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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Raven Russia | LSE:RUS | London | Ordinary Share | GB00B0D5V538 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 45.50 | 45.60 | 46.80 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMRUS
RNS Number : 0799P
Raven Russia Limited
29 August 2017
29 August 2017
Raven Russia Limited ("Raven Russia" or the "Company")
2017 Interim Results
Raven Russia today announces its unaudited results for the six months ended 30 June 2017.
Highlights
-- Earnings before tax of $26.0 million (2016: $16.5 million); -- Revaluation surplus of $11.6 million (2016: deficit of $8.5 million); -- Cash balances today of $237 million;
-- Acquisition of three assets completed in the period for $86.6 million, generating $13.8 million net operating income per annum;
-- New convertible preference shares issued in July 2017 raising GBP102 million;
-- Proposed distribution of 1p per ordinary share by way of a tender offer buy back of 1 in 52 shares at 52p.
Glyn Hirsch CEO said, "The financial results have met our expectations but do not fully reflect the acquisition completed in April which will contribute fully in the second half of the year. We are actively pursuing the acquisition of income producing assets. Our current cash balance of $237 million gives us plenty of fire power to invest further. "
Click on, or paste the following link into your web browser, to view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/0799P_1-2017-8-28.pdf
Enquiries
Raven Russia Limited Tel: + 44 (0) 1481 712955
Anton Bilton
Glyn Hirsch
Novella Communications Tel: +44 (0) 203 151 7008
Tim Robertson
Toby Andrews
N+1 Singer Tel: +44 (0) 20 7496 3000
Corporate Finance - James Maxwell / Liz Yong
Sales - Alan Geeves / James Waterlow
Ravenscroft Tel: +44 (0) 1481 729100
Brian O'Mahoney
This announcement contains forward-looking statements that involve risk and uncertainties. The Group's actual results could differ materially from those estimated or anticipated in the forward-looking statements as a result of many factors. Information contained in this announcement relating to the Company should not be relied upon as a guide to future performance.
About Raven Russia
Raven Russia was founded in 2005 to invest in class A warehouse complexes in Russia and lease to Russian and International tenants. Its Ordinary Shares, Preference Shares and Warrants are listed on the Main Market of the London Stock Exchange and admitted to the Official List of The International Stock Exchange ("TISE"). Its Convertible Preference Shares are admitted to the Official List of TISE and trading on the SETSqx market of the London Stock Exchange. The Company operates out of offices in Guernsey, Moscow and Cyprus and has an investment portfolio of circa 1.6 million square metres of Grade "A" warehouses in Moscow, St Petersburg, Rostov-on-Don and Novosibirsk and 49,000 square metres of commercial office space in St Petersburg. For further information visit the Company's website: www.ravenrussia.com
Financial Summary
Hot Features
Premium
Income Statement for the 6 months ended: 30 June 30 June 2016
2017
------------------------------------------ -------- -------------
Net rental and related income ($m) 69.9 77.0
------------------------------------------ -------- -------------
Revaluation surplus/(deficit) ($m) 11.6 (8.5)
------------------------------------------ -------- -------------
IFRS earnings before tax ($m) 26.0 16.5
------------------------------------------ -------- -------------
Underlying earnings before tax ($m) 24.3 34.7
------------------------------------------ -------- -------------
Basic EPS (cents) 1.4 1.4
------------------------------------------ -------- -------------
Distribution per share (pence) 1.0 0.5
------------------------------------------ -------- -------------
Balance Sheet at: 30 June 31 December
2017 2016
------------------------------------------ -------- -------------
Investment property market value ($m) 1,428 1,324
------------------------------------------ -------- -------------
Adjusted diluted NAV per share (cents) 70 68
------------------------------------------ -------- -------------
IFRS diluted NAV per share (cents) 72 71
------------------------------------------ -------- -------------
Letting Summary
Warehouse Portfolio
Our warehouse portfolio currently totals 1.569 million sqm. Occupancy at the period end was 79% (31 December 2016: 80%).
Maturities '000 2017 2018 2019 2020-2027 Total
sqm
-------------------- ------ ----- ----- ---------- ------
Maturity profile
at 1 January 2017 199 165 252 571 1,187
-------------------- ------ ----- ----- ---------- ------
Acquisitions 34 10 9 17 70
-------------------- ------ ----- ----- ---------- ------
233 175 261 588 1,257
-------------------- ------ ----- ----- ---------- ------
Renegotiated and
extended (19) (65) (22) - (106)
-------------------- ------ ----- ----- ---------- ------
Maturity profile
of renegotiations - 26 - 80 106
-------------------- ------ ----- ----- ---------- ------
Vacated/terminated (102) - (3) - (105)
-------------------- ------ ----- ----- ---------- ------
New lettings 11 6 1 64 82
-------------------- ------ ----- ----- ---------- ------
Maturity profile
at 30 June 2017 123 142 237 732 1,234
-------------------- ------ ----- ----- ---------- ------
Maturity profile
with breaks 140 186 239 669 1,234
-------------------- ------ ----- ----- ---------- ------
Office Portfolio
Our office portfolio of 49,000sqm has been fully let throughout the period.
Maturities '000 2017 2018 2019 2020-2027 Total
sqm
-------------------- ----- ----- ----- ---------- ------
Maturity profile
at 1 January 2017 16 - - - 16
-------------------- ----- ----- ----- ---------- ------
Acquisitions 10 4 13 6 33
-------------------- ----- ----- ----- ---------- ------
26 4 13 6 49
-------------------- ----- ----- ----- ---------- ------
Renegotiated and
extended (20) - - - (20)
-------------------- ----- ----- ----- ---------- ------
Maturity profile
of renegotiations 2 2 - 16 20
-------------------- ----- ----- ----- ---------- ------
Vacated/terminated - - - - -
-------------------- ----- ----- ----- ---------- ------
New lettings - - - - -
-------------------- ----- ----- ----- ---------- ------
Maturity profile
at 30 June 2017 8 6 13 22 49
-------------------- ----- ----- ----- ---------- ------
Maturity profile
with breaks 12 5 12 20 49
-------------------- ----- ----- ----- ---------- ------
Lease Currency Mix
USD RUB EUR Vacant Total
------- ---- ----
Sqm % 36% 40% 3% 21% 100%
------- ---- ---- ---- ------- ------
NOI % 54% 41% 5% 0% 100%
------- ---- ---- ---- ------- ------
Chairman's Message
Against the backdrop of geopolitical white noise surrounding Russia in the last six months, we have experienced a reasonably stable but busy trading environment. This has allowed us to continue adapting to the Rouble market rent model, whilst cushioning the impact by seeking market rented acquisitions which will support our top line as we continue the transition over the next two or three years.
We completed the acquisition of a portfolio of office and warehouse properties in St Petersburg in April this year for $86.6 million which generates $13.8 million of net operating income ("NOI") per annum, contributing $3 million of NOI in the half year since the date of acquisition. We have also completed another fund raising by way of the issue of new convertible preference shares, raising GBP102 million in July, giving us cash reserves of some $237 million today. These funds will be used for acquisitions and we hope to complete a second significant acquisition in Moscow before the end of the year. These acquisitions are typically un-geared, which gives us the opportunity to recycle part of our equity for future projects.
Occupancy levels on the warehouse portfolio have not changed significantly, 79% at 30 June 2017 (31 December 2016: 80%) and our office portfolio, principally the acquisitions, have been fully let throughout the period. We are seeing a greater level of interest in all vacant space and hope to see the benefits of that in the second half of the year.
The Rouble began the year at 60.6 to the US Dollar and ended the six months at 59.1. Valuation metrics on the existing portfolio have remained flat and the valuation uplift on the acquisition portfolio is gratifying.
Rouble denominated leases account for 40% of our total warehouse space at 30 June 2017 (26%: 31 December 2016).
With basic underlying earnings per share of 2.3 cents (2016: 4.8 cents), it is our intention to distribute the equivalent of 1p per ordinary share (30 June 2016: 0.5p per ordinary share) by way of a tender offer buy back of 1 in 52 shares at 52p per share.
We are again grateful to all of our shareholders who continue to believe in our business model and the potential for our market.
Richard Jewson
Chairman
28 August 2017
Chief Executive's Review
Dear Shareholders,
I am delighted to report that our market has gone through a fairly dull period. Something we have been looking forward to for some time.
The US Dollar/Rouble exchange rate has remained stable as have market rents. Demand is improving and we have seen encouraging levels of interest for space in the year. The Russian economy is growing slowly and inflation and interest rates are falling. Since December 2014, Central Bank rates have fallen from the high of 17% to 9% today and are expected to continue that trend.
