TIDMAFRB TIDMAFID
RNS Number : 8170H
AFI Development PLC
20 November 2018
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION
IN OR INTO THE RUSSIAN FEDERATION, THE UNITED STATES, CANADA,
AUSTRALIA OR JAPAN
20 November 2018
AFI DEVELOPMENT PLC
("AFI DEVELOPMENT" OR "THE COMPANY")
UNAUDITED RESULTS FOR THE NINE MONTHS TO 30 SEPTEMBER 2018
Continuous growth strongly supported by contribution from
residential segment
AFI Development, a leading real estate company focused on
developing property in Russia, today announces its unaudited
financial results for the nine months ended 30 September 2018.
9M 2018 financial highlights[1]
-- Revenue for 9M 2018 increased by 45% year-on-year to US$207.1
million, including proceeds from the sale of trading properties:
* Rental and hotel operating income increased by 10%
year-on-year to US$93.9 million
* Contribution from AFIMALL City grew by 8%
year-on-year to US$64.7 million (9M 2017: US$59.8
million)
* Sale of residential properties contributed US$112.4
million to total revenue, a 97% increase year-on-year
(9M 2017: US$57.0 million), mostly due to revenue
recognition from delivery of apartments in AFI
Residence Paveletskaya in Q2 2018 and the
implementation of IFRS 15[2]
-- Gross profit increased by 63% year-on-year to US$72.1 million
(9M 2017: US$44.2 million)
-- Net profit for 9M 2018 amounted to US$96.6 million (including
a US$62.3 million valuation gain and a US$11.8 million forex
gain), compared to US$0.6 million in 9M 2017
-- Total gross value of portfolio of properties stood at US$1.35
billion, broadly unchanged since the end of H1 2018
-- Cash, cash equivalents and marketable securities as of 30
September 2018 amounted to US$114.5 million
9M 2018 operational highlights
-- At Odinburg, construction works and pre-sales continued
at Building 3 (phase I) and Building 6 (phase II)
--
* As of 7 November 2018, the number of signed sale
contracts stood at 685 (96% of total) in Building 2,
420 (46% of total) in Building 3 and 186 (83% of
total) in Building 6
-- At AFI Residence Paveletskaya, following the recent
completion and delivery of the Phase I apartments to
customers, delivery of the Phase II apartments is scheduled
for Q1 2019. 503 sale and pre-sale contracts (amounting
to 79% of the total number of residential units under
sales) have been signed as of 7 November 2018
-- At Bolshaya Pochtovaya, construction and pre-sales
are on track with delivery of Phase I apartments planned
for Q1 2019
* As of 7 November 2018, 191 apartments (47% of Phase I
and Phase II combined) pre-sold
-- The construction and pre-sale of properties at Botanic
Garden remain on track
* As of 7 November 2018, 224 apartments (28% of Phase
I) pre-sold
-- AFIMALL City continues to record solid NOI growth,
up 13% year-on-year to US$50.3 million in 9M 2018,
from US$44.4 million in 9M 2017
Commenting on today's announcement, David Tahan, Chairman of AFI
Development, said:
"We are pleased to report that AFI Development has continued to
deliver growth in revenue and profits, driven by the performance of
our four ongoing residential projects - Odinburg, AFI Residence
Paveletskaya, Bolshaya Pochtovaya and Botanic Garden. As we look
ahead to the full year, we remain alert the issues posed by a
weaker Russian rouble which could impact the value of our property
portfolio and the threat of additional US sanctions. However, we
believe that with our high-calibre projects, we are well placed to
maintain the positive momentum in our performance into the final
quarter."
9M 2018 Results Conference Call:
AFI Development will hold a conference call for analysts and
investors to discuss its 9M 2018 financial results on Wednesday, 21
November 2018.
Details for the conference call are as follows:
Date: Wednesday, 21 November
2018
Time: 2pm GMT (5pm Moscow)
Dial-in Tel: UK toll free: 0800 358 9473
US toll-free: +1 855 85 70686
Russia toll-free: 8800 500 9867
Password: 67397553#
Please dial in 5-10 minutes prior to the start time.
Prior to the conference call, the 9M 2018 Investor Presentation
of AFI Development will be published on the Company website at
http://www.afi-development.com/en/investor-relations/reports-presentations
on 21 November 2018 by 10am GMT (1pm Moscow time).
