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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Afi Development Plc | LSE:AFRB | London | Ordinary Share | CY0101380612 | B ORD USD0.001 |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.379 | 0.378 | 0.38 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
TIDMAFRB TIDMAFID
RNS Number : 8170H
AFI Development PLC
20 November 2018
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION
IN OR INTO THE RUSSIAN FEDERATION, THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
20 November 2018
AFI DEVELOPMENT PLC
("AFI DEVELOPMENT" OR "THE COMPANY")
UNAUDITED RESULTS FOR THE NINE MONTHS TO 30 SEPTEMBER 2018
Continuous growth strongly supported by contribution from residential segment
AFI Development, a leading real estate company focused on developing property in Russia, today announces its unaudited financial results for the nine months ended 30 September 2018.
9M 2018 financial highlights[1]
-- Revenue for 9M 2018 increased by 45% year-on-year to US$207.1 million, including proceeds from the sale of trading properties: * Rental and hotel operating income increased by 10% year-on-year to US$93.9 million * Contribution from AFIMALL City grew by 8% year-on-year to US$64.7 million (9M 2017: US$59.8 million) * Sale of residential properties contributed US$112.4 million to total revenue, a 97% increase year-on-year (9M 2017: US$57.0 million), mostly due to revenue recognition from delivery of apartments in AFI Residence Paveletskaya in Q2 2018 and the implementation of IFRS 15[2] -- Gross profit increased by 63% year-on-year to US$72.1 million (9M 2017: US$44.2 million) -- Net profit for 9M 2018 amounted to US$96.6 million (including a US$62.3 million valuation gain and a US$11.8 million forex gain), compared to US$0.6 million in 9M 2017 -- Total gross value of portfolio of properties stood at US$1.35 billion, broadly unchanged since the end of H1 2018 -- Cash, cash equivalents and marketable securities as of 30 September 2018 amounted to US$114.5 million
9M 2018 operational highlights
-- At Odinburg, construction works and pre-sales continued at Building 3 (phase I) and Building 6 (phase II) -- * As of 7 November 2018, the number of signed sale contracts stood at 685 (96% of total) in Building 2, 420 (46% of total) in Building 3 and 186 (83% of total) in Building 6 -- At AFI Residence Paveletskaya, following the recent completion and delivery of the Phase I apartments to customers, delivery of the Phase II apartments is scheduled for Q1 2019. 503 sale and pre-sale contracts (amounting to 79% of the total number of residential units under sales) have been signed as of 7 November 2018 -- At Bolshaya Pochtovaya, construction and pre-sales are on track with delivery of Phase I apartments planned for Q1 2019 * As of 7 November 2018, 191 apartments (47% of Phase I and Phase II combined) pre-sold -- The construction and pre-sale of properties at Botanic Garden remain on track * As of 7 November 2018, 224 apartments (28% of Phase I) pre-sold -- AFIMALL City continues to record solid NOI growth, up 13% year-on-year to US$50.3 million in 9M 2018, from US$44.4 million in 9M 2017
Commenting on today's announcement, David Tahan, Chairman of AFI Development, said:
"We are pleased to report that AFI Development has continued to deliver growth in revenue and profits, driven by the performance of our four ongoing residential projects - Odinburg, AFI Residence Paveletskaya, Bolshaya Pochtovaya and Botanic Garden. As we look ahead to the full year, we remain alert the issues posed by a weaker Russian rouble which could impact the value of our property portfolio and the threat of additional US sanctions. However, we believe that with our high-calibre projects, we are well placed to maintain the positive momentum in our performance into the final quarter."
9M 2018 Results Conference Call:
AFI Development will hold a conference call for analysts and investors to discuss its 9M 2018 financial results on Wednesday, 21 November 2018.
Details for the conference call are as follows:
Date: Wednesday, 21 November 2018 Time: 2pm GMT (5pm Moscow) Dial-in Tel: UK toll free: 0800 358 9473 US toll-free: +1 855 85 70686 Russia toll-free: 8800 500 9867 Password: 67397553#
Please dial in 5-10 minutes prior to the start time.
