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AFI Development PLC (AFRB)

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Tuesday 26 November, 2019

AFI Development PLC

Results for the nine months to 30 September 2019

RNS Number : 5813U
AFI Development PLC
26 November 2019
 

 THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTIOIN OR INTO THE RUSSIAN FEDERATION, THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN

 

26 November 2019 

 

AFI DEVELOPMENT PLC

("AFI DEVELOPMENT" OR "THE COMPANY")

 

RESULTS FOR THE NINE MONTHS TO 30 SEPTEMBER 2019

 

Pace of residential sales affected by challenging market conditions

 

AFI Development, a leading real estate company focused on developing property in Russia, today announces its financial results for the six months ended 30 September 2019.

9M 2019 financial highlights

·   

Revenue for 9M 2019 totalled US$254.4 million, including proceeds from the sale of trading properties:

 

 -   Rental and hotel operating income up marginally to US$94.9 million, including AFIMALL City contribution of US$67.3 million 

 

 -        Sale of residential properties contributed US$156.5 million to total revenue

·   

Gross profit for the 9-month period was US$138.1 million

·   

Net profit for 9M 2019 amounted to US$77.1 million 

·   

Total gross value of portfolio of properties stood at US$1.25 billion, broadly unchanged since the end of H1 2019

·   

Cash, cash equivalents and marketable securities as of 30 September 2019 amounted to US$109.6 million

9M 2019 operational highlights

·   

Following the delivery of Building 6 at Odinburg in May 2019, the Company recently completed the transfer of pre-sold apartments to customers. The construction and presale of apartments in Building 3 (Phase I) and Building 3 (Phase II) are also underway. As of 18 November 2019, the number of signed sale contracts stood at 810 (88% of total) in Building 3 (Phase I), 150 (11% of total) in Building 3 (Phase II) and 217 (97% of total) in Building 6 

·   

At AFI Residence Paveletskaya, Phase II was delivered in May 2019 and the transfer of apartments is now complete. The construction and presale of apartments in Phase III continue. As of 18 November 2019, 625 contracts for the sales and presales of apartments and "special units" had been signed (78% of Phase I, Phase II and Phase III combined)

·   

At Bolshaya Pochtovaya, construction and marketing of the project are progressing to plan. As of 18 November 2019, 347 apartments (55% of Phases I, II and III combined) had been pre-sold to customers

·   

Phase I Botanic Garden was state-commissioned in September 2019, and transfer of apartments is now ongoing. The construction of Phase II continues as planned. As of 18 November 2019, 434 apartments (54% of Phase I) had been sold or pre-sold to customers

·   

Construction works at Tverskaya Plaza Ic and Tverskaya Plaza IV are ongoing. Both properties are located near the Belorussky railway station in a dynamic and well-developed office district

·   

At AFIMALL City, the net operating income ('NOI') for 9M 2019 was US$52.1 million

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

"I report that, despite a slowdown in residential sales in the third quarter, we delivered another solid set of results for the first nine months of 2019.

The positive momentum in our revenues and gross profit is largely attributable to the recognition of residential pre-sales and the stable performance of the yielding portfolio.

Looking ahead, the pace of sales across our residential portfolio remains subject to volatile market conditions with continuing uncertainty around the outlook for the Russian economy and, in turn, its real estate sector."

 

9M 2019 Results Conference Call:

AFI Development will hold a conference call for analysts and investors to discuss its 9M 2019 financial results on Wednesday, 27 November 2019.

Details for the conference call are as follows:

 

Date:

Wednesday, 27 November 2019

 

Time:

2pm GMT (5pm Moscow)

 

Dial-in Tel:

International:

+44 (0)20 3003 2666

 

UK toll free:

0808 109 0700

Password:

AFI Development

 

       

 

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

 

Prior to the conference call, the 9M 2019 Investor Presentation of AFI Development will be published on the Company website at http://www.afi-development.com/en/investor-relations/reports-presentations on 27 November 2019 by 10am GMT (1pm Moscow time).

