29th Aug 2017 07:00
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 £102 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 $237 million gives us plenty of fire power to invest further. "
Click on, or paste the following link into your web browser, to view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/0799P_1-2017-8-28.pdf
Enquiries
Raven Russia Limited Tel: + 44 (0) 1481 712955
Anton Bilton
Glyn Hirsch
Novella Communications Tel: +44 (0) 203 151 7008
Tim Robertson
Toby Andrews
N+1 Singer Tel: +44 (0) 20 7496 3000
Corporate Finance - James Maxwell / Liz Yong
Sales - Alan Geeves / James Waterlow
Ravenscroft Tel: +44 (0) 1481 729100
Brian O'Mahoney
This announcement contains forward-looking statements that involve risk and uncertainties. The Group's actual results could differ materially from those estimated or anticipated in the forward-looking statements as a result of many factors. Information contained in this announcement relating to the Company should not be relied upon as a guide to future performance.
About Raven Russia
Raven Russia was founded in 2005 to invest in class A warehouse complexes in Russia and lease to Russian and International tenants. Its Ordinary Shares, Preference Shares and Warrants are listed on the Main Market of the London Stock Exchange and admitted to the Official List of The International Stock Exchange ("TISE"). Its Convertible Preference Shares are admitted to the Official List of TISE and trading on the SETSqx market of the London Stock Exchange. The Company operates out of offices in Guernsey, Moscow and Cyprus and has an investment portfolio of circa 1.6 million square metres of Grade "A" warehouses in Moscow, St Petersburg, Rostov-on-Don and Novosibirsk and 49,000 square metres of commercial office space in St Petersburg. For further information visit the Company's website: www.ravenrussia.com
Financial Summary
Income Statement for the 6 months ended: | 30 June 2017 | 30 June 2016 |
Net rental and related income ($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 ($m) | 24.3 | 34.7 |
Basic EPS (cents) | 1.4 | 1.4 |
Distribution per share (pence) | 1.0 | 0.5 |
Balance Sheet at: | 30 June 2017 | 31 December 2016 |
Investment property market value ($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 sqm | 2017 | 2018 | 2019 | 2020-2027 | Total |
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 sqm | 2017 | 2018 | 2019 | 2020-2027 | Total |
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 £102 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 £102 million at a subscription price of £1.14 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 £1.35. 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
Oil price volatility returns leading to a further weakening of the Rouble.
|
This exacerbates the fall in US Dollar equivalent income and an increase in the credit risk of those tenants who remain in US Dollar pegged leases.
Reduced consumer demand reduces appetite for new lettings, renewal of existing leases and restricts rental growth. |
The leasing market is now rouble rents although, we still have a high proportion of US Dollar pegged rents. The integrity of these leases has been proved through arbitration and court challenges.
A lack of projected investment in new projects has led to market reports forecasting that vacancy levels will contract.
|
S |
Interest rates
Increases in US LIBOR
|
Cost of debt increases and Group profitability and debt service cover reduce.
|
The majority of our variable cost of debt is hedged with the use of swaps and caps on US LIBOR or fixed 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 |
S |
Bank covenants
The significant drop in US Dollar denominated rents impacts on both loan to value ("LTV") and debt service cover ratio ("DSCR") covenants on US Dollar debt facilities. |
The likelihood of debt facility covenant breaches increases.
|
We have part prepaid secured, amortising debt facilities and reduced debt service obligations by extending amortisation periods.
There is very little recourse to the holding company and no cross collateralisation between projects on events of default. |
S |
Property Investment
Risk | Impact | Mitigation | Change | ||
|
Where acquisitions are possible, legacy issues may erode earnings enhancement and integration into our existing systems may involve excessive management resource.
|
We have an internal management team with both international and Russian experience allowing possible legacy and integration issues to be identified prior to acquisition; and
External advisers undertake full detailed due diligence.
|
I | ||
Sector focus Investment in new real estate sectors (such as office and retail). | Lack of experience in the new sectors may increase acquisition risks and lead to higher transaction costs and use of excessive management resource. | We have recruited management resource with the appropriate expertise and are familiar with the external advisors specialising in those sectors.
| New | ||
Leases Market practice increasingly incorporates lease break requirements and landlord fit-out obligations. | Can lead to uncertainty of annualised income due to lease break clauses.
Additional landlord risk on delivery of tenant fit-out requirements. | Proactive property management and continued open dialogue with tenants.
Dedicated resources assigned to fit-out obligations under leases, project management and management oversight. | New |
Russian Domestic Risk
Risk | Impact | Mitigation | Change |
Legal Framework
The legal framework in Russia continues to develop.