We are looking actively to acquire income producing assets and are at various stages of due diligence, negotiation and offers on some attractive investments at what we feel is the right time in the cycle.
Although focussed on logistics warehousing, we are seeing opportunities in other real estate sectors which we are considering. Our current cash balance of $237 million gives us plenty of firepower to invest further. Approximately 70% of our cash balances are now held in Roubles.
Our financial results have met expectations but do not fully reflect the portfolio acquisition completed in April which will contribute fully in the second half of the year and is performing well.
Results
We continue our orderly transition to new market norms. Our net operating and related income has dropped to $70 million for the half year compared to $77 million in the six months to 30 June 2016. Administrative expenses and foreign exchange profits reflect a less volatile currency environment for both Rouble and Sterling compared to 2016.
Underlying earnings for the period were $15.5 million compared to $31.5 million in the six months to 30 June 2016, the reduction a factor of lower NOI, foreign exchange gains and increased corporation tax provisioning.
Basic underlying earnings per share have reduced to 2.3 cents (30 June 2016: 4.8 cents).
In contrast, IFRS earnings after tax continued to recover at $9.2 million for the six months (2016: $8.8 million) supported by an improving investment property market with a net valuation surplus of $11.6 million in the period (30 June 2016: deficit of $8.5 million). Basic IFRS earnings per share remain at 1.4 cents.
Fully diluted adjusted net asset value per share increased to 70 cents (31 December 2016: 68 cents) and IFRS diluted net asset value per share to 72 cents (31 December 2016: 71 cents). Cash balances at 30 June 2017 were $108.1 million (31 December 2016: $198.6 million) increasing to $237 million today following the issue of new convertible preference shares in July.
Warehouse occupancy levels at the period end were 79% (31 December 2016: 80%). At 30 June 2017 we had 140,000sqm of warehouse breaks and maturities remaining in 2017 and as of today, we are confident that 93,000sqm of that space will continue to be occupied at the year end and we are continuing negotiations on the remaining 47,000sqm. New leases totalling 52,500sqm have been signed since the half year, we currently have 22,300sqm of letters of intent signed and do not expect any notices on the remaining breaks. Our focus for the final quarter is converting the increased interest in our vacant space.
At 30 June 2017, 36% of our total warehouse space (31 December 2016: 50%) had US Dollar denominated leases with an average warehouse rental level of $139 per sqm and a weighted average term to maturity of 3.17 years. The average rent is higher than would be expected as the majority of space is high specification and temperature controlled. Rouble denominated or capped leases account for 40% (31 December 2016: 26%) of our total space with an average warehouse rent of Roubles 5,600 per sqm and a weighted average term to maturity of 3.05 years. Rouble leases have an average minimum annual indexation of 6.1%.
The St Petersburg office portfolio is fully let. Two of the assets have long term sole tenants and the third which is multi-let, has had significant interest from new tenants and expansion requirements from existing tenants. Leases are predominately Rouble denominated, (71% of space) with three Euro leases (25%) and one US Dollar lease (4%).
Financing
On 3 July 2017 the Company completed the placing of further convertible preference shares, raising GBP102 million at a subscription price of GBP1.14 per share. The convertible preference shares now have a 9 year term, a cumulative preference dividend of 6.5p per annum and are redeemable on maturity at GBP1.35. The holders currently have the right to convert to ordinary shares at a conversion factor of 1.779 per convertible preference share. The shares were listed on The International Stock Exchange and trade on the SETSqx platform of the London Stock Exchange.
We are now seeing the benefit of the secured debt restructuring completed last year, the cost of debt amortisation dropping from $34 million to $20 million for the six months. Secured debt has a loan to value ratio of 53.4% (30 June 2016: 62.9%), a cost of debt of 7.8% (30 June 2016: 7.1%) and weighted average term to maturity of 4.4 years (30 June 2016: 3.5 years).
We completed the refinancing of one secured debt facility in the period, are close to completing a second and have commenced refinancing of the new St Petersburg portfolio which we also expect to complete this quarter. The margins on these new facilities are significantly lower than our current cost of debt and so we expect to put downward pressure on this in the short term, despite the increase in our cost of debt following the recent US LIBOR hikes. All of our debt is hedged with interest rate caps or fixed rate facilities.
Foreign exchange
The relative stability of the US Dollar/Rouble exchange rate in the period meant no significant foreign exchange impact on our net operating income. The continuing weak Sterling, following the Brexit referendum and this year's election, continues to have a positive effect on funding the returns on our Sterling capital instruments. As we still have a high percentage of our income pegged to the US Dollar, our debt service obligations remain partly hedged. We will monitor this over the next 24 months and if the central bank rate continues to drop as Rouble income increases then Rouble debt facilities will become the more attractive option.
Cash flow
Operating cashflows have remained stable in the six months, generating $48.8 million (30 June 2016: $49.9 million). The major cash movement in the period was the payment of consideration for the acquisition of the new St Petersburg portfolio, a net cash outflow of $84.2 million.
Tender offer
We are proposing a distribution of the equivalent of 1p per ordinary share by way of tender offer buy back of 1 in 52 shares at 52p (30 June 2016: 0.5p by way of an offer of 1 in 80 shares at 40p). This reflects our progress and financial performance so far this year.
Glyn Hirsch
Chief Executive Officer
28 August 2017
Corporate Governance
Principal risks and uncertainties
We have set out in the following table the principal risks and uncertainties that face our business, our view on how those risks have changed during the period from the year end and a description of how we mitigate or manage those risks.
Financial Risk
Risk Impact Mitigation Change
-------------------- ----------------------- ---------------------------------- -------
Oil price
and foreign
exchange This exacerbates The leasing market is now S
the fall in US rouble rents although,
Dollar equivalent we still have a high proportion
Oil price income and an of US Dollar pegged rents.
volatility increase in the The integrity of these
returns leading credit risk of leases has been proved
to a further those tenants through arbitration and
weakening who remain in court challenges.
of the Rouble. US Dollar pegged
leases. A lack of projected investment
in new projects has led
Reduced consumer to market reports forecasting
demand reduces that vacancy levels will
appetite for contract.
new lettings,
renewal of existing
leases and restricts
rental growth.
-------------------- ----------------------- ---------------------------------- -------
Interest rates
Increases Cost of debt The majority of our variable S
in US LIBOR increases and cost of debt is hedged
Group profitability with the use of swaps and
and debt service caps on US LIBOR or fixed
cover reduce. rate facilities.
In addition, and as outlined
in the Chief Executive's
Review, we are being offered
lower margins on new debt
facilities and refinancings
that will help mitigate
increases in US LIBOR
-------------------- ----------------------- ---------------------------------- -------
Bank covenants
The likelihood
The significant of debt facility We have part prepaid secured, S
drop in US covenant breaches amortising debt facilities
Dollar denominated increases. and reduced debt service
rents impacts obligations by extending
on both loan amortisation periods.
to value ("LTV")
and debt service There is very little recourse
cover ratio to the holding company
("DSCR") covenants and no cross collateralisation
on US Dollar between projects on events
debt facilities. of default.
-------------------- ----------------------- ---------------------------------- -------
Property Investment
Risk Impact Mitigation Change
---------------------- ------------------------ ---------------------------------- -------
Acquisitions
We intend to I
increase our Where acquisitions We have an internal management
acquisition are possible, team with both international
activity however legacy issues and Russian experience
we operate in may erode earnings allowing possible legacy
an immature enhancement and and integration issues
investment market integration into to be identified prior
where legacy our existing to acquisition; and
issues are common systems may involve
on acquisition excessive management External advisers undertake
projects. resource. full detailed due diligence.
---------------------- ------------------------ ---------------------------------- -------
Sector focus Lack of experience We have recruited management New
Investment in the new sectors resource with the appropriate
in new real may increase expertise and are familiar
estate sectors acquisition risks with the external advisors
(such as office and lead to higher specialising in those sectors.
and retail). transaction costs
and use of excessive
management resource.
---------------------- ------------------------ ---------------------------------- -------
Leases Can lead to uncertainty Proactive property management New
Market practice of annualised and continued open dialogue
increasingly income due to with tenants.
incorporates lease break clauses.
lease break Dedicated resources assigned
requirements Additional landlord to fit-out obligations
and landlord risk on delivery under leases, project management
fit-out obligations. of tenant fit-out and management oversight.
requirements.