Prior to the conference call, the 9M 2018 Investor Presentation of AFI Development will be published on the Company website at http://www.afi-development.com/en/investor-relations/reports-presentations on 21 November 2018 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
In the third quarter of 2018, a weaker rouble increased inflationary expectations, which in turn caused the Russian Central Bank to raise its key lending rate by 25 basis points to 7.5% in September 2018. Furthermore, with some stabilisation in the Russian economy, the threat of new US sanctions remains a risk for consideration by all companies operating in Russia.
AFI Development continues to report growth in revenue and profits, mainly driven by our four ongoing residential projects. Our residential sales contributed $112.4 million in revenue, reflecting both changes in our recognition of revenue now that we report in accordance with IFRS 15 and the delivery of apartments to customers in Phase I of AFI Residence Paveletskaya. Rental and hotel operating income also increased to US$93.9 million for the nine-month period, a 10% year-on-year increase, with AFIMALL City remaining the main contributor.
Our gross profit for 9M 2018 increased 63% year-on-year to US$72.1 million, reflecting stronger residential revenue and higher profitability of our residential projects in Moscow (relative to Odinburg in the Moscow region, which accounted for all of our recognised residential sales revenue in 2017).
We recorded a net profit of US$96.6 million for the nine-month period. This is a significant increase compared to 9M 2017 (US$0.6 million), largely driven by valuation and foreign exchange gains.
We remain cautiously optimistic regarding the market environment for both our residential and commercial projects. We believe that with our high-quality, competitive projects, we are well placed to generate robust revenues and profits in the coming years.
Projects update
AFIMALL City
The continued improvement in the performance of AFIMALL City is reflected in the 8% year-on-year increase in revenue to US$64.7 million for the nine-month period, and a 13% year-on-year increase in NOI to US$50.3 million. Occupancy at the end of Q3 was 92%.
Odinburg
At the Odinburg residential development, the construction of Building 3 (phase II) has commenced. Building 3 (Phase 1) and Building 6 (Phase II) are under construction and currently being marketed to customers. Building 6 is scheduled for delivery in Q1 2019.
As of 7 November 2018, 685 apartments (96% of total) were sold in Building 2, 420 (46% of total) in Building 3 (Phase I) and 161 (83% of total) in Building 6.
AFI Residence Paveletskaya
The delivery of Phase I apartments to customers is now complete. Meanwhile, construction work and the marketing of apartments and special units in Phase II continue to plan, with Phase II scheduled for delivery in Q1 2019. As of 7 November 2018, 503 contracts for pre-sales of both apartments and "special units" have been signed (79% of Phase I and Phase II combined).
Bolshaya Pochtovaya
During the nine-month period ended 30 September 2018, the construction and marketing of the project progressed according to plan and as of 7 November 2018, 191 apartments (47% of Phase I and Phase II combined) had been pre-sold to customers.
Botanic Garden
Construction work and pre-sales are also progressing at Botanic Garden. As of 7 November 2018, 224 apartments (28% of Phase I) have been pre-sold to customers.
Aquamarine III Business Centre (Ozerkovskaya III)
In Q1 2018, the Company successfully completed the disposal of Buildings 2 and 4 to one of the leading Russian banks for circa US$135 million. 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.
Subsequent events
1. On 14 November 2018, the Company converted its existing US dollar denominated loans, provided by Bank VTB PJSC at the Plaza Spa Kislovodsk and Plaza Spa Zheleznovodsk projects, into euros at a flat interest rate of 4.2% per annum. The three loans (two at Plaza Spa Kislovodsk and one at Plaza Spa Zheleznovodsk) will have a combined principal of approximately EUR39 million, the outstanding dollar denominated interest has been paid at the date of conversion. The main terms of the loans, except for currency and interest rate, remain unchanged.
