an end-user (one of the leading Russian banks) for circa US$135 million.

 

Following the disposal, and the restructuring of the loans of Aquamarine III and of AFIMALL City with VTB Bank PJSC, the loan at Aquamarine III was fully repaid in January 2018.

AFI Development currently owns one remaining building in the complex (GBA 18,805 sq.m including underground parking), which is leased to Deutsche Bank, Brown-Forman and other tenants. The occupancy of the building as of the end of Q1 2018 was 87%.

 

 

 

 

Lev Leviev

Executive Chairman of the Board

 

 

 

 

NOT REVIEWED BY AUDITORS

 

 

SUMMARY OF FINANCIAL RESULTS

 

For the period from 1 January 2018 to 31 March 2018

 

 

 

 

 

 

 

 

 

 

AUDITED CONSOLIDATED INCOME STATEMENT

For the period from 1 January 2018 to 31 March 2018

 

 

 

 

 

Unaudited

1/1/18-

Audited

1/1/17-

 

 

31/3/18

31/3/17

 

Note

US$ '000

US$ '000

 

 

 

 

Revenue

2

  49,401

  47,498

 

 

 

 

Other income

 

        210

       155

 

 

 

 

Operating expenses

4

(15,766)

(12,262)

Carrying value of trading properties sold

 

(16,377)

(20,331)

Administrative expenses

3

(1,371)

(546)

Other expenses

 

        (250)

      (385)

Total expenses

 

 (33,764)

 (33,524)

 

 

 

 

Share of the after tax profit of joint ventures

 

             -

        1,957

 

 

 

 

Gross Profit

 

  15,847

  16,086

 

 

 

 

Gain on 100% acquisition of previously held interest in a joint venture

 

 

 

           -

 

          7,532

Decrease in fair value of properties

7,8

 (4,011)

(43,613)

 

 

 

 

Results from operating activities

 

    11,836

       (19,995)

 

 

 

 

Finance income

 

6,545

24,470

Finance costs

 

(11,834)

     (11,863)

Net finance (costs)/income

5

  (5,289)

   12,607

 

 

 

 

(Loss)/profit before tax

 

6,547

(7,388)

Tax (expense)/benefit

6

  (1,429)

       8,419

 

 

 

 

(Loss)/profit for the period

 

  5,118

   1,031

 

 

 

 

(Loss)/profit attributable to:

 

 

 

Owners of the Company

 

5,140

1,091

Non-controlling interests

 

      (22)

         (60)

 

 

  5,118

   1,031

 

 

 

 

Earnings per share

 

 

 

Basic and diluted earnings per share (cent)

 

   0.49

             0.10

         

 

The unaudited summary of financial results was approved by the Board of Directors on 23 May 2018.

 

 

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 March 2018

 

 

 

Unaudited 31/3/18

Audited

31/12/17

 

Note

US$ '000

US$ '000

Assets

 

 

 

Investment property

7

818,060

818,060

Investment property under development

8

163,240

163,240

Property, plant and equipment

9

78,040

77,633

Long-term loans receivable

 

1,705

1,669

Intangible assets

 

693

204

VAT recoverable

 

             52

              48

Non-current assets

 

1,061,790

1,060,854

 

 

 

 

Trading properties

10

9,188

10,792

Trading properties under construction

11

357,039

349,735

Other investments

 

15,032

10,515

Inventories

 

1,088

1,318

Short-term loans receivable

 

1,105

1,090

Trade and other receivables

12

57,368

70,402

Current tax assets

 

4,148

4,114

Cash and cash equivalents

13

103,418

     95,468

Current assets

 

   548,386

   543,434

 

 

 

 

Total assets

 

1,610,176

1,604,288

 

 

 

 

Equity

 

 

 

Share capital

 

1,048

1,048

Share premium

 

1,763,409

1,763,409

Translation reserve

 

(300,791)

(301,050)*

Capital reserve

 

(19,330)

(19,333)

Retained earnings

 

  (660,299)

  (665,438)*

Equity attributable to owners of the Company

 

784,037

778,636

Non-controlling interests

 

         (149)

      (144)*

Total equity

 

   783,888

   778,492

 

 

 

 

Liabilities

 

 

 

Long-term loans and borrowings

14

584,147

492,484

Deferred tax liabilities

 

44,853

44,538*

Deferred income

 

    12,894

     12,641

Non-current liabilities

 

    641,894

   549,663

 

 

 

 

Short-term loans and borrowings

14

3,405

86,775

Trade and other payables

15

40,228

65,106

Advances from customers

 

     140,105

     114,335*

Current tax liabilities

 

656

9,917

Current liabilities

 

   184,394

276,133

 

 

 

 

Total liabilities

 

   826,288

825,796

 

 

 

 

Total equity and liabilities

 

1,610,176

1,604,288

         

 

*The Group has adopted IFRS 15 Revenue from Contracts with Customers from 1 January of 2018. For further details refer to note 4 of Report and Financial Statement for the year ended 31 December 2017.