 

- 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

While our 9M 2019 performance is satisfactory in general, the pace of our residential sales in the third quarter was somewhat slower than in the half of the year. Our residential revenue in Q3 2019 was US$39.8 million, compared to US$62.5 million in Q1 and US$54.1 million in Q2. We explain this mainly by increasing competition in the residential sector.

Sales at our Odinburg and Botanic Garden projects, in particular, were affected by more intense competition in their respective locations. However, bringing the development of our key residential projects (Odinburg, AFI Residence Paveletskaya, Bolshaya Pochtovaya and Botanic Garden) near completion allowed us to recognise revenues of US$254.4 million and a gross profit of US$138.1 million.

Rental and hotel operating income was broadly unchanged year-on-year at US$94.9 million (9M 2018: US$93.9 million). 

 

Projects update

AFIMALL City

 

Occupancy at the end of the third quarter increased marginally to 91% with the NOI for the 9M 2019 period at US$52.1 million. 

 

Odinburg


At the Odinburg residential development, Building 6 (Phase II) was state-commissioned in May 2019 and the delivery of its presold apartments to customers is now complete. Construction works remain underway at Building 3 (Phase I) and Building 3 (Phase II). As of 18 November 2019, the number of signed sale contracts stood at 810 (88% of total) in Building 3 (Phase I), 150 (11% of total) in Building 3 (Phase II) and 217 (97% of total) in Building 6. 

 

AFI Residence Paveletskaya

 

Phase II of the development was state-commissioned in May 2019 and the transfer of apartments to customers is now complete. The focus in construction and presale of apartments is now on Phase III of the development. As of 18 November 2019, 625 contracts for the sales and presales of apartments and "special units" had been signed (78% of Phase I, Phase II and Phase III combined).

 

Bolshaya Pochtovaya

The presales and marketing are ongoing in all three phases of the project. As of 18 November 2019, 347 apartments (55% of Phases I, II and III combined) had been pre-sold to customers.

 

Botanic Garden

In September 2019 the Company successfully state-commissioned Phase I of the development, and transfer of pre-sold apartments to customers is ongoing. As of 18 November 2019, 434 apartments (54% of Phase I) had been pre-sold to customers.

 

Cash Offers by Flotonic Limited for AFI Development

Cash offers for AFI Development by its controlling shareholder, Flotonic Limited, were announced on 25 October 2019 and the offer document was published on 19 November 2019.  For details please refer to the offer document which can be located on the Company's website at https://www.afi-development.com/en/

 

Elias Ebrahimpour (Eli Avrahampour)

Chairman of the Board

 

 

 

 

 

 

SUMMARY OF FINANCIAL RESULTS

 

For the period from 1 January 2019 to 30 September 2019

 

 

 

UNAUDITED CONSOLIDATED INCOME STATEMENT

For the period from 1 January 2019 to 30 September 2019

 

 

 

 

 

Unaudited

1/1/19-

Unaudited

1/1/18-

 

 

30/9/19

30/9/18

 

Note

US$ '000

US$ '000

 

 

 

 

Revenue

2

254,362

207,100

 

 

 

 

Other income

 

2,854

2,150

 

 

 

 

Operating expenses

3

(43,490)

(44,211)

Cost of sales of trading properties

10,11

(72,031)

(84,909)

Administrative expenses

4

(2,426)

(4,031)

Other expenses

 

(1,190)

(4,006)

Total expenses

 

(119,137)

(137,157)

 

 

 

 

Gross Profit

 

138,079

72,093

 

 

 

 

Profit on sale of investment property

7

10,220

-

Decrease in fair value of properties

7,8

(24,294)

62,257

 

 

 

 

Results from operating activities

 

124,005

134,350

 

 

 

 

Finance income

 

23,939

12,830

Finance costs

 

(30,415)

(26,512)

Net finance (costs)/income

5

(6,476)

(13,682)

 

 

 

 

Profit before tax

 

117,529

120,668

Tax (expense)/benefit

6

 (40,448)

 (24,070)

 

 

 

 

Profit for the period

 

77,081

96,598

 

 

 

 

Profit attributable to:

 

 

 

Owners of the Company

 

76,901

96,541

Non-controlling interests

 

180

57

 

 

77,081

96,598

 

 

 

 

Earnings per share

 

 

 

Basic and diluted earnings per share (cent)

 

7.34

9.21

         

 

The unaudited summary of financial results was approved by the Board of Directors on 25 November 2019.

