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AFI Development PLC (AFRB)

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Tuesday 28 May, 2019

AFI Development PLC

1st Quarter Results

RNS Number : 2205A
AFI Development PLC
28 May 2019
 

 

THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION

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

 

 

28 May 2019

 

AFI DEVELOPMENT PLC

("AFI DEVELOPMENT" OR "THE COMPANY")

 

RESULTS FOR THE THREE MONTHS TO 31 MARCH 2019

 

Residential presales drive performance

 

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 2019.

Q1 2019 financial highlights[1]

·    Revenue for Q1 2019 was US$94.0 million, including proceeds from the sale of trading properties:

-    Rental and hotel operating income decreased to US$30.8 million

-    AFIMALL City contribution stood at US$21.7 million

-    Sale of residential properties contributed US$62.5 million to total revenue

·    Gross profit was US$35.2 million

·    Net profit for Q1 2019 amounted to US$6.0 million

·    Total gross value of portfolio of properties was US$1.26 billion   

·    Cash, cash equivalents and marketable securities as of 31 March 2019 was US$137.5 million

Q1 2019 operational highlights

·    Building 6 at Odinburg was delivered in May 2019, with the transfer of apartments to customers currently underway. The construction and presale of apartments in Building 3 (Phase I) and Building 3 (Phase II) also continues. As of 20 May 2019, the number of signed sale contracts stood at 719 (78% of total) in Building 3 (Phase I), 26 (2% of total) in Building 3 (Phase II) and 211 (94% of total) in Building 6.

·    At AFI Residence Paveletskaya, Phase II was delivered in May 2019. The transfer of apartments to customers is ongoing. The construction and presale of apartments at Phase III is currently ongoing. As of 20 May 2019, 567 contracts for the sales and pre-sales of apartments and "special units" had been signed (90% of Phase I and Phase II combined).

·     At Bolshaya Pochtovaya, construction and marketing of the project is progressing to plan. In Q1 2019, the Company launched presales of Phase III apartments. As of 20 May 2019, 274 apartments (44% of Phases I, II and III combined) had been pre-sold to customers.

·     The construction and pre-sale of properties at Botanic Garden are ongoing. As of 20 May 2019, 355 apartments (44% of Phase I) had been pre-sold to customers.

·     In Q1 2019, the Company started construction works at the Tverskaya Plaza Ic, with construction works beginning at Tverskaya Plaza IV in Q2 2019. Both projects are grade A office developments in central Moscow.

·     At AFIMALL City, the NOI for Q1 2019 was broadly flat year-on-year at US$16.6 million.

Commenting on today's announcement, Eli Avrahampour, Chairman of AFI Development, said:

"AFI Development has had a confident start to the year, owing largely to residential presales recognition and stable performance of the yielding portfolio.

At the same time, we remain mindful of the ongoing macroeconomic uncertainty in Russia as well as of potential negative influence of the new escrow schemes and launch of the state-funded housing programme on the Moscow residential development market. These factors are expected to place downward pressure on revenues and profitability of our projects."

Q1 2019 Results Conference Call:

AFI Development will hold a conference call for analysts and investors to discuss its Q1 2019 financial results on Wednesday, 29 May 2019.

Details for the conference call are as follows:

 

Date:                               Wednesday, 29 May 2019    

 

Time:                              3pm BST (5pm Moscow)


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

 UK toll free:               0808 109 0700

 

Password:                       AFID

 

To take part in the conference call, please dial in approximately 5 minutes before the start of the event.

 

The Q1 2019 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 29 May 2019.

 

- 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

Lucy Eyles

 

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. 

Chairman's statement

We are pleased to report year-on-year growth in both revenue and profit in the first quarter of 2019. This is owing largely to residential presales recognition that was responsible for approximately 64% of our total revenue, which amounted US$94.0 million, However, international sanctions have triggered a slowdown in the growth of the Russian economy which has impacted the performance of other areas of the business, particularly the commercial segment.

The level of our residential presales recognition is attributable to the advanced construction stage of our four projects under development (namely, Odinburg, AFI Residence Paveletskaya, Bolshaya Pochtovaya and Botanic Garden). As a result, our gross profit for the quarter was US$35.2 million.

Rental and hotel operating income has decreased to US$30.8 million. 