2. On 19 November 2018, the Board of Directors of AFI Development accepted the resignation of Mr Mark Groysman from the position of Executive Director, effective 1 December 2018. Mr Groysman's services on the Board were planned as an interim measure and his resignation follows a new appointment to the Board. Mr. Groysman will continue to serve as the Chief Executive Officer ('CEO') of AFI RUS LLC. At the same meeting, the Board appointed Mr Avraham Novogrocki to replace Mr Groysman with such appointment being effective from 1 December 2018.
Mr Novogrocki previously served on the Company's Board between 2012 and 2016. Mr Novogrocki was, until September 2018, CEO of Africa Israel Investments Ltd, a company listed on the Tel-Aviv Stock Exchange in Israel. Prior to assuming the CEO role at Africa Israel Investments Ltd, Mr Novogrocki served as CEO of its subsidiaries, namely Africa Israel Industries Ltd (from 2008 to 2012) and Packer Steel Industries Ltd (from 2007 to 2012), as well as Deputy CEO and CFO of Africa Israel Industries Ltd. Mr Novogrocki holds an MBA and a BA in Economics and Business Administration from the Bar-Ilan University, Israel.
David Tahan Chairman of the Board
NOT REVIEWED BY AUDITORS
SUMMARY OF FINANCIAL RESULTS
For the period from 1 January 2018 to 30 September 2018
UNAUDITED CONSOLIDATED INCOME STATEMENT
For the period from 1 January 2018 to 30 September 2018
Unaudited Audited 1/1/18- 1/1/17- 30/9/18 30/9/17 Note US$ '000 US$ '000 ----------------------------------------- ----- ------------ --------------- Revenue 2 207,100 142,692 Other income 2,150 634 Operating expenses 4 (44,211) (40,535) Cost of sales of trading properties (84,909) (54,162) Administrative expenses 3 (4,031) (4,335) Other expenses (4,006) (2,013) Total expenses (137,157) (101,045) Share of the after tax profit of joint ventures - 1,957 Gross Profit 72,093 44,238 ----------------------------------------- ----- ------------ --------------- Gain on 100% acquisition of previously held interest in a joint venture - 7,532 Increase / (decrease) in fair value of properties 7,8 62,257 (13,491) Results from operating activities 134,350 38,279 Finance income 12,830 12,484 Finance costs (26,512) (37,980) Net finance (costs)/income 5 (13,682) (25,496) (Loss)/profit before tax 120,668 12,783 Tax (expense)/benefit 6 (24,070) (12,220) (Loss)/profit for the period 96,598 563 ----------------------------------------- ----- ------------ --------------- (Loss)/profit attributable to: Owners of the Company 96,541 285 Non-controlling interests 57 278 96,598 563 Earnings per share Basic and diluted earnings per share (cent) 9,21 0.03 ----------------------------------------- ----- ------------ ---------------
The unaudited summary of financial results was approved by the Board of Directors on 19 November 2018.
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 September 2018
Unaudited Audited 30/9/18 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 74,402 77,633 Long-term loans receivable 7,438 1,669 Intangible assets 519 204 VAT recoverable 37 48 Other investments 5,075 Non-current assets 1,068,771 1,060,854 Trading properties 10 21,283 10,792 Trading properties under construction 11 276,573 349,735 Other investments 13,391 10,515 Inventories 1,042 1,318 Short-term loans receivable 551 1,090 Trade and other receivables 12 70,256 70,402 Current tax assets 3,950 4,114 Cash and cash equivalents 13 101,078 95,468 Current assets 488,124 543,434 Total assets 1,556,895 1,604,288 ---------------------------------------- --- ---------------- ---------------- Equity Share capital 1,048 1,048 Share premium 1,763,409 1,763,409 Translation reserve (360,566) (301,287) Capital reserve (19,333) (19,333) Retained earnings (562,291) (672,719) Equity attributable to owners of the Company 822,267 771,118 Non-controlling interests (31) (171) Total equity 822,236 770,947 Liabilities Long-term loans and borrowings 14 512,753 492,484 Deferred tax liabilities 67,439 42,652 Deferred income 12,569 12,641 Non-current liabilities 592,761 547,777 Short-term loans and borrowings 14 23,606 86,775
Trade and other payables 15 42,559 65,106 Advances from customers 75,613 123,766 Income tax payable 120 9,917 Current liabilities 141,898 285,564 Total liabilities 734,659 833,341 Total equity and liabilities 1,556,895 1,604,288 ---------------------------------------- --- ---------------- ----------------