 

 

UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 September 2019

 

 

 

Unaudited 30/9/19

Audited

31/12/18

 

Note

US$ '000

US$ '000

Assets

 

 

 

Investment property

7

705,140

742,590

Investment property under development

8

145,840

141,880

Property, plant and equipment

9

71,366

67,868

Long-term loans receivable

 

28

2,811

Trade and other receivables

12

1,402

-

Intangible assets

 

565

230

VAT recoverable

 

              75

              51

Other investments

14

5,353

5,244

Non-current assets

 

929,769

960,674

 

 

 

 

Trading properties

10

29,798

19,082

Trading properties under construction

11

302,564

278,800

Other investments

14

6,043

11,168

Non-financial assets

16

8,059

-

Inventories

 

1,119

1,120

Short-term loans receivable

 

816

578

Trade and other receivables

12

71,398

54,569

Current tax assets

 

1,197

4,431

Cash and cash equivalents

13

     103,579

     89,003

Current assets

 

524,573

458,751

 

 

 

 

Total assets

 

1,454,342

1,419,425

 

 

 

 

Equity

 

 

 

Share capital

 

1,048

1,048

Share premium

 

1,763,409

1,763,409

Translation reserve

 

(333,343)

(371,659)

Capital reserve

 

(19,333)

(19,333)

Retained earnings

 

  (550, 424)

  (627,324)

Equity attributable to owners of the Company

 

861, 357

746,141

Non-controlling interests

 

      76

      (63)

Total equity

 

   861,433

   746,078

 

 

 

 

Liabilities

 

 

 

Long-term loans and borrowings

15

367,130

487,348

Deferred tax liabilities

 

74,516

54,772

Deferred income

 

12,485

11,964

Non-current liabilities

 

   454,131

   554,084

         

 

Liabilities (continued)

 

 

 

Short-term loans and borrowings

15

15,794

16,433

Trade and other payables

16

57,204

37,378

Advances from customers

 

64,113

     65,407

Income tax payable

 

1,667

45

Current liabilities

 

138,778

119,263    

 

 

 

 

Total liabilities

 

592,909

673,347  

 

 

 

 

Total equity and liabilities

 

1,454,342

1,419,425

 

 

 

 

 

UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS

For the period from 1 January 2019 to 30 September 2019

 

 

 

Unaudited 1/1/19-

Unaudited

1/1/18-

 

 

30/9/19

30/9/18

 

Note

US$ '000

US$ '000

Cash flows from operating activities

 

 

 

Profit for the period

 

77,081

96,598

Adjustments for:

 

 

 

Depreciation

9

742

709

Net finance costs/(income)

5

5,405

12,645

Increase/(decrease) in fair value of properties

7,8

24,294

(62,257)

Gain on sale of investment property

7

(10,220)

-

Reversal of trading properties under development construction write-down of prior years

 

11

 

(5,676)

 

-

Tax expense/(benefit)

6

   40,448

   24,070

 

 

132,074

71,765

Change in trade and other receivables

 

(16,909)

11,550

Change in inventories

 

89

125

Change in trading properties and trading properties under construction

 

 

(12,523)

 

(27,905)

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

 

 

7,921

 

(12,210)

Change in advances from customers

 

(16,847)

37,703

Change in trade and other payables

 

183

(24,804)

Change in VAT recoverable

 

4,310

5,438

Change in deferred income

 

   (414)

   1,568

Cash generated from operating activities

 

97,884

63,230

Taxes paid

 

(15,027)

(14,797)

Net cash from operating activities

 

82,857

48,433

 

 

 

 

Cash flows from investing activities

 

 

 

Proceeds from sale of other investments

 

6,962

6,956

Proceeds from sale of investment property

7

68,681

-

Proceeds from sale of property, plant and equipment

 

91

130

Interest received

 

2,784

817

Change in advances and amounts payable to builders

16

(2,527)