 

 

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

For the period from 1 January 2018 to 31 March 2018

 

 

 

Unaudited 1/1/18-

Audited

1/1/17-

 

 

31/3/18

31/3/17

Note

US$ '000

US$ '000

Cash flows from operating activities

 

 

 

Profit/(loss) for the period

 

5,118

1,031

Adjustments for:

 

 

 

Depreciation

9

242

197

Net finance costs/(income)

5

4,514

(12,728)

Decrease in fair value of properties

7,8

4,011

43,613

Share of profit in joint ventures

 

-

(1,957)

Gain on 100% acquisition of previously held interest in a joint venture

 

 

-

 

(7,532)

Tax expense/(benefit)

6

  1,429

  (8,419)

 

 

15,314

14,205

Change in trade and other receivables

 

18,323

(2,264)

Change in inventories

 

239

33

Change in trading properties and trading properties under construction

 

 

(4,444)

 

(3,318)

Change in advances and amounts payable to builders of trading properties under construction

 

 

(3,786)

 

2,725

Change in advances from customers

 

25,271

(1,430)

Change in trade and other payables

 

(25,734)

9,962

Change in VAT recoverable

 

(557)

(663)

Change in deferred income

 

    181

       291

Cash generated from operating activities

 

24,807

19,541

Taxes paid

 

   (10,043)

     (500)

Net cash from operating activities

 

  14,764

 19,041

 

 

 

 

Cash flows from investing activities

 

 

 

Acquisition of subsidiary net of cash acquired

 

-

(786)

Proceeds from sale of other investments

 

5,148

2,621

Proceeds from sale of property, plant and equipment

 

2

-

Interest received

 

349

159

Change in advances and amounts payable to builders

15

(263)

1,836

Payments for construction of investment property under development

 

8

 

(756)

 

(796)

Payments for the acquisition/renovation of investment property

 

7

 

(256)

 

(97)

Change in VAT recoverable

 

143

614

Acquisition of property, plant and equipment

9

(305)

(11)

Acquisition of other investments

 

(9,845)

(2,612)

Acquisition of intangible assets

 

(964)

-

Proceeds from repayments of loans receivable

 

-

4,178

Payments for loans receivable

 

      (2)

          (1,429)

Net cash from / (used in) investing activities

 

       (6,749)

     3,677

 

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)

For the period from 1 January 2018 to 31 March 2018

 

 

 

 

Unaudited 1/1/18-

Audited

1/1/17-

 

 

31/3/18

31/3/17

Note

US$ '000

US$ '000

Cash flows from financing activities

 

 

 

Acquisition of non-controlling interests

 

-

(1,500)

Proceeds from loans and borrowings

 

102,686

5,632

Repayment of loans and borrowings

 

(92,314)

-

Interest paid

 

 (12,555)

 (11,978)

Net cash used in financing activities

 

    (2,183)

 (7,846)

 

 

 

 

Effect of exchange rate fluctuations

 

      2,118  

       (2,044)

 

 

 

 

Net increase in cash and cash equivalents

 

95,468

12,828

Cash and cash equivalents at 1 January

 

  7,950 

  10,619 

Cash and cash equivalents at 31 March

13

  103,418 

  23,447 

 

 

 

 

NOTES TO THE UNAUDITED SUMMARY OF FINANCIAL RESULTS

For the period from 1 January 2018 to 31 March 2018

 

1.   SUMMARY OF OPERATION

 

Incorporation and principal activity

 