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
For the period from 1 January 2018 to 30 September 2018
Unaudited Audited 1/1/18- 1/1/17- 30/9/18 30/9/17 Note US$ '000 US$ '000 ------------------------------------------------ ----- ----------- ----------------- Cash flows from operating activities Profit/(loss) for the period 96,598 563 Adjustments for: Depreciation 9 709 626 Net finance costs/(income) 5 12,645 24,953 (Increase) / decrease in fair value of properties 7,8 (62,257) 13,491 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 24,070 12,220 71,765 42,364 Change in trade and other receivables 11,550 1,435 Change in inventories 125 73 Change in trading properties and trading properties under construction (27,905) (10,890) Change in advances and amounts payable to builders of trading properties under construction (12,210) (3,621) Change in advances from customers 37,703 27,343 Change in trade and other payables (24,804) (4,211) Change in VAT recoverable 5,438 (2,550) Change in deferred income 1,568 1,166 Cash generated from operating activities 63,230 51,109 Taxes paid (14,797) (3,749) ------------------------------------------------ ----- ----------- ----------------- Net cash from operating activities 48,433 47,360 ------------------------------------------------ ----- ----------- ----------------- Cash flows from investing activities Acquisition of subsidiary net of cash acquired - (786) Proceeds from sale of other investments 6,956 7,206 Proceeds from sale of property, plant and equipment 130 89 Interest received 817 378 Change in advances and amounts payable to builders 15 (478) 3,239 Payments for construction of investment property under development 8 (1,893) (3,823) Payments for the acquisition/renovation of investment property 7 (518) (967) Change in VAT recoverable (979) (588) Acquisition of property, plant and equipment 9 (844) (223) Acquisition of other investments (21,274) (6,051) Acquisition of intangible assets (898) - Proceeds from repayments of loans receivable 482 4,178 Payments for loans receivable (6,293) (1,803) ------------------------------------------------ ----- ----------- ----------------- Net cash from / (used in) investing activities (24,792) 849 ------------------------------------------------ ----- ----------- -----------------
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
For the period from 1 January 2018 to 30 September 2018
Unaudited Audited 1/1/18- 1/1/17- 30/9/18 30/9/17 Note US$ '000 US$ '000 Cash flows from financing activities Acquisition of non-controlling interests - (1,369) Proceeds from loans and borrowings 542,467 43,527 Repayment of loans and borrowings (548,571) (8,685) Interest paid (17,724) (28,910) ------------------------------------------- ----- ---------- ------------ Net cash used in financing activities (23,828) 4,563 ------------------------------------------- ----- ---------- ------------ Effect of exchange rate fluctuations 5,797 (322) Net increase in cash and cash equivalents 5,610 52,450 Cash and cash equivalents at 1 January 95,468 10,619 ------------------------------------------- ----- ---------- ------------ Cash and cash equivalents at 30 September 13 101,078 63,069 ------------------------------------------- ----- ---------- ------------
NOTES TO THE UNAUDITED SUMMARY OF FINANCIAL RESULTS
For the period from 1 January 2018 to 30 September 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:
Russian Rubles % change % change
As of: for US$1 nine months
year
30 September 2018 65.5906 13.1 13.9
31 December 2017 57.6002 (5.0)
30 September 2017 58.0169 (4.4)
Average rate during:
Nine-month period ended 30 September 2018 61.4358 5.3 Nine-month period ended 30 September 2017 58.3344 (14.7) 2. REVENUE Unaudited Audited 1/1/18- 1/1/17- 30/9/18 30/9/17 US$ '000 US$ '000 ----------------------------------------- ----------- ----------- Investment property rental income 70,162 64,133 Sales of trading properties (note 10) 10,914 57,034 Sales of residential - transferred over 101,514 - time* (note 11) Hotel operation income 23,781 21,374 Non-core activity revenue 729 - Construction consulting/management fees - 151 ----------------------------------------- ----------- ----------- 207,100 142,692 ----------------------------------------- ----------- -----------
*The Group has adopted IFRS 15 Revenue from Contracts with Customers from 1 January 2018.