---------------------- ------------------------ ---------------------------------- -------
Russian Domestic Risk
Risk Impact Mitigation Change
-------------------- ----------------------------- ----------------------------------- -------
Legal Framework
The legal The large volume We have an experienced S
framework of new legislation in house legal team including
in Russia from various a litigation specialist.
continues state bodies We use a variety of external
to develop. is open to interpretation, legal advisors when appropriate.
puts strain on
the judicial Our lease agreements have
system and can been challenged extensively
This could be open to abuse. in the last 36 months and
encourage have proven to be robust
tenants to Increased litigation in both ICAC arbitration
attack lease on existing leases and in Russian Courts.
terms where in an attempt
they now perceive to renegotiate
those to be US Dollar denominated
unfavourable. leases or seek
early termination
of contracts.
-------------------- ----------------------------- ----------------------------------- -------
Russian taxation
Russian tax Tax treaties The key tax treaty for
code is changing may be renegotiated the Group is with Cyprus S
in line with and new legislation and this was renegotiated
global taxation may increase between the two countries
trends in the Group's tax during 2013 with no significant
areas such charge. impact on the business;
as transfer
pricing, capital Changes in capital gains
gains tax tax rules have led to a
and the beneficial change in our calculation
ownership of Adjusted Diluted NAV
of offshore per share; and
income streams.
Russia remains a relatively
low tax jurisdiction with
20% Corporation tax.
-------------------- ----------------------------- ----------------------------------- -------
Personnel Risks
Risk Impact Mitigation Change
-------------- ------------------------ ------------------------------------- -------
Key personnel
Failing to Strategy becomes The Remuneration Committee S
retain key more difficult and Executives review remuneration
personnel. to flex or implement. packages against comparable
market information;
Employees have regular
appraisals and documented
development plans and targets;
and
A new long term incentive
scheme was approved at
the last AGM.
-------------- ------------------------ ------------------------------------- -------
Political and Economic Risk
Risk Impact Mitigation Change
--------------------- ----------------------- -------------------------------- -------
Sanctions
The use of Continued isolation The local market has accepted S
economic sanctions of Russia from the inevitability of long
by the US international term economic sanctions
and EU continues markets and a and this has played its
for the foreseeable long term dampening part in the fundamental
future. of growth in changes to market practice
the Russian economy. in our sector. We have
adapted our business model
to secure our position
in the market.
--------------------- ----------------------- -------------------------------- -------
Change key
I = Increased risk in the period
S = Stable risk in the period
D = Decreased risk in the period
Going concern
The financial position of the Group, its cash flows, liquidity and borrowings are described in the Chief Executive's Review and the accompanying financial statements and related notes. During the period the Group had, and continues to hold, substantial cash and short term deposits and is generating underlying profits. Since the period end, additional funds have been raised through the issue of new convertible preference shares. As a consequence, the Directors believe the Group is well placed to manage its business risks.
After making enquiries and examining major areas that could give rise to significant financial exposure, the Board has a reasonable expectation that the Company and the Group have adequate resources to continue its operations for the foreseeable future. Accordingly, the Group continues to adopt the going concern basis in the preparation of the accompanying interim financial statements.
Directors' Responsibility Statement
The Board confirms to the best of its knowledge:
The condensed financial statements have been prepared in accordance with IAS 34 as adopted by the European Union, and that the half year report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R.
The names and functions of the Directors of Raven Russia Limited are disclosed in the 2016 Annual Report of the Group.
This responsibility statement was approved by the Board of Directors on the 28 August 2017 and is signed on its behalf by
Mark Sinclair Colin Smith Chief Financial Officer Chief Operating Officer
Independent review report to Raven Russia Limited
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the interim financial report for the six months ended 30 June 2017 which comprises the Condensed Unaudited Group Income Statement, the Condensed Unaudited Group Statement of Comprehensive Income, the Condensed Unaudited Group Balance Sheet, the Condensed Unaudited Group Statement of Changes in Equity, the Condensed Unaudited Group Cash Flow Statement and the related notes 1 to 20. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.
Directors' Responsibilities
The interim financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim financial report for the six months ended 30 June 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
28 August 2017
Condensed Unaudited
Group Income Statement
For the six months
ended 30 June 2017
Six Six
months months
ended ended
30 June 30 June
2017 2016
Underlying Capital Underlying Capital
Notes earnings & other Total earnings & other Total
$'000 $'000 $'000 $'000 $'000 $'000
------------------------- ------ ----------- --------- --------- ----------- --------- ---------
Gross revenue 2 95,381 - 95,381 97,705 - 97,705
Property operating
expenditure and
cost of sales (25,518) - (25,518) (20,701) - (20,701)
--------- --------- ----------- --------- ---------
Net rental and
related income 2 69,863 - 69,863 77,004 - 77,004
----------- --------- --------- ----------- --------- ---------
Administrative
expenses 3 (12,603) (589) (13,192) (10,471) (544) (11,015)
Share-based payments
and other long term
incentives 17c (818) (1,409) (2,227) (2,231) (4,669) (6,900)
Foreign currency
profits 4,912 - 4,912 10,283 - 10,283
----------- --------- --------- ----------- --------- ---------
Operating expenditure (8,509) (1,998) (10,507) (2,419) (5,213) (7,632)
Share of profits
of joint ventures 285 - 285 697 - 697
Operating profit /
(loss) before profits
and losses on investment
property 61,639 (1,998) 59,641 75,282 (5,213) 70,069
----------- --------- --------- ----------- --------- ---------
Unrealised profit
/ (loss) on revaluation
of investment property 7 - 13,343 13,343 - (6,534) (6,534)
Unrealised loss
on revaluation
of investment property
under construction 8 - (1,730) (1,730) - (1,931) (1,931)
----------- --------- --------- ----------- --------- ---------
Operating profit
/ (loss) 2 61,639 9,615 71,254 75,282 (13,678) 61,604
----------- --------- --------- ----------- --------- ---------
Finance income 4 2,965 299 3,264 1,405 1,776 3,181
Finance expense 4 (40,293) (8,263) (48,556) (41,944) (6,326) (48,270)
Profit / (loss)
before tax 24,311 1,651 25,962 34,743 (18,228) 16,515
----------- --------- --------- ----------- --------- ---------
Tax 5 (8,812) (7,969) (16,781) (3,252) (4,495) (7,747)
---------
Profit / (loss)
for the period 15,499 (6,318) 9,181 31,491 (22,723) 8,768
=========== ========= ========= =========== ========= =========
Earnings per share: 6
Basic (cents) 1.38 1.35
Diluted (cents) 1.34 1.34
Underlying earnings
per share: 6
Basic (cents) 2.33 4.84
Diluted (cents) 2.29 4.76
=========== ===========
The total column of this statement represents the Group's
Income Statement, prepared in accordance with IFRS as adopted
by the EU. The "underlying earnings" and "capital and other"
columns are both supplied as supplementary information permitted
by IFRS as adopted by the EU. Further details of the allocation
of items between the supplementary columns are given in
note 6.
All items in the above statement
derive from continuing operations.
All income is attributable to the equity holders of the
parent company. There are no non-controlling interests.
The accompanying notes are
an integral part of this statement.
Condensed Unaudited Group Statement Of Comprehensive
Income
For the six months ended
30 June 2017
Six months Six months
ended ended
30 June 30 June
2017 2016
$'000 $'000
Profit for the period 9,181 8,768
Other comprehensive income,
net of tax
Items to be reclassified to profit
or loss in subsequent periods
Foreign currency translation
on consolidation (10,231) 4,499
Total comprehensive income for
the period, net of tax (1,050) 13,267
============ ===========
All income is attributable to the equity holders of the
parent company. There are no non-controlling interests.
The accompanying notes are an integral part
of this statement.