AFI Development PLC (the "Company") was incorporated in Cyprus on 13 February 2001 as a limited liability company under the name Donkamill Holdings Limited. In April 2007 the Company was transformed into public company and changed its name to AFI Development PLC. The address of the Company's registered office is 165 Spyrou Araouzou Street, Lordos Waterfront Building, 5th floor, Flat/office 505, 3035 Limassol, Cyprus. As of 7 September 2016, the Company is a 64.88% subsidiary of Flotonic Limited, a private holding company registered in Cyprus, 100% owned by Mr Lev Leviev. Prior to that, the Company was a 64.88% subsidiary of Africa Israel Investments Ltd ("Africa-Israel"), which is listed on the Tel Aviv Stock Exchange ("TASE"). The remaining shareholding of "A" shares is held by a custodian bank in exchange for the GDRs issued and listed in the London Stock Exchange ("LSE"). On 5 July 2010 the Company issued by way of a bonus issue 523,847,027 "B" shares, which were admitted to a premium listing on the Official List of the UK Listing Authority and to trading on the main market of LSE. On the same date, the ordinary shares of the Company were designated as "A" shares.

 

This summary of financial results comprises the Company and its subsidiaries (together referred to as the "Group"). The principal activity of the Group is real estate investment and development.

 

The summary of financial results was not audited. The amounts are based on the Group's financial information, which is prepared in accordance with International Financial Reporting Standards ("IFRS"), as adopted by the European Union ("EU") and the Group's accounting policy, while the disclosures and presentation are not in compliance with IFRSs, specifically with IAS 34 "Interim Financial Reporting" and IAS 1 "Presentation of Financial Statements".

 

Exchange rates

The table below shows the exchange rates of Russian Rubles, which is the functional currency of the Russian subsidiaries of the Group, to the US Dollar, which is the presentation currency of the Group:

                                                                                                                          % change  % change

                                                                                          Russian Rubles        quarter      year to

As of:                                                                                     for US$1                                     date

31 March 2018                                                                      57.2649                      (0.6)          (0.6)

31 December 2017                                                               57.6002                                       (5.0)

31 March 2017                                                                      56.3779                                        (7.2)

 

Average rate during:

Three-month period ended 31 March 2018                         56.8803                                        (2.5)

Three-month period ended 31 March 2017                         58.8366                                      (21.2)

 

 

 

 

 

2.   REVENUE

 

Unaudited

1/1/18-

31/3/18

Audited

1/1/17-

31/3/17

 

US$ '000

US$ '000

 

 

 

Investment property rental income

23,638

20,975

Sales of trading properties (note 10)

1,750

21,865

Sales of residential - transferred over time* (note 11)

16,160

-

Hotel operation income

7,590

4,546

Non-core activity revenue

260

-

Construction consulting/management fees

          3

        112

 

 49,401

 47,498

 

*The Group has adopted IFRS 15 Revenue from Contracts with Customers from 1 January of 2018.

 

3.   ADMINISTRATIVE EXPENSES

 

Unaudited

 1/1/18-

31/3/18

Audited

1/1/17-

31/3/17

 

US$ '000

US$ '000

 

 

 

Consultancy fees

160

91

Legal fees

329

576

Auditors' remuneration

62

77

Valuation expenses

16

36

Directors' remuneration

328

325

Depreciation

32

35

Insurance

36

37

Provision for Doubtful Debts

6

(986)

Other administrative expense

      402

      355

 

   1,371

   546

 

 

4.   OPERATING EXPENSES

 

 

Unaudited

1/1/18-

31/3/18

Audited

 1/1/17-

31/3/17

 

US$ '000

US$ '000

 

 

 

Maintenance, utility and security expenses

5,479

4,318

Agency and brokerage fees

924

234

Advertising expenses

1,816

916

Salaries and wages

4,089

3,438

Consultancy fees

126

161

Depreciation

210

163

Insurance

116

148

Rent

432

452

Property and other taxes

2,554

2,418

Other operating expenses

         20

        14

 

  15,766

  12,262

 

 

5.   FINANCE COST AND FINANCE INCOME

 

Unaudited

1/1/18-

31/3/18

Audited

1/1/17-

31/3/17

 

US$ '000

US$ '000

 

 

 

Interest income

368

315

Net foreign exchange gain

6,177

24,104

Net change in fair value of financial assets

-

51

Finance income

   6,545

   24,470

 

 

 

Interest expense on loans and borrowings

(9,205)

(11,742)

Net change in fair value of financial assets

(621)

-

Other finance costs

     (770)

     (121)

Interest expenses (financing component under IFRS 15)*

(1,238)

-

Finance costs

(11,834)

(11,863)

 

 

 

Net finance (costs)/income

(5,289)

12,607

 

*The Group has adopted IFRS 15 Revenue from Contracts with Customers from 1 January of 2018.