Finally, we are pleased to report that we have started the delivery of pre-sold apartments in Building 6 (Phase II) at Odinburg and of Phase II at AFI Residence Paveletskaya, following state commissioning in May 2019. The construction works and pre-sales at our other residential projects, Bolshaya Pochtovaya and Botanic Garden, are also progressing.

Projects update

AFIMALL City

 

Due to several lease expirations, occupancy at the AFIMALL decreased to 90%, from 92% at the end-2018. Although the footfall to the mall continues to grow, the revenue does not grow at the same pace.

 

Odinburg


At the Odinburg residential development, Building 6 (Phase II) was state commissioned in May 2019 and its presold apartments are now being delivered to customers. We have also recently started marketing apartments at Building 3 (Phase II). Currently, construction works are focused on Building 3 (Phases I) and Building 3 (Phase II). As of 20 May 2019, the number of signed sale contracts stood at 719 (78% of total) in Building 3 (Phase I), 26 (2% of total) in Building 3 (Phase II) and 211 (94% of total) in Building 6.

 

AFI Residence Paveletskaya

 

In May 2019, Phase II of the AFI Residence Paveletskaya development was commissioned and delivery of apartments to customers commenced. Meanwhile, construction works and marketing of Phase III apartments continue. As of 20 May 2019, 567 contracts for the sales and pre-sales of apartments and "special units" had been signed (90% of Phase I and Phase II combined).

 

Bolshaya Pochtovaya

 

During Q1 2019, we launched presales at Phase III, following the start of construction at the end of last year. Construction and marketing of the project are progressing to schedule and as of 20 May 2019, 274 apartments (44% of Phases I, II and III combined) had been sold and pre-sold to customers.

 

Botanic Garden

Construction works and pre-sales are also progressing at Botanic Garden. As of 20 May 2019, 355 apartments (44% of Phase I) had been pre-sold to customers.

 

Aquamarine III (Ozerkovskaya III)

In April 2019, the Company agreed to dispose of the last remaining building in the office complex, together with its respective underground parking, for RUR 4.45 million. Upon completion of this transaction, the Company will have fully exited the Aquamarine III development.

Subsequent events

On 23 April 2019, AFI Development announced that it had agreed to sell Building 3 at the completed Aquamarine III Business Centre in Moscow for a total cash consideration of RUR4.45 billion (circa US$69.5 million), net of the applicable Russian VAT. As at the publication date of the current report, the full consideration has been received by the Company.

On 26 April 2019, the Company announced that it had entered into an employment contract with Mr Lev Leviev effective from 1 May 2019.

On 20 May 2019, AFI Development announced that it had agreed with its lender, VTB Bank PJSC, to partially repay loans relating to the Plaza Spa Kislovodsk and Plaza Spa Zheleznovodsk projects, in the total amount of circa EUR35 million. As at the publication date of the current report, the EUR37.73 million repayment was made.

 

 

 

 

 

Elias Ebrahimpour (Eli Avrahampour)

Non-Executive Chairman of the Board

 

 

 

 

 

NOT REVIEWED BY AUDITORS

 

SUMMARY OF FINANCIAL RESULTS

 

For the period from 1 January 2019 to 31 March 2019

 

 

 

UNAUDITED CONSOLIDATED INCOME STATEMENT

For the period from 1 January 2019 to 31 March 2019

 

 

 

 

 

Unaudited

     1/1/19-

Unaudited

       1/1/18-

 

 

     31/3/19

       31/3/18

 

Note

    US$ '000

    US$ '000

 

 

 

 

Revenue

2

94,014

  49,401

 

 

 

 

Other income

 

783

       210

 

 

 

 

Operating expenses

3

(14,625)

   (15,766)

Cost of sales of trading properties

10,11

(43,935)

(17,615)

Administrative expenses

4

(737)

(1,371)

Other expenses

 

(258)

      (250)

Total expenses

 

(59,555)

    (35,002)

 

 

 

 

Gross Profit

 

35,242

  14,609

 

 

 

 

Decrease in fair value of properties

7,8

(34,637)

          (4,011)

 

 

 

 

Results from operating activities

 

605

         10,598

 

 

 

 

Finance income

 

11,971

            6,545

Finance costs

 

(6,879)

        (10,596)

Net finance (costs)/income

5

5,092

          (4,051)

 

 

 

 

Profit before tax

 

5,697

            6,547

Tax (expense)/benefit

6

392

          (1,429)

 

 

 

 

Profit for the period

 

6,089

            5,118

 

 

 

 

Profit attributable to:

 

 

 

Owners of the Company

 

6,088

            5,140

Non-controlling interests

 

1

               (22)

 

 

6,089

            5,118

 

 

 

 

Earnings per share

 

 

 

Basic and diluted earnings per share (cent)

 

0.58

              0.49

         

 

The unaudited summary of financial results was approved by the Board of Directors on 27 May 2019.