Condensed Unaudited Group Balance Sheet
As at 30 June 2017
30 June 31 December
2017 2016
Notes $'000 $'000
Non-current assets
Investment property 7 1,405,904 1,300,643
Investment property under
construction 8 40,356 41,253
Plant and equipment 3,577 3,044
Goodwill 1,979 1,882
Investment in joint ventures 10,533 9,731
Other receivables 4,542 3,724
Derivative financial instruments 3,561 5,012
Deferred tax assets 31,383 27,451
1,501,835 1,392,740
========== =============
Current assets
Inventory 812 771
Trade and other receivables 58,112 52,669
Derivative financial instruments 574 358
Cash and short term deposits 108,083 198,621
167,581 252,419
========== =============
Total assets 1,669,416 1,645,159
========== =============
Current liabilities
Trade and other payables 77,298 65,408
Derivative financial instruments 469 943
Interest bearing loans
and borrowings 10 32,476 40,787
110,243 107,138
========== =============
Non-current liabilities
Interest bearing loans
and borrowings 10 690,000 699,038
Preference shares 11 139,180 131,703
Convertible preference
shares 12 129,967 119,859
Other payables 25,458 25,259
Derivative financial instruments 108 67
Deferred tax liabilities 70,596 61,869
1,055,309 1,037,795
========== =============
Total liabilities 1,165,552 1,144,933
========== =============
Net assets 503,864 500,226
========== =============
Equity
Share capital 13 12,756 12,578
Share premium 221,923 216,938
Warrants 14 449 1,161
Own shares held 15 (6,612) (7,449)
Convertible preference
shares 12 8,453 8,453
Capital reserve (238,419) (245,426)
Translation reserve (187,430) (177,199)
Retained earnings 692,744 691,170
Total equity 503,864 500,226
========== =============
Net asset value per share
(cents): 16
Basic 75 76
Diluted 72 71
Adjusted net asset value
per share (cents): 16
Basic 71 71
Diluted 70 68
========== =============
The accompanying notes are an integral part of
this statement.
Condensed Unaudited Group Statement Of Changes In
Equity
For the six months
ended 30 June 2017
Own Convertible
Share Share Shares Preference Capital Translation Retained
Capital Premium Warrants Held Shares Reserve Reserve Earnings Total
Notes $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
At 1 January
2016 12,776 224,735 1,167 (52,101) - (210,176) (188,141) 676,782 465,042
Profit
for the
period - - - - - - - 8,768 8,768
Other comprehensive
income - - - - - - 4,499 - 4,499
Total comprehensive
income for
the period - - - - - - 4,499 8,768 13,267
-------- -------- --------- --------- ------------ ---------- ------------ --------- ---------
Warrants
exercised - 5 (1) - - - - - 4
Ordinary shares
cancelled (145) (5,691) - 48 - - - - (5,788)
Own shares
disposed - - - 43,161 - - - (28,505) 14,656
Own shares
allocated - - - 945 - - - (1,003) (58)
Share-based
payments - - - - - - - 1,496 1,496
Transfer in
respect of
capital losses - - - - - (8,186) - 8,186 -
At 30 June
2016 12,631 219,049 1,166 (7,947) - (218,362) (183,642) 665,724 488,619
======== ======== ========= ========= ============ ========== ============ ========= =========
At 1 January
2017 12,578 216,938 1,161 (7,449) 8,453 (245,426) (177,199) 691,170 500,226
Profit
for the
period - - - - - - - 9,181 9,181
Other comprehensive
income - - - - - - (10,231) - (10,231)
Total comprehensive
income for
the period - - - - - - (10,231) 9,181 (1,050)
-------- -------- --------- --------- ------------ ---------- ------------ --------- ---------
Warrants
exercised 13/14 178 4,985 (712) - - - - - 4,451
Ordinary
shares
cancelled 13/15 - - - - - - - - -
Own shares
acquired 15 - - - (76) - - - - (76)
Own shares
disposed 15 - - - - - - - - -
Own shares
allocated 15 - - - 913 - - - (600) 313
Share-based
payments 17c - - - - - - - - -
Transfer
in respect
of capital
losses - - - - - 7,007 - (7,007) -
At 30 June
2017 12,756 221,923 449 (6,612) 8,453 (238,419) (187,430) 692,744 503,864
======== ======== ========= ========= ============ ========== ============ ========= =========
The accompanying notes
are an integral part of
this statement.
Condensed Unaudited Group
Cash Flow Statement
For the six months ended
30 June 2017
Six months Six months
ended ended
30 June 30 June
2017 2016
Notes $'000 $'000
Cash flows from operating
activities
Profit before tax 25,962 16,515
Adjustments for:
Depreciation 3 590 544
Provision for bad debts 3 (201) (712)
Share of profits of joint
ventures (285) (697)
Finance income 4 (3,264) (3,181)
Finance expense 4 48,556 48,270
(Profit) / loss on revaluation
of investment property 7 (13,343) 6,534
Loss on revaluation of investment
property under construction 8 1,730 1,931
Foreign exchange profits (4,912) (10,283)
Share-based payments and
other long term incentives 17c 1,409 4,669
------------ ------------
56,242 63,590
Changes in operating working
capital
Decrease / (increase) in
operating receivables 3,211 (2,571)
Decrease / (increase) in
other operating current assets 2 (2)
Decrease in operating payables (2,026) (8,644)
------------ ------------
57,429 52,373
Receipts from joint ventures - 694
Tax paid (8,670) (3,186)
Net cash generated from operating
activities 48,759 49,881
============ ============
Cash flows from investing
activities
Payment for investment property
and investment property under construction (6,615) (4,369)
Refunds of VAT on construction - 172
Acquisition of subsidiaries 20 (88,301) -
Cash acquired with subsidiaries 20 4,088 -
Purchase of plant and equipment (1,305) (294)
Loans repaid 45 227
Interest received 2,951 1,405
Net cash used in investing
activities (89,137) (2,859)
============ ============
Cash flows from financing
activities
Proceeds from long term
borrowings 80,000 -
Repayment of long term borrowings (77,156) -
Loan amortisation (20,187) (33,698)
Bank borrowing costs paid (32,656) (34,639)
Exercise of warrants 4,451 4
Ordinary shares purchased 237 (5,846)
Ordinary shares sold - 14,656
Dividends paid on preference
shares (7,108) (7,906)
Dividends paid on convertible
preference shares (4,502) -
Preference shares purchased - (780)
Premium paid for derivative
financial instruments (759) -
Net cash used in financing
activities (57,680) (68,209)
============ ============
Net decrease in cash and
cash equivalents (98,058) (21,187)
============ ============
Opening cash and cash equivalents 198,621 202,291
Effect of foreign exchange
rate changes 7,520 1,891
Closing cash and cash equivalents 108,083 182,995
============ ============
The accompanying notes are an integral
part of this statement.
Notes to the Condensed Unaudited
Group Financial Statements
For the six months ended
30 June 2017
1. Basis of accounting
Basis of preparation
The condensed unaudited financial statements have been
prepared using accounting policies consistent with International
Financial Reporting Standards adopted for use in the European
Union ("IFRS") and have been prepared in accordance with
International Accounting Standard 34 "Interim Financial
Reporting".
The condensed financial statements do not include all the
information and disclosures required in annual financial
statements and should be read in conjunction with the Group's
financial statements for the year ended 31 December 2016.
Significant accounting policies
The accounting policies adopted in the preparation of the
condensed financial statements are consistent with those
followed in the preparation of the Group's financial statements
for the year ended 31 December 2016.
The Group has adopted new and amended IFRS and IFRIC interpretations
as of 1 January 2017, which did not have any effect on
the financial performance, financial position or disclosures
in the financial statements of the Group.
The Group has not adopted early any standard, interpretation
or amendment that has been issued but is not yet effective.
The requirements of IFRS 9 and IFRS 15, which are effective
from 1 January 2018, have been assessed and neither are
expected to have a material impact on the Group's financial
statements.
Going concern
The financial position of the Group, its cash flows, liquidity
position and borrowings are described in the Chief Executive's
Review and the notes to these interim financial statements.
After making appropriate enquiries and examining sensitivities
that could give rise to financial exposure, the Board has
a reasonable expectation that the Group has adequate resources
to continue operations for the foreseeable future. Accordingly,
the Group continues to adopt the going concern basis in
the preparation of these interim financial statements.
2. Segmental information
The Group has three operating segments, which are managed
and report independently to the Board of Directors. These
comprise:
Property investment - acquire, develop and lease commercial
property in Russia;
Roslogistics - provision of warehousing, transport, customs
brokerage and related services in Russia; and
Raven Mount - sale of residential property in the UK.