(478)

Payments for construction of investment property under development

 

8

 

(13,573)

 

(1,893)

Payments for the acquisition/renovation of investment property

 

7

 

(227)

 

(518)

Change in VAT recoverable

 

796

(979)

Acquisition of property, plant and equipment

9

(1,265)

(844)

Acquisition of other investments

 

-

(21,274)

Acquisition of intangible assets

 

-

(898)

Proceeds from repayments of loans receivable

 

2,700

482

Payments for loans receivable

 

(398)

(6,293)

Net cash from / (used in) investing activities

 

64,024

(24,792)

Cash flows from financing activities

 

 

 

Proceeds from loans and borrowings

 

-

542,467

Repayment of loans and borrowings

15

(118,253)

(548,571)

Interest paid

 

(19,376)

(17,724)

Net cash used in financing activities

 

(137,629)

(23,828)

 

 

 

 

Effect of exchange rate fluctuations

 

5,324

5,797

 

 

 

 

Net increase in cash and cash equivalents

 

14,576

5,610

Cash and cash equivalents at 1 January

 

89,003

95,468

Cash and cash equivalents at 30 September

13

103,579

101,078

 

 

 

 

 

NOTES TO THE UNAUDITED SUMMARY OF FINANCIAL RESULTS

For the period from 1 January 2019 to 30 September 2019

 

 

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:

 

As of:

Russian Rubles

for US$1

% change

nine months

% change

year

30 September 2019

64.4156

(7.3)

(1.8)

31 December 2018

69.4706

 

20.6

30 September 2018

65.5906

 

13.9

 

 

 

 

Average rate during:

 

 

 

Nine-month period ended 30 September 2019

65.0789

 

3.8

Nine-month period ended 30 September 2018      

61.4358

 

5.3

                                                                                                              

 

 

1/1/19-

30/9/19

Unaudited

1/1/18-

30/9/18

 

US$ '000

US$ '000

 

 

 

Revenue from contracts with customers

 

 

Revenue from sale of trading properties - transferred at a point of time (note 10)

18,336

10,914

Revenue from sale of trading properties - transferred over time 

(note 11)

138,117

101,514

Hotel operation income

22,354

23,781

Construction consulting/management fees

727

-

 

179,534

136,209

Other revenue

 

 

Investment property rental income

72,527

70,162

Non-core activity revenue

2,301

729

 

74,828

70,891

 

 254,362

 207,100

 

 

 

 

 

1/1/19-

30/9/19

Unaudited

1/1/18-

30/9/18

 

US$ '000

US$ '000

 

 

 

Maintenance, utility and security expenses

14,638

14,980

Agency and brokerage fees

1,093

1,799

Advertising expenses

4,633

5,312

Salaries and wages

11,557

10,769

Consultancy fees

2,007

1,802

Depreciation

631

629

Insurance

328

323

Rent

1,173

980

Property and other taxes

7,370

7,563

Other operating expenses

60

54

 

43,490

44,211

 

 

 

 

1/1/19-

30/9/19

Unaudited

1/1/18-

30/9/18

 

US$ '000

US$ '000

 

 

 

Consultancy fees

142

487

Legal fees

581

1,143

Auditors' remuneration

144

245

Valuation expenses

51

43

Directors' remuneration

156

885

Depreciation

111

81

Insurance

113

113

Provision for Doubtful Debts

(428)

(283)

Donations

34

40

Maintenance of IT systems

262

160

Accommodation

42

94

Salaries and wages

453

37

Other administrative expense

765

986

 

   2,426

4,031

 

 

 

 

1/1/19-

30/9/19

Unaudited

1/1/18-

30/9/18

 

US$ '000

US$ '000

 

 

 

Interest income

2,547

1,018

Net foreign exchange gain

19,148

11,812

Net change in fair value of financial assets

2,244

-

Finance income

   23,939

   12,830

 

 

 

Interest expense on loans and borrowings

(18,862)

(23,957)

Net change in fair value of financial assets

-

(1,517)

Other finance costs

     (1,067)

     (1,038)

Significant finance component on advances from customers*

(10,486)

-

Finance costs

(30,415)

(26,512)

 

 

 

Net finance (costs)/income

(6,476)

(13,682)

 

* In the current period the Group presented significant financial component from contracts with customers in the amount of US$10,486 in the finance cost. In prior period significant finance component expense was capitalised in the trading properties under development and was then transferred to cost of sales in the period it was accrued as costs to fulfil the contract.