- ends -
For further information, please contact:
AFI Development, +7 495 796 9988
Ilya Kutnov, Corporate Affairs/Investments Director (Responsible
for arranging the release of this announcement)
Citigate Dewe Rogerson, London +44 20 7638 9571
Sandra Novakov
Lucy Eyles
This announcement contains inside information.
About AFI Development
Established in 2001, AFI Development is one of the leading real
estate development companies operating in Russia.
AFI Development is listed on the Main Market of the London Stock
Exchange and aims to deliver shareholder value through a commitment
to innovation and continuous project development, coupled with the
highest standards of design, construction and quality of customer
service.
AFI Development focuses on developing and redeveloping high
quality commercial and residential real estate assets across
Russia, with Moscow being its main market. The Company's existing
portfolio comprises commercial projects focused on offices,
shopping centres, hotels and mixed-use properties, and residential
projects.
AFI Development's strategy is to sell the residential properties
it develops and to either lease the commercial properties or sell
them for a favourable return.
AFI Development is a leading force in urban regeneration,
breathing new life into city squares and neighbourhoods and
transforming congested and underdeveloped areas into thriving new
communities. The Company's long-term, large-scale regeneration and
city infrastructure projects establish the necessary groundwork for
the successful launch of commercial and residential properties,
providing a strong base for the future.
Legal disclaimer
Some of the information in these materials may contain
projections or other forward-looking statements regarding future
events, the future financial performance of the Company, its
intentions, beliefs or current expectations and those of its
officers, directors and employees concerning, among other things,
the Company's results of operations, financial condition,
liquidity, prospects, growth, strategies and business. You can
identify forward looking statements by terms such as "expect",
"believe", "anticipate", "estimate", "intend", "will", "could,"
"may" or "might" or the negative of such terms or other similar
expressions. These statements are only predictions and that actual
events or results may differ materially. Unless otherwise required
by applicable law, regulation or accounting standard, the Company
does not intend to update these statements to reflect events and
circumstances occurring after the date hereof or to reflect the
occurrence of unanticipated events. Many factors could cause the
actual results to differ materially from those contained in
projections or forward-looking statements of the Company,
including, among others, general economic conditions, the
competitive environment, risks associated with operating in Russia
and market change in the industries the Company operates in, as
well as many other risks specifically related to the Company and
its operations.
Chairman's statement
In the third quarter of 2018, a weaker rouble increased
inflationary expectations, which in turn caused the Russian Central
Bank to raise its key lending rate by 25 basis points to 7.5% in
September 2018. Furthermore, with some stabilisation in the Russian
economy, the threat of new US sanctions remains a risk for
consideration by all companies operating in Russia.
AFI Development continues to report growth in revenue and
profits, mainly driven by our four ongoing residential projects.
Our residential sales contributed $112.4 million in revenue,
reflecting both changes in our recognition of revenue now that we
report in accordance with IFRS 15 and the delivery of apartments to
customers in Phase I of AFI Residence Paveletskaya. Rental and
hotel operating income also increased to US$93.9 million for the
nine-month period, a 10% year-on-year increase, with AFIMALL City
remaining the main contributor.
Our gross profit for 9M 2018 increased 63% year-on-year to
US$72.1 million, reflecting stronger residential revenue and higher
profitability of our residential projects in Moscow (relative to
Odinburg in the Moscow region, which accounted for all of our
recognised residential sales revenue in 2017).
We recorded a net profit of US$96.6 million for the nine-month
period. This is a significant increase compared to 9M 2017 (US$0.6
million), largely driven by valuation and foreign exchange
gains.
We remain cautiously optimistic regarding the market environment
for both our residential and commercial projects. We believe that
with our high-quality, competitive projects, we are well placed to
generate robust revenues and profits in the coming years.
Projects update
AFIMALL City
The continued improvement in the performance of AFIMALL City is
reflected in the 8% year-on-year increase in revenue to US$64.7
million for the nine-month period, and a 13% year-on-year increase
in NOI to US$50.3 million. Occupancy at the end of Q3 was 92%.
Odinburg
At the Odinburg residential development, the construction of
Building 3 (phase II) has commenced. Building 3 (Phase 1) and
Building 6 (Phase II) are under construction and currently being
marketed to customers. Building 6 is scheduled for delivery in Q1
2019.