This could encourage tenants to attack lease terms where they now perceive those to be unfavourable. |
The large volume of new legislation from various state bodies is open to interpretation, puts strain on the judicial system and can be open to abuse.
Increased litigation on existing leases in an attempt to renegotiate US Dollar denominated leases or seek early termination of contracts. |
We have an experienced in house legal team including a litigation specialist. We use a variety of external legal advisors when appropriate.
Our lease agreements have been challenged extensively in the last 36 months and have proven to be robust in both ICAC arbitration and in Russian Courts.
|
S |
Russian taxation
Russian tax code is changing in line with global taxation trends in areas such as transfer pricing, capital gains tax and the beneficial ownership of offshore income streams. |
Tax treaties may be renegotiated and new legislation may increase the Group's tax charge. |
The key tax treaty for the Group is with Cyprus and this was renegotiated between the two countries during 2013 with no significant impact on the business;
Changes in capital gains tax rules have led to a change in our calculation of Adjusted Diluted NAV per share; and
Russia remains a relatively low tax jurisdiction with 20% Corporation tax. |
S |
Personnel Risks
Risk | Impact | Mitigation | Change |
Key personnel
Failing to retain key personnel.
|
Strategy becomes more difficult to flex or implement. |
The Remuneration Committee and Executives review remuneration 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. |
S |
Political and Economic Risk
Risk | Impact | Mitigation | Change |
Sanctions
The use of economic sanctions by the US and EU continues for the foreseeable future.
|
Continued isolation of Russia from international markets and a long term dampening of growth in the Russian economy. |
The local market has accepted the inevitability of long term economic sanctions and this has played its part in the fundamental changes to market practice in our sector. We have adapted our business model to secure our position in the market. |
S |
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 months ended 30 June 2017 | Six months ended 30 June 2016 | |||||||||||||
Notes | Underlying earnings | Capital & other | Total | Underlying earnings | Capital & 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 ended | Six months ended | |||
30 June 2017 | 30 June 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 | ||||||||||||||||
Share Capital | Share Premium | Warrants | Own Shares Held | Convertible Preference Shares | Capital Reserve | Translation Reserve | Retained 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 ended | Six months ended | ||||
30 June 2017 | 30 June 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 months | Six 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 months | Six 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 |
| |||||||||||||
| ||||||||||||||||
5. Taxation | Six months | Six 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 months | Six 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 2017 | 30 June 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 2017 | 30 June 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 |
| ||||||||||
Location | Moscow | St Petersburg | Regions | St Petersburg | 2017 |
| ||||||||||
Fair value hierarchy * | Level 3 | Level 3 | Level 3 | Level 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 |
| ||||||||||
Location | Moscow | St Petersburg | Regions | St Petersburg | 2016 |
| ||||||||||
Fair value hierarchy * | Level 3 | Level 3 | Level 3 | Level 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 |
| ||||||||||||
Location | Moscow | Regions | St Petersburg | Regions | 2017 |
| ||||||||||
Fair value hierarchy * | Level 3 | Level 3 | Sub-total | Level 3 | Level 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 |
| ||||||||||||
Location | Moscow | Regions | St Petersburg | Regions | 2016 |
| ||||||||||
Fair value hierarchy * | Level 3 | Level 3 | Sub-total | Level 3 | Level 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 |
| ||||||||||||
30 June 2017 | 31 December 2016 | Valuation technique | 30 June 2017 | 31 December 2016 |
| |||||||||||
$'000 | $'000 |
| ||||||||||||||
Completed investment property |
| |||||||||||||||
| ||||||||||||||||
