Source - RNS
RNS Number : 3639I
Raven Russia Limited
30 August 2016
 

30 August 2016

 

Raven Russia Limited ("Raven Russia" or the "Company")

 

2016 Interim Results

 

Raven Russia today announces its unaudited results for the six months ended 30 June 2016.

 

Highlights

 

·      IFRS earnings after tax $8.8 million (30 June 2015: loss of $20.6 million);

·      Underlying earnings after tax $31.5 million (30 June 2015: $34.5 million);

·      Basic underlying earnings per share 4.8 cents (30 June 2015: 5.0 cents);

·      Adjusted diluted net asset value per share 70 cents (31 December 2015: 70 cents);

·      Investment portfolio stable at 82% let;

·      Issue of new convertible preference shares completed on 7 July 2016 raising £109 million;

·      Cash balance today of $331 million; and

·      Proposed distribution of 0.5p by way of tender offer buy back of 1 in 80 shares at 40p.

 

Glyn Hirsch CEO said, "We are getting used to the new business conditions and the market is adapting and stabilising too. With our considerably strengthened balance sheet we feel well placed for the next phase for the Group."

 

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

 

Barclays Bank Plc                                                                                                                   Tel: +44 (0) 20 7623 2323

Tom Boardman / Tom Macdonald      

 

Ravenscroft                                                                                                                          Tel: +44 (0) 1481 729100

David McGall

 

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 Channel Islands Securities Exchange Authority Limited ("CISEA"). Its Convertible Preference Shares are admitted to the CISEA Official List and trading on the SETSqx market of the London Stock Exchange.  The Company operates out of offices in Guernsey, Moscow and Cyprus and has to date completed a portfolio of circa 1.5 million square metres of Grade "A" warehouses in Moscow, St Petersburg, Rostov-on-Don and Novosibirsk. For further information visit the Company's website: www.ravenrussia.com

Financial Summary

 

Income Statement for the 6 months ended:

30 June 2016

30 June 2015

Net Rental and Related Income ($m)

77.0

95.5

Revaluation deficit  ($m)

(8.5)

(50.8)

IFRS Earnings/ (Loss) after tax ($m)

8.8

(20.6)

Underlying Earnings after tax ($m)

31.5

34.5

IFRS Basic EPS (cents)

1.4

(3.0)

Underlying Basic EPS (cents)

4.8

5.0

Distribution per share (pence)

0.5

1.0




Balance Sheet at:

30 June 2016

31 December 2015

Investment property Market Value ($m)

1,352

1,357

Adjusted  diluted  NAV per share (cents)

70

70

IFRS  diluted  NAV per share (cents)

72

70

 

 

Letting Summary

 

The completed logistics portfolio of 1.5 million sqm is 82% let. The table below shows the maturity profile at the period end and how that has changed in the six months to 30 June 2016.

 

 Maturities, '000 sqm

2016

2017

2018

2019

2020-2027

Total

Maturity profile at 1 January 2016

228

210

131

225

429

1,223

Renegotiated and extended

(82)

(25)

0

(12)

0

(119)

Effect of renegotiations

0

45

33

11

30

119

Vacated/terminated

(78)

(6)

(3)

0

0

(87)

New lettings

7

3

34

12

29

85

Maturity profile at 30 June 2016

75

227

195

236

488

1,221

 

In addition, 25,000sqm of pre let agreements ("PLAs") and letters of intent ("LOIs") had been signed at 30 June 2016.

 

 

Chairman's Message

 

I am pleased to say that since my last message in March this year there has been a period of relative stability in the Russian market and we have been busy taking some positive steps to recover lost ground.

 

Business models have adapted to the new market fundamentals following the various macro economic events of the past two years and investment decisions are coming back onto the agenda. Our occupancy levels have stabilised at 82% and we have active discussions on vacant space on most of our projects. Similarly, property valuations have remained relatively flat over the six months with a small deficit of $8.5 million at 30 June 2016 (deficit of $257 million in 12 months to 31 December 2015).

 

New leases are Rouble denominated and as a result we will continue to have a drop off in US Dollar denominated income as existing US Dollar pegged leases mature. But we now have greater clarity on where that may lead us. The underlying tenant base is strong with the weaker covenants having now vacated and the integrity of our leases, where tested in various court and arbitration procedures, has proved robust.