As of 7 November 2018, 685 apartments (96% of total) were sold
in Building 2, 420 (46% of total) in Building 3 (Phase I) and 161
(83% of total) in Building 6.
AFI Residence Paveletskaya
The delivery of Phase I apartments to customers is now complete.
Meanwhile, construction work and the marketing of apartments and
special units in Phase II continue to plan, with Phase II scheduled
for delivery in Q1 2019. As of 7 November 2018, 503 contracts for
pre-sales of both apartments and "special units" have been signed
(79% of Phase I and Phase II combined).
Bolshaya Pochtovaya
During the nine-month period ended 30 September 2018, the
construction and marketing of the project progressed according to
plan and as of 7 November 2018, 191 apartments (47% of Phase I and
Phase II combined) had been pre-sold to customers.
Botanic Garden
Construction work and pre-sales are also progressing at Botanic
Garden. As of 7 November 2018, 224 apartments (28% of Phase I) have
been pre-sold to customers.
Aquamarine III Business Centre (Ozerkovskaya III)
In Q1 2018, the Company successfully completed the disposal of
Buildings 2 and 4 to one of the leading Russian banks for circa
US$135 million. AFI Development currently owns one remaining
building in the complex (GBA 18,805 sq.m, including underground
parking), which is leased to Deutsche Bank, Brown-Forman and other
tenants.
Subsequent events
1. On 14 November 2018, the Company converted its existing US
dollar denominated loans, provided by Bank VTB PJSC at the Plaza
Spa Kislovodsk and Plaza Spa Zheleznovodsk projects, into euros at
a flat interest rate of 4.2% per annum. The three loans (two at
Plaza Spa Kislovodsk and one at Plaza Spa Zheleznovodsk) will have
a combined principal of approximately EUR39 million, the
outstanding dollar denominated interest has been paid at the date
of conversion. The main terms of the loans, except for currency and
interest rate, remain unchanged.
2. On 19 November 2018, the Board of Directors of AFI
Development accepted the resignation of Mr Mark Groysman from the
position of Executive Director, effective 1 December 2018. Mr
Groysman's services on the Board were planned as an interim measure
and his resignation follows a new appointment to the Board. Mr.
Groysman will continue to serve as the Chief Executive Officer
('CEO') of AFI RUS LLC. At the same meeting, the Board appointed Mr
Avraham Novogrocki to replace Mr Groysman with such appointment
being effective from 1 December 2018.
Mr Novogrocki previously served on the Company's Board between
2012 and 2016. Mr Novogrocki was, until September 2018, CEO of
Africa Israel Investments Ltd, a company listed on the Tel-Aviv
Stock Exchange in Israel. Prior to assuming the CEO role at Africa
Israel Investments Ltd, Mr Novogrocki served as CEO of its
subsidiaries, namely Africa Israel Industries Ltd (from 2008 to
2012) and Packer Steel Industries Ltd (from 2007 to 2012), as well
as Deputy CEO and CFO of Africa Israel Industries Ltd. Mr
Novogrocki holds an MBA and a BA in Economics and Business
Administration from the Bar-Ilan University, Israel.
David Tahan
Chairman of the Board
NOT REVIEWED BY AUDITORS
SUMMARY OF FINANCIAL RESULTS
For the period from 1 January 2018 to 30 September 2018
UNAUDITED CONSOLIDATED INCOME STATEMENT
For the period from 1 January 2018 to 30 September 2018
Unaudited Audited
1/1/18- 1/1/17-
30/9/18 30/9/17
Note US$ '000 US$ '000
----------------------------------------- ----- ------------ ---------------
Revenue 2 207,100 142,692
Other income 2,150 634
Operating expenses 4 (44,211) (40,535)
Cost of sales of trading properties (84,909) (54,162)
Administrative expenses 3 (4,031) (4,335)
Other expenses (4,006) (2,013)
Total expenses (137,157) (101,045)
Share of the after tax profit of joint
ventures - 1,957
Gross Profit 72,093 44,238
----------------------------------------- ----- ------------ ---------------
Gain on 100% acquisition of previously
held interest in a joint venture - 7,532
Increase / (decrease) in fair value
of properties 7,8 62,257 (13,491)
Results from operating activities 134,350 38,279
Finance income 12,830 12,484
Finance costs (26,512) (37,980)
Net finance (costs)/income 5 (13,682) (25,496)
(Loss)/profit before tax 120,668 12,783
Tax (expense)/benefit 6 (24,070) (12,220)
(Loss)/profit for the period 96,598 563
----------------------------------------- ----- ------------ ---------------
(Loss)/profit attributable to:
Owners of the Company 96,541 285
Non-controlling interests 57 278
96,598 563
Earnings per share
Basic and diluted earnings per share
(cent) 9,21 0.03
----------------------------------------- ----- ------------ ---------------
The unaudited summary of financial results was approved by the
Board of Directors on 19 November 2018.