 

 

 

1/1/19-

30/9/19

Unaudited

1/1/18-

30/9/18

 

US$ '000

US$ '000

Current tax expense

 

 

Current year

       20,223

       4,363

 

 

 

Deferred tax expense/(benefit)

 

 

Origination and reversal of temporary differences

20,225   

19,707   

Total income tax expense/(benefit)

40,448

24,070

           

 

 

 

 

30/9/19

31/12/18

 

US$ '000

US$ '000

 

 

 

Balance 1 January as previously reported

742,590

818,060

Renovations / additional costs

227

793

Disposals

(57,430)

(812)

Fair value adjustment

(7,528)

(3,707)

Effect of movement in foreign exchange rates

27,281

(70,668)

Reclassification to trading properties under development (note 11)

-

(1,076)

Balance 30 September / 31 December

705,140

742,590

 

 

The fair value adjustment in investment property is mainly related to the strengthening of the Russian Rouble to the US Dollar by 7.3% during the nine months of 2019.

 

The disposal during the nine-month period of 2019 represents the sale of the last remaining office building of the Aquamarine III Business Centre owned by Krown Investments LLC to one of the leading Russian banks for a total consideration of 4.4 billion Russian roubles, equivalent to US$68.7 million, net of applicable VAT, realising a profit before tax of US$10,220 thousand.

 

The Company assessed that the fair value of the properties has not materially changed since 30 June 2019, 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 8 below.

 

 

 

 

30/9/19

31/12/18

 

US$ '000

US$ '000

 

 

 

Balance 1 January as previously reported

141,880

163,240

Construction costs

13,573

5,691

Fair value adjustment

(16,766)

(7,787)

Effect of movements in foreign exchange rates

7,153

(19,264)

Balance 30 September / 31 December

145,840

141,880

 

 

The fair value adjustment in investment property is mainly related to the strengthening of the Russian Rouble to the US Dollar by 7.3% during the nine months of 2019.

 

The Company assessed that the fair value of the properties has not materially changed since 30 June 2019, when a valuation by external appraisers took place, as there were no significant changes in the macroeconomic conditions in Russia.

 

 

 

30/9/19

31/12/18

 

US$ '000

US$ '000

 

 

 

Balance 1 January

67,868

77,633

Depreciation charge

(742)

(899)

Additions

1,265

1,596

Disposals

(91)

(150)

Effect of movements in foreign exchange rates

3,066

(10,312)

Balance 30 September / 31 December

  71,366

  67,868

 

 

 

30/9/19

31/12/18

 

US$ '000

US$ '000

 

 

 

Balance 1 January

19,082

10,792

Transfer from trading properties under construction (note 11)

20,114

23,054

Additions

-

56

Cost of sale of trading properties

(10,398)

(11,681)

Effect of movements in exchange rates

1,000

      (3,139)

Balance 30 September / 31 December

   29,798

   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 apartments, offices and parking places of "AFI Residence Paveletskaya" project (Phase 1 and 2 delivered during 2018-2019) and "Odinburg" project (Building 6 delivered during 2019).

 

 

 

30/9/19

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 10)

(20,114)

(23,054)

Cost of sale of trading properties

(67,309)

(124,804)

Partial reversal of write-down of prior years

5,676

 

Construction costs

90,230

159,186

Finance cost capitalised

-

9,414

Effect of movements in exchange rates

15,281

    (32,952)

Balance 30 September / 31 December

302,564

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 apartments which were sold but not yet completed based on the standard IFRS 15 adopted as from 1 January 2018.