(a) Segmental information for the six
months ended and as at 30 June 2017
For the six months
ended 30 June 2017 Property Raven Segment Central
Investment Roslogistics Mount Total Overhead Total
$'000 $'000 $'000 $'000 $'000 $'000
Gross
revenue 83,646 11,458 277 95,381 - 95,381
Operating costs
/ Cost of sales (20,305) (5,158) (55) (25,518) - (25,518)
Net operating income 63,341 6,300 222 69,863 - 69,863
----------- --------------- ------------ -------------- ------------- -------------
Administrative
expenses
Running general
& administration
expenses (8,207) (1,032) (511) (9,750) (2,852) (12,602)
Depreciation (362) (228) - (590) - (590)
Share-based payments
and other long
term incentives (396) - - (396) (1,831) (2,227)
Foreign currency
profits / (losses) 4,919 (7) - 4,912 - 4,912
----------- --------------- ------------ -------------- ------------- -------------
59,295 5,033 (289) 64,039 (4,683) 59,356
Unrealised profit
on revaluation
of investment property 13,343 - - 13,343 - 13,343
Unrealised loss
on revaluation
of investment property
under construction (1,730) - - (1,730) - (1,730)
Share of profits
of joint ventures - - 285 285 - 285
----------- --------------- ------------ -------------- ------------- -------------
Segment profit
/ (loss) 70,908 5,033 (4) 75,937 (4,683) 71,254
=========== =============== ============ ============== ============= =============
Finance income 3,264
Finance
expense (48,556)
Profit before tax 25,962
=============
As at 30 June 2017 Property Raven
Investment Roslogistics Mount Total
$'000 $'000 $'000 $'000
Assets
Investment property 1,405,904 - - 1,405,904
Investment property under construction 40,356 - - 40,356
Investment in joint ventures - - 10,533 10,533
Inventory - - 812 812
Cash and short term deposits 104,095 1,375 2,613 108,083
------------ -------------- -------------
Segment assets 1,550,355 1,375 13,958 1,565,688
============ ============== ============= =============
Other non-current assets 45,042
Other current assets 58,686
Total
assets 1,669,416
=============
Segment liabilities
Interest bearing loans
and borrowings 722,476 - - 722,476
============ ============== ============= =============
Capital expenditure
Payments for investment property
and investment property under
construction 6,615 - - 6,615
============ ============== ============= =============
(b) Segmental information for the six
months ended and as at 30 June 2016
Property Raven Segment Central
Investment Roslogistics Mount Total Overhead Total
$'000 $'000 $'000 $'000 $'000 $'000
Gross
revenue 89,614 7,910 181 97,705 - 97,705
Operating costs
/ Cost of sales (17,306) (3,398) 3 (20,701) - (20,701)
Net operating income 72,308 4,512 184 77,004 - 77,004
----------- --------------- ------------ -------------- ------------- -------------
Administrative
expenses
Running general
& administration
expenses (5,763) (660) (620) (7,043) (3,428) (10,471)
Depreciation (424) (120) - (544) - (544)
Share-based payments
and other long
term incentives (2,447) - - (2,447) (4,453) (6,900)
Foreign currency
profits 10,276 7 - 10,283 - 10,283
----------- --------------- ------------ -------------- -------------
73,950 3,739 (436) 77,253 (7,881) 69,372
Unrealised loss
on revaluation
of investment property (6,534) - - (6,534) - (6,534)
Unrealised loss
on revaluation
of investment property
under construction (1,931) - - (1,931) - (1,931)
Share of profits
of joint ventures - - 697 697 - 697
Segment profit
/ (loss) 65,485 3,739 261 69,485 (7,881) 61,604
=========== =============== ============ ============== ============= =============
Finance income 3,181
Finance
expense (48,270)
Profit before tax 16,515
=============
(c) Segmental information as
at 31 December 2016
Property Raven
Investment Roslogistics Mount Total
$'000 $'000 $'000 $'000
Assets
Investment property 1,300,643 - - 1,300,643
Investment property under
construction 41,253 - - 41,253
Investment in joint ventures - - 9,731 9,731
Inventory - - 771 771
Cash and short term deposits 192,995 1,014 4,612 198,621
Segment assets 1,534,891 1,014 15,114 1,551,019
============ ============== ============= =============
Other non-current
assets 41,113
Other current assets 53,027
Total
assets 1,645,159
=============
Segment liabilities
Interest bearing loans
and borrowings 739,825 - - 739,825
============ ============== ============= =============
Capital expenditure
Payments for investment
property under construction 9,163 - - 9,163
============ ============== ============= =============
3. Administrative
expenses
Six
Six months months
ended ended
30 June 30 June
2017 2016
$'000 $'000
Employment
costs 7,023 5,521
Directors' remuneration 1,624 1,788
Bad debts (201) (712)
Office running costs and
insurance 1,702 1,691
Travel
costs 840 799
Auditors' remuneration 338 335
Legal and professional 1,087 754
Depreciation 590 544
Registrar costs and other
administrative expenses 189 295
13,192 11,015
============= =============
4. Finance income and
expense
Six
Six months months
ended ended
30 June 30 June
2017 2016
Finance
income $'000 $'000
Total interest income on financial
assets not at fair value through
profit or loss
Income from cash and short
term deposits 2,951 1,405
Interest receivable from
joint ventures 14 -
Other finance income
Change in fair value of open
interest rate derivative financial
instruments - 177
Change in fair value of foreign
currency embedded derivatives 299 1,599
Finance
income 3,264 3,181
============= =============
Finance
expense
Interest expense on loans and borrowings
measured at amortised cost 31,777 35,378
Interest expense on preference shares 7,725 8,759
Interest expense on convertible
preference shares 7,184 -
------------- -------------
Total interest expense on financial liabilities
not at fair value through profit or loss 46,686 44,137
Change in fair value of open
forward currency derivative
financial instruments 110 1,676
Change in fair value of open
interest rate derivative financial
instruments 1,760 2,457
Finance expense 48,556 48,270
============= =============
Six
5. Taxation Six months months
ended ended
30 June 30 June
2017 2016
The tax charge for the period can be
reconciled to the profit per the Income
Statement as follows: $'000 $'000
Profit
before
tax 25,962 16,515
Tax at the Russian
corporate rate
of 20% 5,192 3,303
Tax effect of income not subject
to tax and non-deductible expenses 11,905 9,290
Tax on dividends and inter
company gains 1,115 496
Tax effect of financing
arrangements (5,840) 2,510
Movement on unprovided
deferred tax assets (1,012) (7,852)
Movement in provision
for uncertain tax positions 5,379 -
Effect of acquisitions
in the period 42 -
16,781 7,747
============= =============
The majority of income not subject to tax and non-deductible
expenses relates to income and expenditure arising in Guernsey.
The tax effect of financing arrangements includes intra
group financing arrangements and the effect of foreign
currency loans entered into by the Group's Russian subsidiaries.
Unrealised foreign exchange gains and losses are taxable
or tax deductible in Russia. Therefore the movement in
each period is a factor of the related movement in the
underlying exchange rates, principally the US Dollar /
Rouble rate.
As noted in the 2016 Annual Report, the Group is required
to estimate its provision for uncertain tax positions.
During the period the provision has increased, as shown
in the tax reconciliation above, as a consequence of ongoing
tax clarifications and interpretations.
6. Earnings measures
In addition to reporting IFRS earnings the Group also reports
its own underlying earnings measure. The Directors consider
underlying earnings to be a key performance measure, as
this is the measure used by Management to assess the return
on holding investment assets for the long term and the
Group's ability to declare covered distributions. As a
consequence the underlying earnings measure excludes investment
property revaluations, gains or losses on the disposal
of investment property, intangible asset movements, gains
and losses on derivative financial instruments, share-based
payments and other long term incentives (to the extent
not settled in cash), the accretion of premiums payable
on redemption of preference shares and convertible preference
shares, material non-recurring items, depreciation and
amortisation of loan origination costs, together with any
related tax.