 

 

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 March 2019

 

 

 

Unaudited        31/3/19

     Audited

     31/12/18

 

Note

      US$ '000

     US$ '000

Assets

 

 

 

Investment property

7

746,424

742,590

Investment property under development

8

147,501

141,880

Property, plant and equipment

9

71,505

67,868

Long-term loans receivable

 

2,307

2,811

Intangible assets

 

255

230

VAT recoverable

 

51

              51

Other investments

14

5,244

5,244

Right-of-use assets

15

7,789

-

Non-current assets

 

981,076

960,674

 

 

 

 

Trading properties

10

18,598

19,082

Trading properties under construction

11

285,945

278,800

Other investments

14

8,403

11,168

Inventories

 

1,017

1,120

Short-term loans receivable

 

625

578

Trade and other receivables

12

54,536

54,569

Current tax assets

 

3,636

4,431

Cash and cash equivalents

13

129,099

     89,003

Current assets

 

501,859

458,751

 

 

 

 

Total assets

 

1,482,935

1,419,425

 

 

 

 

Equity

 

 

 

Share capital

 

1,048

1,048

Share premium

 

1,763,409

1,763,409

Translation reserve

 

(340,285)

(371,659)

Capital reserve

 

(19,333)

(19,333)

Retained earnings

 

(624,265)

  (627,324)

Equity attributable to owners of the Company

 

780,574

746,141

Non-controlling interests

 

(47)

      (63)

Total equity

 

780,527

   746,078

 

 

 

 

Liabilities

 

 

 

Long-term loans and borrowings

16

487,625

487,348

Deferred tax liabilities

 

51,469

54,772

Deferred income

 

13,001

11,964

Long-term lease liabilities

15

17,471

-

Non-current liabilities

 

569,566

   554,084

 

 

 

 

 

 

 

 

 

 

Unaudited 31/3/19

Audited

31/12/18

 

Note

US$ '000

US$ '000

Liabilities (continued)

 

 

 

Short-term loans and borrowings

16

17,060

16,433

Trade and other payables

17

46,583

37,378

Advances from customers

 

64,153

     65,407

Income tax payable

 

337

45

Short-term lease liabilities

15

4,709

-

Current liabilities

 

132,842

 119,263

 

 

 

 

Total liabilities

 

702,408

673,347

 

 

 

 

Total equity and liabilities

 

1,482,935

1,419,425

         

 

 

 

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

For the period from 1 January 2019 to 31 March 2019

 

 

 

Unaudited 1/1/19-

Unaudited

1/1/18-

 

 

31/3/19

 31/3/18

 

Note

      US$ '000

         US$ '000

Cash flows from operating activities

 

 

Profit for the period

 

6,089

5,118

Adjustments for:

 

 

 

Depreciation

9

241

242

Net finance costs/(income)

5

(5,229)

4,514

Decrease in fair value of properties

7,8

34,637

4,011

Tax expense/(benefit)

6

   (392)

  1,429

 

 

35,346

15,314

Change in trade and other receivables

 

(1,386)

18,323

Change in inventories

 

183

239

Change in trading properties and trading properties under construction

 

 

8,633

 

(4,444)

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

 

 

7,645

 

(3,786)

Change in advances from customers

 

(5,912)

25,271

Change in trade and other payables

 

(114)

(25,734)

Change in VAT recoverable

 

1,531

(557)

Change in deferred income

 

   158

   181

Cash generated from operating activities

 

46,084

24,807

Taxes paid

 

(122)

     (10,043)

Net cash from operating activities

 

45,962

 14,764

 

 

 

Cash flows from investing activities

 

 

 

Proceeds from sale of other investments

 

2,000

5,148

Proceeds from sale of property, plant and equipment

 

51

2

Interest received

 