 

 

6.   TAX EXPENSE / (BENEFIT)

 

Unaudited

1/1/18-

31/3/18

Audited

1/1/17-

31/3/17

 

US$ '000

     US$ '000

Current tax expense

 

 

Current year

       990

         481

 

 

 

Deferred tax expense/(benefit)

 

 

Origination and reversal of temporary differences

439

(8,900)

Total income tax expense/(benefit)

1,429

     (8,419)

           

7.   INVESTMENT PROPERTY

 

Reconciliation of carrying amount

 

Unaudited

31/3/18

Audited

31/12/17

 

US$ '000

US$ '000

 

 

 

Balance 1 January

818,060

915,350

Renovations / additional costs

256

998

Disposals

-

(140,026)

Fair value adjustment

(2,684)

18,218

Effect of movement in foreign exchange rates

2,428

23,520

Balance 31 March / 31 December

818,060

818,060

 

 

The increase/decrease due to the effect of the foreign exchange fluctuation is a result of the weakening of the US Dollar to the Russian Rouble by 0.6% during the first quarter 2018. The fair value adjustment in investment property was a result of this weakening of the US Dollar.

 

The Company assessed that the fair value of the properties has not materially changed since 31 December 2017 as there were no significant changes in the macroeconomic conditions in Russia. The same applies for investment property under development. See note 8 below.

 

The disposals of investment property represent the below two transactions:

 

·     Two out of the three buildings of Ozerkovskaya III also known as Aquamarine III Business Centre owned by Krown Investments LLC to one of the leading Russian banks. The consideration received amounted to Russian rouble 7.89 billion, equivalent to US$135 million net of the applicable Russian VAT, brokerage fees and cost of agreed repairs resulting in a loss of approximately US$4 million before taxes.

·     An agreement based on which the Group acquired the additional 26% interest in Bizar LLC increasing its ownership to 100% in exchange for one of the four buildings owned by Bizar LLC of a total value of US$5,341 thousand.

 

 

8.   INVESTMENT PROPERTY UNDER DEVELOPMENT

 

Unaudited

31/3/18

Audited

31/12/17

 

US$ '000

US$ '000

 

 

 

Balance 1 January

163,240

232,900

Construction costs

756

4,865

Transfer to trading properties under construction (note 11)

-

(74,100)

Fair value adjustment

(1,327)

(6,648)

Effect of movements in foreign exchange rates

571

  6,223

Balance 31 March / 31 December

163,240

163,240

 

The investment property under development was revalued by independent appraisers on 31 December 2017. The cumulative adjustments, for all projects, are shown in line "Fair value adjustment" in the table above.

 

The increase/decrease due to the effect of the foreign exchange fluctuation is a result of the weakening of the US Dollar to the Russian Rouble by 0.6% during the first quarter 2018, as described in note 7 above.

 

9.   PROPERTY, PLANT AND EQUIPMENT

 

Unaudited

31/3/18

Audited

31/12/17

 

US$ '000

US$ '000

 

 

 

Balance 1 January

77,633

31,215

Effect of acquisition of subsidiary

-

45,580

Depreciation charge

(242)

(846)

Additions

305

484

Disposals

(2)

(137)

Effect of movements in foreign exchange rates

346

1,337

Balance 31 March / 31 December

  78,040

  77,633

 

 

10. TRADING PROPERTIES

 

Unaudited

31/3/18

Audited

31/12/17

 

US$ '000

US$ '000

 

 

 

Balance 1 January

10,792

6,854

Transfer from trading properties under construction (note 11)

-

63,202

Disposals

(1,628)

(59,747)

Effect of movements in exchange rates

24

      483

Balance 31 March / 31 December

   9,188

   10,792

 

Trading properties comprise unsold apartments and parking spaces of "Odinburg" project. During the period the sale of 18 flats and 1 parking places were recognised, upon transferring of the rights to the buyers according to the signed acts of transfer, in the income statement.

 

 

11. TRADING PROPERTIES UNDER CONSTRUCTION

 

 

Unaudited

31/3/18

Audited

31/12/17

 

US$ '000

US$ '000

 

 

 

Balance 1 January

349,735

243,327

Transfer from investment property under development (note 8)

-

74,100

Transfer to trading properties (note 10)

-

(63,202)

Sale of residential*

(14,749)

-

Construction costs

20,821

96,481

Impairment

-

(9,548)

Effect of movements in exchange rates

1,232

   8,577

Balance 31 March / 31 December

357,039

349,735

 

*The Group has adopted IFRS 15 Revenue from Contracts with Customers from 1 January of 2018.