 

 

 

30/9/19

31/12/18

 

US$ '000

US$ '000

Short-term trade and other receivables

 

 

 

Advances to builders

40,925

35,919

Amounts receivable from related parties

116

184

Trade receivables, net

7,434

5,008

Other receivables

6,229

5,603

VAT recoverable

9,240

5,755

Tax receivable

5,529

2,100

Receivables from contracts with customers

1,925

-

 

71,398

54,569

 

 

 

Long-term trade and other receivables

 

 

Prepayments

1,402

-

 

1,402

-

 

  72,800

   54,569

 

Trade receivables net

Trade receivables are presented net of an accumulated provision for doubtful debts and unrecognised revenue of US$5,461 thousand (31/12/2018: US$7,686 thousand).

 

Receivables from contracts with customers 

Receivables from contracts with customers represent receivables from customers for residential

units sold were the revenue recognised over time is higher than the amount paid by customers, up to the reporting date.

 

Long-term trade and other receivables

Long-term prepayments represent prepaid amount to a third party developer to construct and

transfer to the Group a non-residential building.

 

 

 

 

30/9/19

31/12/18

 

US$ '000

US$ '000

 

 

 

Cash and cash equivalents consist of:

 

 

Cash at banks

103,296

88,798

Cash in hand

        284

       205

Overdraft

(1)

-

Cash and cash equivalents as per statement of cash flows:

103,579

  89,003

 

 

 

30/9/19

31/12/18

 

US$ '000

US$ '000

 

 

 

Equity securities

5,353

5,244

Investment in listed debt securities

-

2,022

Investment in funds

        6,043

       9,146

Balance 30 September / 31 December

11,396

  16,412

 

By 30 September 2019 Other investments comprised US$11,396 thousand, whereas US$5,353 thousand were invested in long-term equity instruments and US$6,043 were invested in short-term easily convertible into cash instruments. Listed debt securities have been matured in February 2019.

 

 

 

30/9/19

31/12/18

 

US$ '000

US$ '000

 

 

 

Non-current liabilities

 

 

Secured bank loans

 367,130

487,348

 

367,130

487,348

Current liabilities

 

 

Secured bank loans

15,516

16,176

Unsecured loans from other non-related companies

     278

       257

 

15,794

16,433

 

The outstanding loans at 30 September 2019 were as follows:

 

1) A secured loan from VTB Bank JSC («VTB») acquired by one of the Group's subsidiaries, Bellgate Constructions Ltd («Bellgate»), based on a loan agreement signed on the 28 December 2017. This loan was used to refinance the previous loan and Ozerkovskaya III loan from VTB. Bellgate received the loan in five tranches, during January and February 2018, in Euros and Russian Rubles. The blended interest rate on the loan is circa 5.54% per annum (assuming EUR/RUR exchange rate and Russian Central Bank key lending rate as at 30.09.2019). The interest and the principal of the loan are to be paid quarterly, while the term of the loan is 5 years. In June 2019 Bellgate made a partial early repayment of the loan of EUR60 million (equivalent to US$68 million).

 

2) Secured loans from VTB acquired by Group's subsidiaries, Sanatorium Plaza Kislovodsk and Sanatorium PlazaSPA Zheleznovodsk (Sanatoriums), based on loan agreements signed on the 12 October 2018. The loans were used to refinance the previous loans of Sanatoriums from VTB (which were received to finance the acquisition of the additional 50% stake in the Sanatorium Plaza Kislovodsk and to repay intra group loans). Sanatoriums received the loans in Euros. The interest rate on the loans is 4.2% per annum. The interest and the principal of the loans are to be paid quarterly with a balloon payment of circa 60% at maturity, while the terms of the loans are up to 4 years. In May 2019 the Group made a partial early repayment of the loan of EUR35 million (equivalent to US$39 million).

 

The financial covenants in the loan agreements remained the same as described in the last annual consolidated financial statements. The Group has complied with the loan covenants during nine months ended 30 September 2019.

 

 

 

30/9/19

31/12/18

 

US$ '000

US$ '000

 

 

 

Trade payables

17,069

 10,742

Payables to related parties

366

192

Amount payable to builders

27,110

18,056

VAT and other taxes payable

7,769

4,800

Other payables

  4,890

    3,588

 

57,204

  37,378

 


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