Six
Six months months
ended ended
30 June 30 June
The calculation of basic and diluted
earnings per share is based on the following
data: 2017 2016
$'000 $'000
Earnings
Net profit for the period
prepared under IFRS 9,181 8,768
Adjustments to arrive at underlying
earnings:
Unrealised (profit) / loss on
revaluation of investment property (13,343) 6,534
Unrealised loss on revaluation of investment
property under construction 1,730 1,931
Change in fair value of open forward
currency derivative financial instruments 110 1,676
Change in fair value of open interest
rate derivative financial instruments 1,760 2,280
Change in fair value of foreign
currency embedded derivatives (299) (1,599)
Movement on deferred tax
thereon 7,919 2,033
Share-based payments and other long term
incentives 1,409 4,669
Premium on redemption of preference shares
and amortisation of issue costs 262 278
Premium on redemption of convertible
preference shares and amortisation of
issue costs 2,799 -
Depreciation 589 544
Amortisation of loan origination
costs 3,332 1,915
Tax charge on unrealised foreign
exchange movements in loans 50 2,462
Underlying
earnings 15,499 31,491
============= =============
30 June 30 June
2017 2016
Weighted Weighted
average average
Earnings shares EPS Earnings shares EPS
IFRS $'000 No. '000 Cents $'000 No. '000 Cents
Basic 9,181 666,209 1.38 8,768 650,946 1.35
Effect of dilutive
potential ordinary
shares:
Warrants
(note 14) - 10,082 - 6,351
LTIP
(note
17) - 1,711 - 1,111
2016 Retention
scheme (note 17) - 4,873 - -
CBLTIS 2015 (note
17) - - - 2,231
ERS (note
17) - - - 43
Convertible preference
shares (note 12) - - - -
Diluted 9,181 682,875 1.34 8,768 660,682 1.34
----------- --------------- -------------- -------------
30 June 30 June
2017 2016
Weighted Weighted
average average
Earnings shares EPS Earnings shares EPS
Underlying
earnings $'000 No. '000 Cents $'000 No. '000 Cents
Basic 15,498 666,209 2.33 31,491 650,946 4.84
Effect of dilutive
potential ordinary
shares:
Warrants (note
14) - 10,082 - 6,351
LTIP
(note
17) - 1,711 - 1,111
2016 Retention
scheme (note 17) - 4,873 - -
CBLTIS 2015 (note
17) - - - 2,231
ERS (note
17) - - - 43
Convertible preference
shares (note 12) 4,385 187,032 - -
Diluted 19,883 869,907 2.29 31,491 660,682 4.76
----------- --------------- -------------- -------------
The finance expense for the period relating to the convertible
preference shares is greater than IFRS basic earnings per
share and thus the convertible preference shares are not
dilutive for IFRS fully diluted earnings per share. In
the case of underlying earnings per share the convertible
preference shares are dilutive and have been incorporated
into the calculation of fully diluted underlying earnings
per share.
7. Investment property
Asset
class Logistics Logistics Logistics Office 30 June
St St
Location Moscow Petersburg Regions Petersburg 2017
Fair value
hierarchy Level Level Level
* 3 Level 3 3 3 Total
$'000 $'000 $'000 $'000 $'000
Market value at
1 January 2017 1,005,449 141,431 151,846 24,818 1,323,544
Property acquisitions
(note 20) - 35,994 - 50,179 86,173
Property improvements
and movement in completion
provisions 2,748 412 2,401 243 5,804
Unrealised (loss)
/ profit on revaluation (5,536) 13,554 904 3,874 12,796
--------------- ------------ -------------- ------------- -------------
Market value at
30 June 2017 1,002,661 191,391 155,151 79,114 1,428,317
Tenant incentives and
contracted rent uplift
balances (17,129) (5,194) (1,121) (362) (23,806)
Head lease
obligations 1,393 - - - 1,393
---------------
Carrying value
at 30 June 2017 986,925 186,197 154,030 78,752 1,405,904
--------------- ------------ -------------- ------------- -------------
Revaluation movement in
the period ended 30 June
2017
Gross
revaluation (5,536) 13,554 904 3,874 12,796
Effect of tenant incentives
and contracted rent uplift
balances 366 138 251 (208) 547
--------------- ------------ -------------- -------------
Revaluation reported in
the Income Statement (5,170) 13,692 1,155 3,666 13,343
--------------- ------------ -------------- ------------- -------------
Asset
class Logistics Logistics Logistics Office 31 December
St St
Location Moscow Petersburg Regions Petersburg 2016
Fair value hierarchy Level Level Level
* 3 Level 3 3 3 Total
$'000 $'000 $'000 $'000 $'000
Market value at
1 January 2016 1,043,952 139,106 148,649 25,140 1,356,847
Property improvements
and movement in completion
provisions 4,906 2,022 378 (179) 7,127
Unrealised (loss)
/ profit on revaluation (43,409) 303 2,819 (143) (40,430)
--------------- ------------ -------------- ------------- -------------
Market value at
31 December 2016 1,005,449 141,431 151,846 24,818 1,323,544
Tenant incentives and
contracted rent uplift
balances (17,495) (5,332) (1,372) (154) (24,353)
Head lease
obligations 1,452 - - - 1,452
Carrying value
at 31 December
2016 989,406 136,099 150,474 24,664 1,300,643
--------------- ------------ -------------- ------------- -------------
*Classified in accordance with the fair value hierarchy.
There were no transfers between fair value hierarchy in
2016 or 2017.
At 30 June 2017 the Group has pledged investment property
with a value of $1,289 million (31 December 2016: $1,288
million) to secure banking facilities granted to the Group
(note 10).
8. Investment property
under construction
Asset
class Assets under construction Land Bank 30 June
St
Location Moscow Regions Petersburg Regions 2017
Fair value
hierarchy Level Level Level
* 3 3 Sub-total Level 3 3 Sub-total Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Market value
at 1 January
2017 29,600 7,500 37,100 - 3,662 3,662 40,762
Costs
incurred 15 - 15 - 188 188 203
Effect of
foreign
exchange
rate changes 344 171 515 - 103 103 618
Unrealised
loss on
revaluation (1,459) (271) (1,730) - - - (1,730)
------------ ----------- --------------- ------------ -------------- ------------- -------------
Market value
at 30 June
2017 28,500 7,400 35,900 - 3,953 3,953 39,853
Head lease
obligations 503 - 503 - - - 503
----------- --------------- ------------ -------------- -------------
Carrying
value at
30 June
2017 29,003 7,400 36,403 - 3,953 3,953 40,356
------------ ----------- --------------- ------------ -------------- ------------- -------------
Asset
class Assets under construction Land Bank 31 December
St
Location Moscow Regions Petersburg Regions 2016
Fair value
hierarchy Level Level Level
* 3 3 Sub-total Level 3 3 Sub-total Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Market value
at 1 January
2016 27,700 7,300 35,000 413 2,714 3,127 38,127
Costs
incurred 2,353 33 2,386 49 355 404 2,790
Disposal - - - (543) - (543) (543)
Effect of
foreign
exchange
rate changes 1,774 1,072 2,846 81 593 674 3,520
Unrealised
loss on
revaluation (2,227) (905) (3,132) - - - (3,132)
------------ -------------- ------------- -------------
Market value
at 31
December
2016 29,600 7,500 37,100 - 3,662 3,662 40,762
Head lease
obligations 491 - 491 - - - 491
------------ ----------- --------------- ------------ -------------- ------------- -------------
Carrying
value at
31 December
2016 30,091 7,500 37,591 - 3,662 3,662 41,253
------------ ----------- --------------- ------------ -------------- ------------- -------------
*Classified in accordance with the fair value hierarchy.
There were no transfers between fair value hierarchy in
2016 or 2017.
No borrowing costs were capitalised in the period (31 December
2016: $nil).
At 30 June 2017 the Group has pledged investment property
under construction with a value of $35.9 million (31 December
2016: $37.1 million) to secure banking facilities granted
to the Group (note 10).