3. ADMINISTRATIVE EXPENSES Unaudited Audited 1/1/18- 1/1/17- 30/9/18 30/9/17 US$ '000 US$ '000 ------------------------------ ---------- --------- Consultancy fees 487 257 Legal fees 1,143 1,122 Auditors' remuneration 245 466 Valuation expenses 43 60 Directors' remuneration 885 993 Depreciation 81 82 Insurance 113 118 Provision for Doubtful Debts (283) 40 Donations 40 67 Other administrative expense 1,277 1,130 ------------------------------ ---------- --------- 4,031 4,335 ------------------------------ ---------- --------- 4. OPERATING EXPENSES Unaudited Audited 1/1/18- 1/1/17- 30/9/18 30/9/17 US$ '000 US$ '000 -------------------------------------------- ---------- ---------- Maintenance, utility and security expenses 14,980 13,653 Agency and brokerage fees 1,799 1,037 Advertising expenses 5,312 4,121 Salaries and wages 10,769 11,069 Consultancy fees 1,802 716 Depreciation 629 544 Insurance 323 395 Rent 980 1,405 Property and other taxes 7,563 7,545 Other operating expenses 54 50 -------------------------------------------- ---------- ---------- 44,211 40,535 -------------------------------------------- ---------- ---------- 5. FINANCE COST AND FINANCE INCOME Unaudited Audited 1/1/18- 1/1/17- 30/9/18 30/9/17 US$ '000 US$ '000 ---------------------------------------------- ------------ ---------- Interest income 1,018 688 Net foreign exchange gain 11,812 11,796 Finance income 12,830 12,484 Interest expense on loans and borrowings (23,957) (37,082) Net change in fair value of financial assets (1,517) (355) Other finance costs (1,038) (543) Finance costs (26,512) (37,980) Net finance (costs)/income (13,682) (25,496) ---------------------------------------------- ------------ ---------- 6. TAX EXPENSE / (BENEFIT) Unaudited Audited 1/1/18- 1/1/17- 30/9/18 30/9/17 US$ '000 US$ '000 --------------------------------------------------- ------------ -------------- Current tax expense Current year 4,363 2,919 Deferred tax expense/(benefit) Origination and reversal of temporary differences 19,707 9,301 --------------------------------------------------- ------------ -------------- Total income tax expense/(benefit) 24,070 12,220 --------------------------------------------------- ------------ -------------- 7. INVESTMENT PROPERTY
Reconciliation of carrying amount
Unaudited Audited 30/9/18 31/12/17 US$ '000 US$ '000 ---------------------------------------- ---------- ---------- Balance 1 January 818,060 915,350 Renovations / additional costs 518 998 Disposals (903) (140,026) Fair value adjustment 50,655 18,218 Effect of movement in foreign exchange rates (50,270) 23,520 ---------------------------------------- ---------- ---------- Balance 30 September / 31 December 818,060 818,060 ---------------------------------------- ---------- ----------
The fair value adjustment in investment property is mainly related to the weakening of the Russian Rouble to the US Dollar by 13.9% during the nine months of 2018.
The Company assessed that the fair value of the properties has not materially changed since 31 December 2017, 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.
8. INVESTMENT PROPERTY UNDER DEVELOPMENT Unaudited Audited 30/9/18 31/12/17 US$ '000 US$ '000 --------------------------------------------------- ---------- ---------- Balance 1 January 163,240 232,900 Construction costs 1,893 4,865 Transfer to trading properties under construction (note 11) - (74,100) Fair value adjustment 11,602 (6,648) Effect of movements in foreign exchange rates (13,495) 6,223 --------------------------------------------------- ---------- ---------- Balance 30 September / 31 December 163,240 163,240 --------------------------------------------------- ---------- ----------
The fair value adjustment in investment property under development is mainly related to the weakening of the Russian Rouble to the US Dollar by 13.9% during the nine months of 2018.