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 September 2018
Unaudited Audited
30/9/18 31/12/17
Note US$ '000 US$ '000
-------------------------------------------- ---------------- ----------------
Assets
Investment property 7 818,060 818,060
Investment property under development 8 163,240 163,240
Property, plant and equipment 9 74,402 77,633
Long-term loans receivable 7,438 1,669
Intangible assets 519 204
VAT recoverable 37 48
Other investments 5,075
Non-current assets 1,068,771 1,060,854
Trading properties 10 21,283 10,792
Trading properties under construction 11 276,573 349,735
Other investments 13,391 10,515
Inventories 1,042 1,318
Short-term loans receivable 551 1,090
Trade and other receivables 12 70,256 70,402
Current tax assets 3,950 4,114
Cash and cash equivalents 13 101,078 95,468
Current assets 488,124 543,434
Total assets 1,556,895 1,604,288
---------------------------------------- --- ---------------- ----------------
Equity
Share capital 1,048 1,048
Share premium 1,763,409 1,763,409
Translation reserve (360,566) (301,287)
Capital reserve (19,333) (19,333)
Retained earnings (562,291) (672,719)
Equity attributable to owners of the
Company 822,267 771,118
Non-controlling interests (31) (171)
Total equity 822,236 770,947
Liabilities
Long-term loans and borrowings 14 512,753 492,484
Deferred tax liabilities 67,439 42,652
Deferred income 12,569 12,641
Non-current liabilities 592,761 547,777
Short-term loans and borrowings 14 23,606 86,775
Trade and other payables 15 42,559 65,106
Advances from customers 75,613 123,766
Income tax payable 120 9,917
Current liabilities 141,898 285,564
Total liabilities 734,659 833,341
Total equity and liabilities 1,556,895 1,604,288
---------------------------------------- --- ---------------- ----------------
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
For the period from 1 January 2018 to 30 September 2018
Unaudited Audited
1/1/18- 1/1/17-
30/9/18 30/9/17
Note US$ '000 US$ '000
------------------------------------------------ ----- ----------- -----------------
Cash flows from operating activities
Profit/(loss) for the period 96,598 563
Adjustments for:
Depreciation 9 709 626
Net finance costs/(income) 5 12,645 24,953
(Increase) / decrease in fair value of
properties 7,8 (62,257) 13,491
Share of profit in joint ventures - (1,957)
Gain on 100% acquisition of previously
held interest in a joint venture - (7,532)
Tax expense/(benefit) 6 24,070 12,220
71,765 42,364
Change in trade and other receivables 11,550 1,435
Change in inventories 125 73
Change in trading properties and trading
properties under construction (27,905) (10,890)
Change in advances and amounts payable
to builders of trading properties under
construction (12,210) (3,621)
Change in advances from customers 37,703 27,343
Change in trade and other payables (24,804) (4,211)
Change in VAT recoverable 5,438 (2,550)
Change in deferred income 1,568 1,166
Cash generated from operating activities 63,230 51,109
Taxes paid (14,797) (3,749)
------------------------------------------------ ----- ----------- -----------------
Net cash from operating activities 48,433 47,360
------------------------------------------------ ----- ----------- -----------------
Cash flows from investing activities
Acquisition of subsidiary net of cash
acquired - (786)
Proceeds from sale of other investments 6,956 7,206
Proceeds from sale of property, plant
and equipment 130 89
Interest received 817 378
Change in advances and amounts payable
to builders 15 (478) 3,239
Payments for construction of investment
property under development 8 (1,893) (3,823)
Payments for the acquisition/renovation
of investment property 7 (518) (967)
Change in VAT recoverable (979) (588)
Acquisition of property, plant and equipment 9 (844) (223)
Acquisition of other investments (21,274) (6,051)
Acquisition of intangible assets (898) -
Proceeds from repayments of loans receivable 482 4,178
Payments for loans receivable (6,293) (1,803)
------------------------------------------------ ----- ----------- -----------------
Net cash from / (used in) investing activities (24,792) 849
------------------------------------------------ ----- ----------- -----------------