9. Valuation assumptions
and key inputs
Class of
property Carrying amount Input Range
31
30 June December Valuation 30 June 31 December
2017 2016 technique 2017 2016
$'000 $'000
Completed investment
property
Moscow -
Logistics 986,925 989,406 Income
capitalisation
Long term
ERV per
sqm for
existing
tenants $85 to $105 $85 to $105
Short term Rub 3,800 Rub 4,000
ERV per
sqm for
vacant
space
Initial 2.4% to 2.0% to
yield 16.7% 16.0%
Equivalent 10.7% to 10.7% to
yield 12.0% 12.2%
Vacancy
rate 0% to 94% 9% to 77%
Passing
rent per
sqm $89 to $162 $70 to $158
Passing
rent per Rub 3,500 Rub 3,500
sqm to Rub 11,406 to Rub 6,744
St Petersburg
- Logistics 186,197 136,099 Income
capitalisation
Long term
ERV per
sqm for
existing
tenants $75 to $80 $80
Short term Rub 3,500 Rub 3,700
ERV per to Rub 3,700
sqm for
vacant
space
Initial 8.8% to 11.3% to
yield 13.7% 13.2%
Equivalent 12.2% to 12.3% to
yield 12.4% 12.6%
Vacancy
rate 3% to 12% 3% to 31%
Passing
rent per $105 to
sqm $46 to $140 $138
Passing
rent per Rub 2,339 Rub 3,500
sqm to Rub 3,900 to Rub 4,500
Regional
- Logistics 154,030 150,474 Income
capitalisation
Long term
ERV per
sqm for
existing
tenants $80 $80
Short term
ERV per
sqm for
vacant
space Rub 3,700 Rub 3,700
Initial 8.9% to
yield 12.6% 9% to 12.4%
Equivalent 12.2% to 12.4% to
yield 12.3% 12.5%
Vacancy
rate 18% to 26% 22% to 33%
Passing
rent per $102 to
sqm $92 to $133 $129
Passing
rent per Rub 3,980 Rub 3,900
sqm to Rub 7,000 to Rub 6,547
St Petersburg ERV per $165 to
- Office 78,752 24,664 Income sqm $205 $235
Initial 12.6% to
capitalisation yield 22.8% 20.0%
Equivalent
yield 11% to 12.25% 13.0%
Vacancy
rate 0% to 0.4% 0%
Passing
rent per
sqm $388 Rub 19,545
Passing
rent per Rub 3,051
sqm to Rub 16,271 Rub 19,545
Passing
rent per
sqm EUR390 n/a
Range
Other key Description 30 June 31 December
information 2017 2016
Moscow - Land plot 34% - 34%
Logistics ratio 65% - 65%
Age of 2 to
building 12 years 2 to 12 years
Outstanding
costs (US$'000) 7,012 6,803
St Petersburg Land plot 48% - 51%
- Logistics ratio 57% - 57%
Age of 2 to
building 8 years 2 to 8 years
Outstanding
costs (US$'000) 900 1,102
Regional Land plot 48% - 48%
- Logistics ratio 61% - 61%
Age of
building 7 years 7 years
Outstanding
costs (US$'000) 1,569 665
St Petersburg Land plot 148%
- Office ratio to 496% 320%
Age of
building 10 years 10 years
Outstanding -
costs (US$'000) 125
Carrying amount Input Range
Investment
property 31
under 30 June December Valuation 30 June 31 December
construction 2017 2016 technique 2017 2016
$'000 $'000
Moscow - Value per $0.31 $0.29
Logistics 29,003 30,091 Comparable ha ($m) - $0.53 - $0.61
Regional Value per
- Logistics 7,400 7,500 Comparable ha ($m) $0.29 $0.29
In preparing their valuations at 30 June 2017, JLL have
again made reference to the uncertainty caused in the market
by the low oil price, weak Rouble and continuing sanctions.
This was the case at 31 December 2016 and the impact of
this on the valuation process is set out more fully in
note 13 of the 2016 Annual Report.
10. Interest bearing loans
and borrowings 30 June 31 December
2017 2016
Bank
loans $'000 $'000
Loans due for settlement
within 12 months 32,476 40,787
Loans due for settlement
after 12 months 690,000 699,038
------------- -------------
722,476 739,825
============= =============
The Group's borrowings
have the following maturity
profile:
On demand or within
one year 32,476 40,787
In the second
year 47,569 53,292
In the third to
fifth years 410,577 440,432
After
five
years 231,854 205,314
-------------
722,476 739,825
============= =============
The amounts above include unamortised loan origination
costs of $9.7 million (31 December 2016: $12.3 million)
and interest accruals of $1.2 million (31 December 2016:
$3.8 million).
The principal terms of the Group's interest bearing
loans and borrowings on a weighted average basis
are summarised below:
As at 30
June 2017 Interest Maturity
Rate (years) $'000
Secured on investment property
and investment property under
construction 7.80% 4.4 707,744
Unsecured facility
of the Company 8.90% 3.2 14,732
722,476
-------------
As at 31 December
2016
Secured on investment property
and investment property under
construction 7.50% 4.7 725,123
Unsecured facility
of the Company 8.90% 3.7 14,702
739,825
-------------
The interest rates shown above are the weighted
average cost, including US LIBOR, as at the
Balance Sheet dates.
11. Preference
shares
30 June 31 December
2017 2016
$'000 $'000
At 1
January 131,703 156,558
Purchased in the
period / year - (713)
Premium on redemption of preference
shares and amortisation of issue
costs 262 562
Scrip
dividends 459 614
Effect of foreign
exchange rate changes 6,756 (25,318)
At 30 June / 31
December 139,180 131,703
============= =============
30 June 31 December
2017 2016
Number Number
At 1
January 98,265,327 98,328,017
Purchased in the
period / year - (450,000)
Scrip
dividends 245,670 387,310
At 30 June / 31
December 98,510,997 98,265,327
============= =============
Shares
in issue 98,998,046 98,752,376
Held by the Company's
Employee Benefit Trusts (487,049) (487,049)
At 30 June / 31
December 98,510,997 98,265,327
============= =============
12. Convertible
preference shares
30 June 31 December
2017 2016
$'000 $'000
At 1
January 119,859 -
Issued in the period /
year (net of issue costs) - 138,705
Allocated
to equity - (8,453)
Acquired by Company's
Employee Benefit Trust - (10,378)
Reissued in the period
/ year 1,048 2,779
Premium on redemption of preference
shares and amortisation of issue
costs 2,799 2,892
Movement on accrual for
preference dividends - 24
Effect of foreign
exchange rate changes 6,261 (5,710)
At 30 June / 31
December 129,967 119,859
============= =============
30 June 31 December
2017 2016
Number Number
At 1
January 102,837,876 -
Issued in the period
/ year - 108,689,501
Acquired by Company's
Employee Benefit Trust - (8,000,000)
Reissued
in the year 728,290 2,148,375
At 30 June / 31
December 103,566,166 102,837,876
============= =============
Shares
in issue 108,689,501 108,689,501
Held by the Company's
Employee Benefit Trusts (5,123,335) (5,851,625)
At 30 June / 31
December 103,566,166 102,837,876
============= =============
On 4 July 2017 the Company created and issued a further
89,766,361 convertible preference shares at a placing price
of 114p per share. The new convertible preference shares
rank pari passu with the existing convertible preference
shares in issue.
One of the Company's employee benefit trusts participated
in the placing and subscribed for a further 2,631,578 convertible
preference shares.
13. Share
capital 30 June 31 December
2017 2016
$'000 $'000
At 1
January 12,578 12,776
Issued in the period /
year for cash on warrant
exercises 178 2
Repurchased and cancelled
in the period / year - (200)
At 30 June / 31
December 12,756 12,578
============= =============
30 June 31 December
2017 2016
Number Number
At 1
January 667,968,463 682,560,376
Issued in the period /
year for cash on warrant
exercises 13,807,774 114,084
Repurchased and cancelled
in the period / year - (14,705,997)
At 30 June / 31
December 681,776,237 667,968,463
============= =============
Of the authorised ordinary share capital of 1,500,000,000
at 30 June 2017 (31 December 2016: 1,500,000,000), 11.1
million (31 December 2016: 24.9 million) ordinary shares
are reserved for warrants.
Details of own shares
held are given in note
15.
14. Warrants 30 June 31 December
2017 2016
$'000 $'000
At 1
January 1,161 1,167
Exercised in the
period / year (712) (6)
At 30 June / 31
December 449 1,161
============= =============
30 June 31 December
2017 2016
Number Number
At 1
January 24,894,739 25,008,823
Exercised in the
period / year (13,807,774) (114,084)
At 30 June / 31
December 11,086,965 24,894,739
============= =============
15. Own shares 30 June 31 December
held
2017 2016
$'000 $'000
At 1
January (7,449) (52,101)
Acquisitions (76) (133)
Disposal - 43,161
Cancelled - 81
Allocation to satisfy
ERS options exercised
(note 17a) - 68
Allocation to satisfy
LTIP options exercised
(note 17a) 913 598
Allocation to satisfy CBLTIS
2015 awards vesting (note 17b) - 877
At 30 June / 31
December (6,612) (7,449)
============= =============
30 June 31 December
2017 2016
Number Number
At 1
January 6,444,080 38,456,594
Acquisitions 121,547 282,468
Disposal - (30,937,631)
Cancelled - (64,987)
Allocation to satisfy
ERS options exercised
(note 17a) - (62,756)
Allocation to satisfy
LTIP options exercised
(note 17a) (759,289) (500,000)
Allocation to satisfy CBLTIS
2015 awards vesting (note 17b) - (729,608)
At 30 June / 31
December 5,806,338 6,444,080
============= =============
Allocations are transfers by the Company's Employee Benefit
Trusts to settle CBLTIS awards that vest and to satisfy
ERS and LTIP options exercised in the period. The amounts
shown for share movements are net of the Trustees' participation
in tender offers during the period from grant to exercise.
Details of outstanding ERS and LTIP options, which are
vested but unexercised, are given in note 17a.