The Company assessed that the fair value of the properties has not materially changed since 31 December 2017, 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 Audited 30/9/18 31/12/17 US$ '000 US$ '000 ----------------------------------------- ---------- ---------- Balance 1 January 77,633 31,215 Effect of acquisition of subsidiary - 45,580 Depreciation charge (709) (846) Additions 844 484 Disposals (130) (137) Transfer from trading properties 4,278 - Effect of movements in foreign exchange rates (7,514) 1,337 Balance 30 September / 31 December 74,402 77,633 ----------------------------------------- ---------- ----------
10. TRADING PROPERTIES
Unaudited Audited 30/9/18 31/12/17 US$ '000 US$ '000 ----------------------------------------------------- ---------- ---------- Balance 1 January 10,792 6,854 Transfer from trading properties under construction (note 11) 23,054 63,202 Transfer to property, plant and equipment (4,278) - Disposals (7,206) (59,747) Effect of movements in exchange rates (1,079) 483 ----------------------------------------------------- ---------- ---------- Balance 30 September / 31 December 21,283 10,792 ----------------------------------------------------- ---------- ----------
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 during the nine months period of 2018, and of "Odinburg" project during the year 2017.
The amount recognised to cost of sales of trading properties represents the sale of completed flats or parking places recognised at a point in time. For the year ended 31 December 2017 this amount represents the amount transferred to the income statements upon transferring of the rights to the buyers according to the signed acts of transfer in accordance with the previous accounting policy as per IAS18.
11. TRADING PROPERTIES UNDER CONSTRUCTION
Unaudited Audited 30/9/18 31/12/17 US$ '000 US$ '000 ------------------------------------------------ ---------- -------------- Balance 1 January as previously reported 349,735 243,327 Effect of adoption of IFRS 15 as at 1 January (59,801) - 2018* Restated balance at 1 January 289,934 243,327 Transfer from investment property under development (note 8) - 74,100 Transfer to trading properties (note 10) (23,054) (63,202) Cost of sale of trading properties (77,703) - Construction costs 106,199 96,481 Impairment - (9,548) Finance cost capitalised 6,615 - Effect of movements in exchange rates (25,418) 8,577 ------------------------------------------------ ---------- -------------- Balance 30 September / 31 December 276,573 349,735 ------------------------------------------------ ---------- --------------
*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 new standard IFRS 15 adopted as from 1 January 2018.
12. TRADE AND OTHER RECEIVABLES
Unaudited Audited 30/9/18 31/12/17 US$ '000 US$ '000 ----------------------------------------- ---------- ---------- Advances to builders 48,280 29,313 Amounts receivable from related parties 133 109 Trade receivables, net 5,824 3,458 Other receivables 7,431 21,713 VAT recoverable 4,513 9,889 Tax receivables 4,075 5,920 ----------------------------------------- ---------- ---------- 70,256 70,402 ----------------------------------------- ---------- ----------
Trade receivables net
Trade receivables are presented net of an accumulated provision for doubtful debts and unrecognised revenue of US$8,125 thousand (31/12/2017: US$10,522 thousand).