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
For the period from 1 January 2018 to 30 September 2018
Unaudited Audited
1/1/18- 1/1/17-
30/9/18 30/9/17
Note US$ '000 US$ '000
Cash flows from financing activities
Acquisition of non-controlling interests - (1,369)
Proceeds from loans and borrowings 542,467 43,527
Repayment of loans and borrowings (548,571) (8,685)
Interest paid (17,724) (28,910)
------------------------------------------- ----- ---------- ------------
Net cash used in financing activities (23,828) 4,563
------------------------------------------- ----- ---------- ------------
Effect of exchange rate fluctuations 5,797 (322)
Net increase in cash and cash equivalents 5,610 52,450
Cash and cash equivalents at 1 January 95,468 10,619
------------------------------------------- ----- ---------- ------------
Cash and cash equivalents at 30 September 13 101,078 63,069
------------------------------------------- ----- ---------- ------------
NOTES TO THE UNAUDITED SUMMARY OF FINANCIAL RESULTS
For the period from 1 January 2018 to 30 September 2018
1. SUMMARY OF OPERATION
Incorporation and principal activity
AFI Development PLC (the "Company") was incorporated in Cyprus
on 13 February 2001 as a limited liability company under the name
Donkamill Holdings Limited. In April 2007 the Company was
transformed into public company and changed its name to AFI
Development PLC. The address of the Company's registered office is
165 Spyrou Araouzou Street, Lordos Waterfront Building, 5th floor,
Flat/office 505, 3035 Limassol, Cyprus. As of 7 September 2016 the
Company is a 64.88% subsidiary of Flotonic Limited, a private
holding company registered in Cyprus, 100% owned by Mr Lev Leviev.
Prior to that, the Company was a 64.88% subsidiary of Africa Israel
Investments Ltd ("Africa-Israel"), which is listed on the Tel Aviv
Stock Exchange ("TASE"). The remaining shareholding of "A" shares
is held by a custodian bank in exchange for the GDRs issued and
listed in the London Stock Exchange ("LSE"). On 5 July 2010 the
Company issued by way of a bonus issue 523,847,027 "B" shares,
which were admitted to a premium listing on the Official List of
the UK Listing Authority and to trading on the main market of LSE.
On the same date, the ordinary shares of the Company were
designated as "A" shares.
This summary of financial results comprises the Company and its
subsidiaries (together referred to as the "Group"). The principal
activity of the Group is real estate investment and
development.
The summary of financial results was not audited. The amounts
are based on the Group's financial information, which is prepared
in accordance with International Financial Reporting Standards
("IFRS"), as adopted by the European Union ("EU") and the Group's
accounting policy, while the disclosures and presentation are not
in compliance with IFRSs, specifically with IAS 34 "Interim
Financial Reporting" and IAS 1 "Presentation of Financial
Statements".
Exchange rates
The table below shows the exchange rates of Russian Rubles,
which is the functional currency of the Russian subsidiaries of the
Group, to the US Dollar, which is the presentation currency of the
Group:
Russian Rubles % change % change
As of: for US$1 nine months
year
30 September 2018 65.5906 13.1 13.9
31 December 2017 57.6002 (5.0)
30 September 2017 58.0169 (4.4)
Average rate during:
Nine-month period ended 30 September 2018 61.4358 5.3
Nine-month period ended 30 September 2017 58.3344 (14.7)
2. REVENUE
Unaudited Audited
1/1/18- 1/1/17-
30/9/18 30/9/17
US$ '000 US$ '000
----------------------------------------- ----------- -----------
Investment property rental income 70,162 64,133
Sales of trading properties (note 10) 10,914 57,034
Sales of residential - transferred over 101,514 -
time* (note 11)
Hotel operation income 23,781 21,374
Non-core activity revenue 729 -
Construction consulting/management fees - 151
----------------------------------------- ----------- -----------
207,100 142,692
----------------------------------------- ----------- -----------
*The Group has adopted IFRS 15 Revenue from Contracts with
Customers from 1 January 2018.