531

349

Change in advances and amounts payable to builders

17

2,898

(263)

Payments for construction of investment property under development

 

8

 

(2,236)

 

(756)

Payments for the acquisition/renovation of investment property

 

7

 

(85)

 

(256)

Change in VAT recoverable

 

(313)

143

Acquisition of property, plant and equipment

9

(260)

(305)

Acquisition of other investments

 

-

(9,845)

Acquisition of intangible assets

 

-

(964)

Proceeds from repayments of loans receivable

 

642

-

Payments for loans receivable

 

-

          (2)

Net cash from / (used in) investing activities

 

3,228

    (6,749)

 

Cash flows from financing activities

 

 

 

Proceeds from loans and borrowings

 

-

102,686

Repayment of loans and borrowings

 

(2,477)

(92,314)

Interest paid

 

(6,604)

 (12,555)

Net cash used in financing activities

 

(9,081)

(2,183)

 

 

 

Effect of exchange rate fluctuations

 

(13)

       2,118

 

 

 

 

Net increase in cash and cash equivalents

 

40,096

7,950

Cash and cash equivalents at 1 January

 

89,003

  95,468

Cash and cash equivalents at 31 March

13

129,099

  103,418

 

 

 

 

NOTES TO THE UNAUDITED SUMMARY OF FINANCIAL RESULTS

For the period from 1 January 2019 to 31 March 2019

 

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:

                                                                                                                                    

                                                                    Russian Rubles          % change     % change

As of:                                                                for US$1             three months       year

31 March 2019                                                    64.7347                    (6.8)               13.0

31 December 2018                                              69.4706                                           17.6

31 March 2018                                                    57.2649                                             1.6

 

Average rate during:

Three-month period ended 31 March 2019        66.1271                                             5.5

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

 

 

 

2.   REVENUE

 

       Unaudited

              1/1/19-

              31/3/19

  Unaudited

         1/1/18-

         31/3/18

 

            US$ '000

       US$ '000

 

 

 

Revenue from contracts with customers

 

 

Revenue from sale of trading properties - transferred at a point of time (note 0)

2,553

1,750

Revenue from sale of trading properties - transferred over time 

(note 11)

59,949

16,160

Hotel operation income

6,725

7,590

Construction consulting/management fees

108

3

 

69,335

25,503

Other revenue

 

 

Investment property rental income

24,051

23,638

Non-core activity revenue

628

260

 

24,679

23,898

 

 94,014

 49,401

 

 

3.   OPERATING EXPENSES

 

 

     Unaudited

             1/1/19-

            31/3/19

    Unaudited

          1/1/18-

          31/3/18

 

          US$ '000

        US$ '000

 

 

 

Maintenance, utility and security expenses

5,144

5,479

Agency and brokerage fees

361

924

Advertising expenses

1,434

1,816

Salaries and wages

3,792

4,089

Consultancy fees

676

126

Depreciation

208

210

Insurance

94

116

Rent

389

432

Property and other taxes

2,511

2,554

Other operating expenses

16

        20

 

14,625

  15,766

 

 

 

 

4.   ADMINISTRATIVE EXPENSES

 

       Unaudited

              1/1/19-

              31/3/19

     Unaudited

           1/1/18-

          31/3/18

 

           US$ '000

        US$ '000

 

 

 

Consultancy fees

60

160

Legal fees

101

329

Auditors' remuneration

1

62

Valuation expenses

20

16

Directors' remuneration

45

328

Depreciation

33

32

Insurance

36

36

Provision for Doubtful Debts

1

6

Donations

26

-

Maintenance of IT systems

121

65

Accommodation

17

39

Salaries and wages

12

13

Other administrative expense

264

285

 

   737

   1,371

 

 

 

5.   FINANCE COST AND FINANCE INCOME

 

        Unaudited

               1/1/19-

              31/3/19

       Unaudited

             1/1/18-

            31/3/18

 

         US$ '000

       US$ '000

 

 

 

Interest income

533

368

Net foreign exchange gain

9,995

6,177

Net change in fair value of financial assets

1,443

-

Finance income

   11,971

   6,545

 

 

 

Interest expense on loans and borrowings

(6,741)

(9,205)

Net change in fair value of financial assets

-

(621)

Other finance costs

     (138)

     (770)

Finance costs

(6,879)