13. CASH AND CASH EQUIVALENTS
Unaudited Audited 30/9/18 31/12/17 US$ '000 US$ '000 -------------------------------------------- ----------- ---------- Cash and cash equivalents consist of: Cash at banks 100,805 95,102 Cash in hand 273 366 -------------------------------------------- ----------- ---------- Cash and cash equivalents as per statement of cash flows: 101,078 95,468 -------------------------------------------- ----------- ----------
14. LOANS AND BORROWINGS
Unaudited Audited 30/9/18 31/12/17 US$ '000 US$ '000 -------------------------------------------------- ---------- ------------- Non-current liabilities Secured bank loans 512,753 492,484 512,753 492,484 Current liabilities Secured bank loans 23,334 86,468 Unsecured loans from other non-related companies 272 307 -------------------------------------------------- ---------- ------------- 23,606 86,775 -------------------------------------------------- ---------- -------------
The following changes to the loans took place during the nine-month period ended 30 September 2018:
A new loan facility was acquired by one of the Group's subsidiaries, Bellgate Construction Ltd ("Bellgate"), based on a loan agreement signed on the 28 December 2017. This new loan facility was used to refinance the previous loan from VTB Bank JSC ("VTB") signed on 22 June 2012 with a maturity date in April 2018 and was also used to repay the remainder amount of US$83 million, of Ozerkovskaya III loan which expired in January 2018. Bellgate received the new loan in five tranches, during January and February 2018, in Euros and in Russian Rubles. The blended interest rate on the new loan is circa 5.6% (assuming current EUR/RUR exchange rate and current Russian Central Bank key lending rate). The interest and the principal of the new loan are to be paid quarterly, while the term of the loan is 5 years.
In January 2018, the Company's subsidiary MKPK PJSC (the owner of the AFI Residence Paveletskaya Project) received a loan from VTB Bank PJSC in the amount of RUR711 million to refinance the previously incurred costs for the construction of the project. The loan bears floating interest rate of the Russian Central Bank key lending rate + 1.5%. The principal on the loan is payable monthly, while the interest is payable quarterly. The loan was fully repaid in June 2018.
15. TRADE AND OTHER PAYABLES
Unaudited Audited 30/9/18 31/12/17 US$ '000 US$ '000 ----------------------------- ---------- ---------- Trade payables 7,034 13,756 Payables to related parties 233 183 Amount payable to builders 17,805 8,510 Provision 6,320 6,830 VAT and other taxes payable 5,515 28,982 Other payables 5,652 6,845 ----------------------------- ---------- ---------- 42,559 65,106 ----------------------------- ---------- ----------
Provision represents the estimated cost of construction of common use areas of the Odinburg project such as hospital and school which is an obligation of the Group to build and make available for use by the residents.
16. SUBSEQUENT EVENTS
On 14 November 2018 the Company converted its existing US dollar denominated loans provided by Bank VTB PJSC at the Plaza Spa Kislovodsk and Plaza Spa Zheleznovodsk projects into euros, at a flat interest rate of 4.2% per annum. The three loans (two at Plaza Spa Kislovodsk and one at Plaza Spa Zheleznovodsk) will have a combined principal of about EUR39 million, the outstanding dollar denominated interest has been paid at the date of conversion. The main terms of the loans, except for currency and interest rate, did not change.
On 19 November 2018 the Board of Directors of AFI Development accepted the resignation of Mr Mark Groysman from the position of executive director effective 1 December 2018. Mr Groysman's services on the Board were planned as an interim measure and his resignation follows a new appointment to the Board. Mr. Groysman will continue to serve as the chief executive officer of AFI RUS LLC. At the same meeting, the Board appointed Mr Avraham Novogrocki as a non-executive director to replace Mr Groysman with such appointment being effective as from 1 December 2018.
Mr Novogrocki previously served on the Company's Board between 2012 and 2016. Mr Novogrocki was, until September 2018, CEO of Africa Israel Investments Ltd (a company listed on the Tel-Aviv Stock Exchange, Israel). Prior to assuming the CEO role at Africa Israel Investments Ltd, Mr Novogrocki served as CEO of its subsidiaries, namely Africa Israel Industries Ltd. (from 2008 to 2012) and Packer Steel Industries Ltd. (from 2007 to 2012), as well as Deputy CEO and CFO of Africa Israel Industries Ltd. Mr Novogrocki holds a MBA and a BA in Economics and Business Administration from the Bar-Ilan University, Israel.
[1] The financial results for 9M 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] AFI Development 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.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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November 20, 2018 02:00 ET (07:00 GMT)
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