Moscow - Logistics | 986,925 | 989,406 | Income | Long term ERV per sqm for existing tenants |
| |||||||||||
capitalisation |
| |||||||||||||||
$85 to $105 | $85 to $105 |
| ||||||||||||||
Short term ERV per sqm for vacant space | Rub 3,800 | Rub 4,000 |
| |||||||||||||
Initial yield | 2.4% to 16.7% | 2.0% to 16.0% |
| |||||||||||||
Equivalent yield | 10.7% to 12.0% | 10.7% to 12.2% |
| |||||||||||||
Vacancy rate | 0% to 94% | 9% to 77% |
| |||||||||||||
Passing rent per sqm | $89 to $162 | $70 to $158 |
| |||||||||||||
Passing rent per sqm | Rub 3,500 to Rub 11,406 | Rub 3,500 to Rub 6,744 |
| |||||||||||||
| ||||||||||||||||
St Petersburg - Logistics | 186,197 | 136,099 | Income | Long term ERV per sqm for existing tenants |
| |||||||||||
capitalisation |
| |||||||||||||||
$75 to $80 | $80 |
| ||||||||||||||
Short term ERV per sqm for vacant space | Rub 3,500 to Rub 3,700 | Rub 3,700 |
| |||||||||||||
Initial yield | 8.8% to 13.7% | 11.3% to 13.2% |
| |||||||||||||
Equivalent yield | 12.2% to 12.4% | 12.3% to 12.6% |
| |||||||||||||
Vacancy rate | 3% to 12% | 3% to 31% |
| |||||||||||||
Passing rent per sqm | $46 to $140 | $105 to $138 |
| |||||||||||||
Passing rent per sqm | Rub 2,339 to Rub 3,900 | Rub 3,500 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 yield | 8.9% to 12.6% | 9% to 12.4% |
| |||||||||||||
Equivalent yield | 12.2% to 12.3% | 12.4% to 12.5% |
| |||||||||||||
Vacancy rate | 18% to 26% | 22% to 33% |
| |||||||||||||
Passing rent per sqm | $92 to $133 | $102 to $129 |
| |||||||||||||
Passing rent per sqm | Rub 3,980 to Rub 7,000 | Rub 3,900 to Rub 6,547 |
| |||||||||||||
| ||||||||||||||||
St Petersburg - Office | 78,752 | 24,664 | Income | ERV per sqm | $165 to $205 | $235 |
| |||||||||
capitalisation | Initial yield | 12.6% to 22.8% | 20.0% |
| ||||||||||||
Equivalent yield | 11% to 12.25% | 13.0% |
| |||||||||||||
Vacancy rate | 0% to 0.4% | 0% |
| |||||||||||||
Passing rent per sqm | $388 | Rub 19,545 |
| |||||||||||||
Passing rent per sqm | Rub 3,051 to Rub 16,271 | Rub 19,545 |
| |||||||||||||
Passing rent per sqm | €390 | n/a |
| |||||||||||||
| ||||||||||||||||
Range |
| |||||||||||||||
Other key information | Description | 30 June 2017 | 31 December 2016 |
| ||||||||||||
| ||||||||||||||||
Moscow - Logistics | Land plot ratio | 34% - 65% | 34% - 65% |
| ||||||||||||
Age of building | 2 to 12 years | 2 to 12 years |
| |||||||||||||
Outstanding costs (US$'000) | 7,012 | 6,803 |
| |||||||||||||
| ||||||||||||||||
St Petersburg - Logistics | Land plot ratio | 48% - 57% | 51% - 57% |
| ||||||||||||
Age of building | 2 to 8 years | 2 to 8 years |
| |||||||||||||
Outstanding costs (US$'000) | 900 | 1,102 |
| |||||||||||||
| ||||||||||||||||
Regional - Logistics | Land plot ratio | 48% - 61% | 48% - 61% |
| ||||||||||||
Age of building | 7 years | 7 years |
| |||||||||||||
Outstanding costs (US$'000) | 1,569 | 665 |
| |||||||||||||
| ||||||||||||||||
St Petersburg - Office | Land plot ratio | 148% to 496% | 320% |
| ||||||||||||
Age of building | 10 years | 10 years |
| |||||||||||||
Outstanding costs (US$'000) | 125 | - |
| |||||||||||||
| ||||||||||||||||
Carrying amount | Input | Range |
| |||||||||||||
Investment property under construction | 30 June 2017 | 31 December 2016 | Valuation technique | 30 June 2017 | 31 December 2016 | |||||||||||
$'000 | $'000 | |||||||||||||||
Moscow - Logistics | 29,003 | 30,091 | Comparable | Value per ha ($m) | $0.31 - $0.53 | $0.29 - $0.61 | ||||||||||
Regional - Logistics | 7,400 | 7,500 | Comparable | Value per ha ($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 held | 30 June | 31 December |
| |||||||||||||
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 |
| |||||||||||||
| ||||||||||||||||
17. Share-based payments and other long term incentives | Six months ended 30 June 2017 | Six months ended 30 June 2016 |
| |||||||||||||
No of options | Weighted | No of options | Weighted |
| ||||||||||||
(a) Movements in Executive Share Option Schemes | average | average |
| |||||||||||||
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 2017 | 30 June 2016 |
| ||||||||||||||
No of award | No of 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 2017 | 30 June 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 June 2017 | $'000 | $'000 | $'000 | $'000 |
| |||||||||||
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 |
| |||||||||||||||
| ||||||||||||||||
| ||||||||||||||||
Related Shares:
RAV.L