(10,596)

 

 

 

Net finance (costs)/income

5,092

(4,051)

 

 

 

6.   TAX EXPENSE / (BENEFIT)

 

Unaudited

     1/1/19-     31/3/19

       Unaudited

              1/1/18-

             31/3/18

 

 US$ '000

      US$ '000

Current tax expense

 

 

Current year

       1,569

990

 

 

 

Deferred tax expense/(benefit)

 

 

Origination and reversal of temporary differences

(1,961)

439

Total income tax expense/(benefit)

(392)

     1,429

           

 

7.   INVESTMENT PROPERTY

 

Reconciliation of carrying amount

 

    Unaudited

          31/3/19

        Audited

        31/12/18

 

       US$ '000

     US$ '000

 

 

 

Balance 1 January as previously reported

742,590

818,060

Effect of adoption of IFRS 16 as at 1 January 2019*

3,605

-

Restated balance at 1 January

746,195

818,060

Renovations / additional costs

85

793

Disposals

-

(812)

Fair value adjustment

(25,328)

(3,707)

Increase in investment property carrying amount due to IFRS 16*

230

-

Effect of movement in foreign exchange rates

25,242

(70,668)

Reclassification to trading properties under development (note 11)

-

(1,076)

Balance 31 March / 31 December

746,424

742,590

 

(*) The Group has adopted IFRS 16 Leases from 1 January 2019.

 

The fair value adjustment in investment property is mainly related to the strengthening of the Russian Rouble to the US Dollar by 6.8% during the three months of 2019.

 

The Company assessed that the fair value of the properties has not materially changed since 31 December 2018, when a valuation by external appraisers took place, as there were no significant changes in the macroeconomic conditions in Russia. The same applies for investment property under development. See note 0 below.

 

 

8.   INVESTMENT PROPERTY UNDER DEVELOPMENT

 

Reconciliation of carrying amount

 

 

      Unaudited

           31/3/19

           Audited

           31/12/18

 

        US$ '000

        US$ '000

 

 

 

Balance 1 January as previously reported

141,880

163,240

Effect of adoption of IFRS 16 as at 1 January 2019*

5,497

-

Restated balance at 1 January

147,377

163,240

Construction costs

2,236

5,691

Fair value adjustment

(9,309)

(7,787)

Increase in investment property carrying amount due to IFRS 16*

124

-

Effect of movements in foreign exchange rates

7,073

(19,264)

Balance 31 March / 31 December

147,501

141,880

 

(*) The Group has adopted IFRS 16 Leases from 1 January 2019.

 

The fair value adjustment in investment property is mainly related to the strengthening of the Russian Rouble to the US Dollar by 6.8% during the three months of 2019.

 

The Company assessed that the fair value of the properties has not materially changed since 31 December 2018, when a valuation by external appraisers took place, as there were no significant changes in the macroeconomic conditions in Russia.

 

 

9.   PROPERTY, PLANT AND EQUIPMENT

 

     Unaudited

           31/3/19

           Audited

           31/12/18

 

         US$ '000

         US$ '000

 

 

 

Balance 1 January

67,868

77,633

Depreciation charge

(241)

(899)

Additions

260

1,596

Disposals

(51)

(150)

Effect of movements in foreign exchange rates

3,669

(10,312)

Balance 31 March / 31 December

  71,505

  67,868

 

 

10. TRADING PROPERTIES

 

   Unaudited

         31/3/19

           Audited

           31/12/18

 

     US$ '000

         US$ '000

 

 

 

Balance 1 January

19,082

10,792

Transfer from trading properties under construction (note 11)

-

23,054

Additions

-

56

Cost of sale of trading properties

(1,802)

(11,681)

Effect of movements in exchange rates

1,318

      (3,139)

Balance 31 March / 31 December

   18,598

   19,082

 

Trading properties comprise unsold apartments and parking spaces. The transfer from trading properties under construction represents the completion of the construction of a number of flats, offices and parking places of "AFI Residence Paveletskaya" project, phase 1, during 2018.