3. ADMINISTRATIVE EXPENSES
Unaudited Audited
1/1/18- 1/1/17-
30/9/18 30/9/17
US$ '000 US$ '000
------------------------------ ---------- ---------
Consultancy fees 487 257
Legal fees 1,143 1,122
Auditors' remuneration 245 466
Valuation expenses 43 60
Directors' remuneration 885 993
Depreciation 81 82
Insurance 113 118
Provision for Doubtful Debts (283) 40
Donations 40 67
Other administrative expense 1,277 1,130
------------------------------ ---------- ---------
4,031 4,335
------------------------------ ---------- ---------
4. OPERATING EXPENSES
Unaudited Audited
1/1/18- 1/1/17-
30/9/18 30/9/17
US$ '000 US$ '000
-------------------------------------------- ---------- ----------
Maintenance, utility and security expenses 14,980 13,653
Agency and brokerage fees 1,799 1,037
Advertising expenses 5,312 4,121
Salaries and wages 10,769 11,069
Consultancy fees 1,802 716
Depreciation 629 544
Insurance 323 395
Rent 980 1,405
Property and other taxes 7,563 7,545
Other operating expenses 54 50
-------------------------------------------- ---------- ----------
44,211 40,535
-------------------------------------------- ---------- ----------
5. FINANCE COST AND FINANCE INCOME
Unaudited Audited
1/1/18- 1/1/17-
30/9/18 30/9/17
US$ '000 US$ '000
---------------------------------------------- ------------ ----------
Interest income 1,018 688
Net foreign exchange gain 11,812 11,796
Finance income 12,830 12,484
Interest expense on loans and borrowings (23,957) (37,082)
Net change in fair value of financial assets (1,517) (355)
Other finance costs (1,038) (543)
Finance costs (26,512) (37,980)
Net finance (costs)/income (13,682) (25,496)
---------------------------------------------- ------------ ----------
6. TAX EXPENSE / (BENEFIT)
Unaudited Audited
1/1/18- 1/1/17-
30/9/18 30/9/17
US$ '000 US$ '000
--------------------------------------------------- ------------ --------------
Current tax expense
Current year 4,363 2,919
Deferred tax expense/(benefit)
Origination and reversal of temporary differences 19,707 9,301
--------------------------------------------------- ------------ --------------
Total income tax expense/(benefit) 24,070 12,220
--------------------------------------------------- ------------ --------------
7. INVESTMENT PROPERTY
Reconciliation of carrying amount
Unaudited Audited
30/9/18 31/12/17
US$ '000 US$ '000
---------------------------------------- ---------- ----------
Balance 1 January 818,060 915,350
Renovations / additional costs 518 998
Disposals (903) (140,026)
Fair value adjustment 50,655 18,218
Effect of movement in foreign exchange
rates (50,270) 23,520
---------------------------------------- ---------- ----------
Balance 30 September / 31 December 818,060 818,060
---------------------------------------- ---------- ----------
The fair value adjustment in investment property is mainly
related to the weakening of the Russian Rouble to the US Dollar by
13.9% during the nine months of 2018.
The Company assessed that the fair value of the properties has
not materially changed since 31 December 2017, when a valuation by
external appraisers took place, as there were no significant
changes in the macroeconomic conditions in Russia. The same applies
for investment property under development. See note 8 below.
8. INVESTMENT PROPERTY UNDER DEVELOPMENT
Unaudited Audited
30/9/18 31/12/17
US$ '000 US$ '000
--------------------------------------------------- ---------- ----------
Balance 1 January 163,240 232,900
Construction costs 1,893 4,865
Transfer to trading properties under construction
(note 11) - (74,100)
Fair value adjustment 11,602 (6,648)
Effect of movements in foreign exchange
rates (13,495) 6,223
--------------------------------------------------- ---------- ----------
Balance 30 September / 31 December 163,240 163,240
--------------------------------------------------- ---------- ----------
The fair value adjustment in investment property under
development is mainly related to the weakening of the Russian
Rouble to the US Dollar by 13.9% during the nine months of
2018.
The Company assessed that the fair value of the properties has
not materially changed since 31 December 2017, when a valuation by
external appraisers took place, as there were no significant
changes in the macroeconomic conditions in Russia.