 

Trading properties under construction comprise "Odinburg", "AFI Residence Paveletskaya", "Botanic Garden" and "Bolshaya Pochtovaya" projects that involve primarily the construction of residential properties.

 

12. TRADE AND OTHER RECEIVABLES

 

Unaudited

31/3/18

Audited

31/12/17

 

US$ '000

US$ '000

 

 

 

Advances to builders

33,811

29,313

Amounts receivable from related parties

121

109

Trade receivables, net

2,114

3,458

Other receivables

6,287

21,713

VAT recoverable

10,353

9,889

Tax receivables

    4,682

     5,920

 

  57,368

   70,402

 

Trade receivables net

Trade receivables are presented net of an accumulated provision for doubtful debts of US$94 thousand (31/12/2017: US$82 thousand).

                           

 

13. CASH AND CASH EQUIVALENTS

 

Unaudited

31/3/18

Audited

31/12/17

 

US$ '000

US$ '000

 

 

 

Cash and cash equivalents consist of:

 

 

Cash at banks

103,136

95,102

Cash in hand

        282

       366

Cash and cash equivalents as per statement of cash flows:

103,418

  95,468

 

 

14. LOANS AND BORROWINGS

 

Unaudited

31/3/18

Audited

31/12/17

 

US$ '000

           US$ '000

 

 

 

Non-current liabilities

 

 

Secured bank loans

 584,147

492,484

 

584,147

492,484

Current liabilities

 

 

Secured bank loans

3,095

86,468

Unsecured loans from other non-related companies

      310

       307

 

3,405

       86,775

 

The following changes to the loans took place during the three-month period ended 31 March 2018:

 

(i)   A secured loan from VTB Bank JSC ("VTB") signed on 22 June 2012 by one of the Group's subsidiary, Bellgate Construction Ltd ("Bellgate") with a maturity date in April 2018, was refinanced through a new loan, signed on 28 December 2017 by the Group's subsidiary Bellgate. This loan facility agreement refinanced the existing Bellgate loan from VTB and was also used to repay the remainder of Ozerkovskaya III loan. Bellgate has received the New Loan in five tranches, in Euros and in Russian Rubles. The blended interest rate on the New Loan is circa 5.6% (assuming current EUR/RUR exchange rate and current Russian Central Bank key lending rate). The interest and the principal of the New Loan are to be paid quarterly, while the term of the loan is 5 years.

(ii)  On 26 January 2018 Krown Investments LLC ("Krown") fully repaid the remaining balance of the secured loan from VTB Bank JSC ("VTB") signed on 25 January 2013.

(iii) A secured loan from VTB Bank JSC ("VTB") signed on 18 July 2017 by one of the Group's subsidiary, MKPK PJSC (the owner of the AFI Residence Paveletskaya Project). In January 2018 MKPK PJSC drawdown the whole amount of the agreed loan facility, being RUR711 million, so as to refinance the previously incurred costs for the construction of the project. The loan bears floating interest rate of the Russian Central Bank key lending rate + 1.5%. The principal on the loan is payable monthly, while the interest is payable quarterly. The loan matures in July 2019. During first quarter of 2018 the loan was partly repaid in amount circa RUR88 million.

(iv) During first quarter of 2018 the loans received by the "Plaza SPA Zheleznovodsk" from VTB were partly repaid in amount circa US$507 thousand.

 

 

 

 

15. TRADE AND OTHER PAYABLES

 

Unaudited

31/3/18

Audited

31/12/17

 

US$ '000

US$ '000

 

 

 

Trade payables

12,460

 13,756

Payables to related parties

237

183

Amount payable to builders

15,772

15,340

VAT and other taxes payable

6,004

28,982

Other payables

  5,755

    6,845

 

40,228

  65,106

 

The above are payable within one year and bear no interest.

 

VAT and other taxes payable include an amount of US$24,618 thousand of tax payable as at 31.12.2017 arising from the disposal of the two buildings of Aquamarine III Business Centre, as described in note 7.

 

 

 

[1] The financial results for Q1 2018 reported in this publication are based on the Unaudited summary of financial results prepared by the Company. 

The results were not reviewed by the auditors.

[2] The Group has adopted IFRS 15 Revenue from Contracts with Customers from 1 January 2018. The "sale of residential properties" figure includes 

the revenue from sales of residential properties transferred over time calculated under IFRS 15.


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