16. Net asset value
per share
As well as reporting IFRS net asset value per share, the
Group also reports its own adjusted net asset value and
adjusted net asset value per share measure. The Directors
consider that the adjusted measure provides more relevant
information to shareholders as to the net asset value of
a property investment group with a strategy of long term
investment. The adjustments remove or adjust assets and
liabilities, including goodwill and amounts relating to
irredeemable preference shares, that are not expected to
crystallise in normal circumstances.
30 June 31 December
2017 2016
$'000 $'000
Net asset
value 503,864 500,226
Goodwill (1,979) (1,882)
Goodwill in joint
venture (4,525) (4,305)
Unrealised foreign exchange
profits on preference
shares (13,606) (20,362)
Fair value of interest rate
derivative financial instruments (3,764) (4,764)
Fair value of embedded
derivatives 381 681
Fair value of foreign exchange
derivative financial instruments (176) (277)
Adjusted net asset
value 480,195 469,317
============= =============
Assuming exercise / vesting
of all dilutive potential ordinary
shares
- Convertible preference
shares (note 12) 129,967 119,859
- Warrants
(note 14) 3,601 7,691
- LTIP
(note
17) 933 1,196
- 2016 Retention
scheme (note 17) 3,028 1,498
Adjusted fully diluted
net asset value 617,724 599,561
============= =============
30 June 31 December
2017 2016
Number Number
Number of ordinary
shares (note 13) 681,776,237 667,968,463
Less own shares
held (note 15) (5,806,338) (6,444,080)
675,969,899 661,524,383
============= =============
Assuming exercise of all
potential ordinary shares
- Convertible preference
shares (note 12) 188,283,290 186,959,259
- Warrants
(note 14) 11,086,965 24,894,739
- LTIP
(note
17) 2,872,973 3,872,973
- 2016 Retention
scheme (note 17) 9,242,893 10,897,650
Number of ordinary shares assuming exercise
of all potential ordinary shares 887,456,020 888,149,004
============= =============
30 June 31 December
2017 2016
Cents Cents
Net asset value
per share 75 76
Diluted net asset
value per share 72 71
Adjusted net asset
value per share 71 71
Adjusted diluted
net asset value
per share 70 68
============= =============
Six months ended 30 June Six months ended 30 June
17. Share-based payments and other long term incentives 2017 2016
No of Weighted No of options Weighted
options
(a) Movements in Executive Share Option average average
Schemes
exercise exercise
price price
Outstanding at
the beginning of
the period 3,872,973 25p 4,447,973 25p
Exercised during
the period
- ERS - 0p (75,000) 0p
- LTIP (1,000,000) 25p - 25p
Outstanding at
the end of the
period 2,872,973 25p 4,372,973 25p
============ ============== ============= =============
Represented
by:
- LTIP 2,872,973 4,372,973
Exercisable at the end of the
period 2,872,973 25p 4,372,973 25p
(b) Movements in Combined Bonus and Long Term Incentive Scheme 2015 Awards ("CBLTIS
2015")
Six months Six months
ended ended
30 June 30 June
2017 2016
No of No of award
award
shares shares
Awards of Ordinary shares:
Outstanding at the beginning of the period - 34,800,000
- Granted during the period - -
- Unvested awards waived during the period - (18,750,000)
- Vested during the period (of which entitlement to
2,150,626 was waived) - (2,942,060)
- Lapsed during the period - (6,207,940)
- Cancelled during the period - (6,900,000)
Outstanding at
the end of the
period - -
============= =============
Six months Six months
ended ended
(c) Income statement charge for the period 30 June 30 June
2017 2016
$'000 $'000
CBLTIS
2015 - 1,496
2016 Retention Scheme 2,227 5,404
2,227 6,900
============= =============
To be satisfied by allocation
of:
Ordinary shares (IFRS 2
expense) - 1,496
Convertible preference shares (IFRS 2
expense) 1,409 3,173
Cash 818 2,231
2,227 6,900
============= =============
18. Ordinary dividends
The Company did not declare a final dividend for the year ended 31 December 2016 (2015: none)
and instead implemented a tender offer buy back for ordinary shares on 13 July 2017 on the
basis of 1 in every 26 shares held and a tender price of 52 pence per share, the equivalent
of a final dividend of 2 pence per share (2015: 1 in every 40 shares at 40p per share the
equivalent of 1p per share).
19. Fair value measurement
Set out below is a comparison of the carrying amounts and fair value of the Group's financial
instruments as at the balance sheet date:
30 June 2017 31 December 2016
Carrying Fair Carrying Fair
Value Value Value Value
$'000 $'000 $'000 $'000
Non-current
assets
Loans
receivable 612 570 611 577
Security
deposits 500 500 - -
Derivative financial
instruments 3,561 3,561 5,012 5,012
Current
assets
Trade receivables 37,687 37,687 37,732 37,732
Security
deposits - - 2,393 2,393
Other current receivables 1,873 1,873 318 318
Derivative financial
instruments 574 574 358 358
Cash and short
term deposits 108,083 108,083 198,621 198,621
Non-current liabilities
Interest bearing
loans and borrowings 690,000 702,416 699,038 706,682
Preference
shares 139,180 177,553 131,703 165,140
Convertible preference
shares 129,967 155,049 119,859 143,596
Derivative financial
instruments 108 108 67 67
Rent
deposits 23,570 19,099 23,324 19,838
Other
payables 1,888 1,888 1,935 1,935
Current
liabilities
Interest bearing
loans and borrowings 32,476 34,630 40,787 45,458
Derivative financial
instruments 469 469 943 943
Rent
deposits 7,520 7,520 6,640 6,640
Investment property
acquisition obligations - - - -
Other
payables 8,517 8,517 8,869 8,869
Fair value
hierarchy
The following table provides the fair value measurement hierarchy* of the Group's assets and
liabilities.
Total
Fair
Level 1 Level 2 Level 3 Value
As at 30 $'000 $'000 $'000 $'000
June 2017
Assets measured
at fair value
Investment
property - - 1,405,904 1,405,904
Investment property
under construction - - 40,356 40,356
Derivative financial
instruments - 4,135 - 4,135
Liabilities measured
at fair value
Derivative financial
instruments - 577 - 577
As at 31 December
2016
Assets measured at fair value
Investment
property - - 1,300,643 1,300,643
Investment property
under construction - - 41,253 41,253
Derivative financial
instruments - 5,370 - 5,370
Liabilities measured
at fair value
Derivative financial
instruments - 1,010 - 1,010
* Explanation of the fair value hierarchy:
Level 1 - Quoted prices in active markets for identical assets or liabilities that can be
accessed at the balance sheet date.
Level 2 - Use of a model with inputs that are directly or indirectly observable market data.
Level 3 - Use of a model with inputs that are not based on observable market data.
The Group's foreign currency derivative financial instruments are call options and are measured
based on spot exchange rates, the yield curves of the respective currencies as well as the
currency basis spreads between the respective currencies. The Group's interest rate derivative
financial instruments comprise swap contracts and interest rate caps. These contracts are
valued using a discounted cash flow model and where not cash collateralised consideration
is given to the Group's own credit risk.
20. Acquisitions in the period
The Group made three acquisitions in the period, Gorigo Logistics Park, Primium Business Centre
and Kellerman Business Centre, each from the same investment fund. The Group purchased each
of the properties by acquiring all of the issued share capital of the corporate vehicles that
owned the properties. In accordance with its accounting policy, the Group considered each
acquisition in turn, assessing whether an integrated set of activities had been acquired in
addition to the property. In each case it was concluded a business had not been purchased
but rather the acquisition of a group of assets and related liabilities.
Analyses of the consideration payable for the properties
and the incidental assets and liabilities are provided
below:
Offices
Primium Kellerman Total Gorigo Total
$'000 $'000 $'000 $'000 $'000
Non-current
assets
Investment property
(note 7) 29,216 20,963 50,179 35,994 86,173
Deferred
tax assets - - - 1,856 1,856
Current
assets
Trade and other
receivables 234 440 674 282 956
Cash and short
term deposits 1,930 1,016 2,946 1,142 4,088
Current
liabilities
Trade and other
payables (1,983) (2,523) (4,506) (1,961) (6,467)
29,397 19,896 49,293 37,313 86,606
=============== ============ ============== ============= =============
Discharged
by:
Cash consideration
paid 87,473
Amounts recoverable
from escrow (1,294)
Amounts recoverable from
seller (401)
Acquisition
costs 828
86,606
=============
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR OKFDQKBKDFFB
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