9. PROPERTY, PLANT AND EQUIPMENT
Unaudited Audited
30/9/18 31/12/17
US$ '000 US$ '000
----------------------------------------- ---------- ----------
Balance 1 January 77,633 31,215
Effect of acquisition of subsidiary - 45,580
Depreciation charge (709) (846)
Additions 844 484
Disposals (130) (137)
Transfer from trading properties 4,278 -
Effect of movements in foreign exchange
rates (7,514) 1,337
Balance 30 September / 31 December 74,402 77,633
----------------------------------------- ---------- ----------
10. TRADING PROPERTIES
Unaudited Audited
30/9/18 31/12/17
US$ '000 US$ '000
----------------------------------------------------- ---------- ----------
Balance 1 January 10,792 6,854
Transfer from trading properties under construction
(note 11) 23,054 63,202
Transfer to property, plant and equipment (4,278) -
Disposals (7,206) (59,747)
Effect of movements in exchange rates (1,079) 483
----------------------------------------------------- ---------- ----------
Balance 30 September / 31 December 21,283 10,792
----------------------------------------------------- ---------- ----------
Trading properties comprise unsold apartments and parking
spaces. The transfer from trading properties under construction
represents the completion of the construction of a number of flats,
offices and parking places of "AFI Residence Paveletskaya" project
during the nine months period of 2018, and of "Odinburg" project
during the year 2017.
The amount recognised to cost of sales of trading properties
represents the sale of completed flats or parking places recognised
at a point in time. For the year ended 31 December 2017 this amount
represents the amount transferred to the income statements upon
transferring of the rights to the buyers according to the signed
acts of transfer in accordance with the previous accounting policy
as per IAS18.
11. TRADING PROPERTIES UNDER CONSTRUCTION
Unaudited Audited
30/9/18 31/12/17
US$ '000 US$ '000
------------------------------------------------ ---------- --------------
Balance 1 January as previously reported 349,735 243,327
Effect of adoption of IFRS 15 as at 1 January (59,801) -
2018*
Restated balance at 1 January 289,934 243,327
Transfer from investment property under
development (note 8) - 74,100
Transfer to trading properties (note 10) (23,054) (63,202)
Cost of sale of trading properties (77,703) -
Construction costs 106,199 96,481
Impairment - (9,548)
Finance cost capitalised 6,615 -
Effect of movements in exchange rates (25,418) 8,577
------------------------------------------------ ---------- --------------
Balance 30 September / 31 December 276,573 349,735
------------------------------------------------ ---------- --------------
*The Group has adopted IFRS 15 Revenue from Contracts with
Customers as from 1 January 2018.
Trading properties under construction comprise "Odinburg", "AFI
Residence Paveletskaya", "Botanic Garden" and "Bolshaya Pochtovaya"
projects that involve primarily the construction of residential
properties.
The amount recognised to cost of sales of trading properties,
represents the cost incurred to date for the construction of the
apartments and flats which were sold but not yet completed based on
the new standard IFRS 15 adopted as from 1 January 2018.
12. TRADE AND OTHER RECEIVABLES
Unaudited Audited
30/9/18 31/12/17
US$ '000 US$ '000
----------------------------------------- ---------- ----------
Advances to builders 48,280 29,313
Amounts receivable from related parties 133 109
Trade receivables, net 5,824 3,458
Other receivables 7,431 21,713
VAT recoverable 4,513 9,889
Tax receivables 4,075 5,920
----------------------------------------- ---------- ----------
70,256 70,402
----------------------------------------- ---------- ----------
Trade receivables net
Trade receivables are presented net of an accumulated provision
for doubtful debts and unrecognised revenue of US$8,125 thousand
(31/12/2017: US$10,522 thousand).