 

 

11. TRADING PROPERTIES UNDER CONSTRUCTION

 

 

   Unaudited

         31/3/19

           Audited

           31/12/18

 

      US$ '000

        US$ '000

 

 

 

Balance 1 January as previously reported

278,800

349,735

Effect of adoption of IFRS 15 as at 1 January 2018*

-

            (59,801)

Restated balance at 1 January

278,800

289,934

Transfer from investment property (note 7)

-

1,076

Transfer to trading properties (note 0)

-

(23,054)

Cost of sale of trading properties

(42,133)

(124,804)

Construction costs

33,194

159,186

Finance cost capitalised

2,108

9,414

Effect of movements in exchange rates

13,976

    (32,952)

Balance 31 March / 31 December

285,945

278,800

 

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

 

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

 

The amount recognised to cost of sales of trading properties, represents the cost incurred to date for the construction of the apartments and flats which were sold but not yet completed based on the standard IFRS 15 adopted as from 1 January 2018.

 

 

12. TRADE AND OTHER RECEIVABLES

 

  Unaudited

        31/3/19

            Audited

            31/12/18

 

     US$ '000

US$ '000

 

 

 

Advances to builders

34,378

35,919

Amounts receivable from related parties

112

184

Trade receivables, net

4,121

5,008

Other receivables

5,919

5,603

VAT recoverable

7,891

5,755

Tax receivable

    2,115

     2,100

 

  54,536

   54,569

 

Trade receivables net

Trade receivables are presented net of an accumulated provision for doubtful debts and unrecognised revenue of US$6,798 thousand (31/12/2018: US$7,686 thousand).

 

 

13. CASH AND CASH EQUIVALENTS

 

 

   Unaudited

         31/3/19

            Audited

            31/12/18

 

US$ '000

US$ '000

 

 

 

Cash and cash equivalents consist of:

 

 

Cash at banks

128,881

88,798

Cash in hand

        218

       205

Cash and cash equivalents as per statement of cash flows:

129,099

  89,003

 

 

14. OTHER INVESTMENTS

 

   Unaudited

         31/3/19

            Audited

            31/12/18

 

US$ '000

US$ '000

 

 

 

Equity securities

5,244

5,244

Investment in listed debt securities

-

2,022

Investment in funds

        8,403

       9,146

Balance 31 March / 31 December

13,647

  16,412

 

By 31 March 2019 Other investments comprised US$13,647 thousand, whereas US$5,244 thousand were invested in long-term equity instruments and US$8,403 were invested in short-term easily convertible into cash instruments. Listed debt securities have been matured in February 2019.

 

 

15. Right-of-use-assets / LEASE LIABILITIES

 

The Group has adopted IFRS 16 Lease from 1 January 2019. The Group as a lessee recognizes a right-of-use assets representing its right to use the underlying assets and a lease liability representing its obligation to make lease payments.

 

 

16. LOANS AND BORROWINGS

 

  Unaudited

         31/3/19

            Audited

            31/12/18

 

        US$ '000

          US$ '000

 

 

 

Non-current liabilities

 

 

Secured bank loans

 487,625

487,348

 

487,625

487,348

Current liabilities

 

 

Secured bank loans

16,784

16,176

Unsecured loans from other non-related companies

     276

       257

 

17,060

16,433

 

There were no changes to the loans during the three-month period ended 31 March 2019.

 

 

17. TRADE AND OTHER PAYABLES

 

      Unaudited

           31/3/19

        Audited

        31/12/18

 

         US$ '000

        US$ '000

 

 

 

Trade payables

10,437

 10,742

Payables to related parties

200

192

Amount payable to builders

25,979

18,056

VAT and other taxes payable

5,498

4,800

Other payables

  4,469

    3,588

 

46,583

  37,378

 

 

18. SUBSEQUENT EVENTS

On 23 April 2019, AFI Development announced that it had agreed to sell Building 3 at the completed Aquamarine III Business Centre in Moscow for a total cash consideration of RUR4.45 billion (circa US$69.5 million), net of the applicable Russian VAT. As at the publication date of the current report, the full consideration has been received by the Company.

On 26 April 2019, the Company announced that it had entered into an employment contract with Mr Lev Leviev effective from 1 May 2019.

On 20 May 2019, AFI Development announced that it had agreed with its lender, VTB Bank PJSC, to partially repay loans relating to the Plaza Spa Kislovodsk and Plaza Spa Zheleznovodsk projects, in the total amount of circa EUR35 million. As at the publication date of the current report, the EUR37.73 million repayment was made.

 

 

 

[1] The financial results for Q1 2019 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.


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