13. CASH AND CASH EQUIVALENTS
Unaudited Audited
30/9/18 31/12/17
US$ '000 US$ '000
-------------------------------------------- ----------- ----------
Cash and cash equivalents consist of:
Cash at banks 100,805 95,102
Cash in hand 273 366
-------------------------------------------- ----------- ----------
Cash and cash equivalents as per statement
of cash flows: 101,078 95,468
-------------------------------------------- ----------- ----------
14. LOANS AND BORROWINGS
Unaudited Audited
30/9/18 31/12/17
US$ '000 US$ '000
-------------------------------------------------- ---------- -------------
Non-current liabilities
Secured bank loans 512,753 492,484
512,753 492,484
Current liabilities
Secured bank loans 23,334 86,468
Unsecured loans from other non-related companies 272 307
-------------------------------------------------- ---------- -------------
23,606 86,775
-------------------------------------------------- ---------- -------------
The following changes to the loans took place during the
nine-month period ended 30 September 2018:
A new loan facility was acquired by one of the Group's
subsidiaries, Bellgate Construction Ltd ("Bellgate"), based on a
loan agreement signed on the 28 December 2017. This new loan
facility was used to refinance the previous loan from VTB Bank JSC
("VTB") signed on 22 June 2012 with a maturity date in April 2018
and was also used to repay the remainder amount of US$83 million,
of Ozerkovskaya III loan which expired in January 2018. Bellgate
received the new loan in five tranches, during January and February
2018, in Euros and in Russian Rubles. The blended interest rate on
the new loan is circa 5.6% (assuming current EUR/RUR exchange rate
and current Russian Central Bank key lending rate). The interest
and the principal of the new loan are to be paid quarterly, while
the term of the loan is 5 years.
In January 2018, the Company's subsidiary MKPK PJSC (the owner
of the AFI Residence Paveletskaya Project) received a loan from VTB
Bank PJSC in the amount of RUR711 million to refinance the
previously incurred costs for the construction of the project. The
loan bears floating interest rate of the Russian Central Bank key
lending rate + 1.5%. The principal on the loan is payable monthly,
while the interest is payable quarterly. The loan was fully repaid
in June 2018.
15. TRADE AND OTHER PAYABLES
Unaudited Audited
30/9/18 31/12/17
US$ '000 US$ '000
----------------------------- ---------- ----------
Trade payables 7,034 13,756
Payables to related parties 233 183
Amount payable to builders 17,805 8,510
Provision 6,320 6,830
VAT and other taxes payable 5,515 28,982
Other payables 5,652 6,845
----------------------------- ---------- ----------
42,559 65,106
----------------------------- ---------- ----------
Provision represents the estimated cost of construction of
common use areas of the Odinburg project such as hospital and
school which is an obligation of the Group to build and make
available for use by the residents.
16. SUBSEQUENT EVENTS
On 14 November 2018 the Company converted its existing US dollar
denominated loans provided by Bank VTB PJSC at the Plaza Spa
Kislovodsk and Plaza Spa Zheleznovodsk projects into euros, at a
flat interest rate of 4.2% per annum. The three loans (two at Plaza
Spa Kislovodsk and one at Plaza Spa Zheleznovodsk) will have a
combined principal of about EUR39 million, the outstanding dollar
denominated interest has been paid at the date of conversion. The
main terms of the loans, except for currency and interest rate, did
not change.
On 19 November 2018 the Board of Directors of AFI Development
accepted the resignation of Mr Mark Groysman from the position of
executive director effective 1 December 2018. Mr Groysman's
services on the Board were planned as an interim measure and his
resignation follows a new appointment to the Board. Mr. Groysman
will continue to serve as the chief executive officer of AFI RUS
LLC. At the same meeting, the Board appointed Mr Avraham Novogrocki
as a non-executive director to replace Mr Groysman with such
appointment being effective as from 1 December 2018.
Mr Novogrocki previously served on the Company's Board between
2012 and 2016. Mr Novogrocki was, until September 2018, CEO of
Africa Israel Investments Ltd (a company listed on the Tel-Aviv
Stock Exchange, Israel). Prior to assuming the CEO role at Africa
Israel Investments Ltd, Mr Novogrocki served as CEO of its
subsidiaries, namely Africa Israel Industries Ltd. (from 2008 to
2012) and Packer Steel Industries Ltd. (from 2007 to 2012), as well
as Deputy CEO and CFO of Africa Israel Industries Ltd. Mr
Novogrocki holds a MBA and a BA in Economics and Business
Administration from the Bar-Ilan University, Israel.
[1] The financial results for 9M 2018 reported in this
publication are based on the unaudited summary of financial results
prepared by the Company. The results were not reviewed by the
auditors.
[2] AFI Development has adopted IFRS 15 Revenue from Contracts
with Customers from 1 January 2018. The "sale of residential
properties" figure includes the revenue from sales of residential
properties transferred over time calculated under IFRS 15.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
QRTFMMMMVLGGRZM
(END) Dow Jones Newswires
November 20, 2018 02:00 ET (07:00 GMT)
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