 

Following the release of our 2015 Annual Report and with the spectre of a continuing reduction in our net operating income as leases re-align with current market rental levels it became obvious that we should restructure our balance sheet to counter the effects. In a very short window and thanks to the foresight of Anton, our Deputy Chairman, Glyn, our CEO and a supportive shareholder base, we raised £109 million through the issue of new convertible preference shares in early July. This has allowed us to start the process of changing the weighting of our secured, amortising debt, reducing it to levels that meet ongoing covenant requirements, extending the maturity periods and significantly reducing the annual amortisation exposure. The effect of this should begin to be seen in 2017, when our cash break even point will fall to a level commensurate with our reduced net operating income.

 

We still have significant cash resources over and above the new fund raising and following this strengthening of our balance sheet we will look to start rebuilding our top line as acquisition or development opportunities arise.

 

Although it is our intention to distribute the equivalent of 0.5p per ordinary share (30 June 2015: 1p per ordinary share) by way of a tender offer buy back of 1 in 80 shares at 40p per share, we remain cognisant of how quickly external events can impact on our market and will continue with caution, albeit with a stronger balance sheet.

 

 

Richard Jewson

Chairman

29 August 2016

 

 

Chief Executive's Review

 

Results

 

Results for the first six months of the year have met our expectations. Our net operating and related income continues to reduce to a level commensurate with current market rents, $77 million for the half year compared to $95.5 million in the six months to 30 June 2015.

 

Underlying earnings after tax for the period remain healthy, given the reduced income, at $31.5 million (30 June 2015: $34.5 million). This is driven mainly by foreign exchange profits through the income statement and reduced administrative expenses.

 

Administrative expenses benefitted from a recovery in the bad debt charge (a credit of $0.7million in the period compared to a charge of $2.5 million in 2015) and reduced discretionary employee bonuses. The latter is offset by an increased charge for share based payments and other long term incentives following the approval of the new incentive scheme at the AGM on 15 June 2016.

 

Basic underlying earnings per share are 4.8 cents (30 June 2015: 5.0 cents).

 

IFRS earnings after tax recovered to $8.8 million (30 June 2015: loss of $20.6 million) with property values remaining relatively stable, generating an unrealised loss on revaluation of $8.5 million in the half year (30 June 2015: loss of $50.8 million).

 

Fully diluted adjusted net asset value per share remained at 70 cents (31 December 2015: 70 cents). Cash balances at 30 June 2016 were $183 million (31 December 2015: $202 million) increasing to $331 million today following the issue of new convertible preference shares in July.

 

Occupancy levels have remained at 82% over the period (31 December 2015: 82%). At 30 June 2016, 73% of our let warehouse space had US Dollar denominated leases with an average warehouse rental level of $124 per sqm and a weighted average term to maturity of 3.4 years. Rouble denominated or capped leases account for 27% of our let space with an average warehouse rent of Roubles 5,000 per sqm and a weighted average term to maturity of 2 years. Rouble leases have an average minimum annual indexation of 7%.

 

The majority of 2016 lease maturities have now been dealt with. This has resulted in 78,000sqm of vacancies in the first six months with a further 62,000sqm of space expected to be vacated in the second half of the year. Letting interest has picked up significantly since the year end and 85,000sqm of vacant space had been re let by 30 June 2016 with a further 25,000sqm of pre let agreements and letters of intent signed.

 

Financing 

 

On 7 July 2016 the Company completed the placing of new convertible preference shares, raising £109 million at a subscription price of £1 per share. The convertible preference shares have a 10 year term, a cumulative preference dividend of 6.5p per annum and are redeemable on maturity at £1.35. The holders have the right to convert to ordinary shares at the equivalent to approximately 55p per ordinary share (subject to certain adjustments) prior to maturity. The shares were listed on the Channel Islands Securities Exchange and trade on the SETSqx platform of the London Stock Exchange.

 

This fund raising allows us to restructure our balance sheet by reducing secured, amortising debt facilities, extend the terms of that debt and reduce our annual amortisation. We have agreed terms on 7 of our facilities and expect to pre pay $100 million of debt on these facilities by the end of the current quarter. The two largest near term maturities of $232 million will be extended to 2021 as part of this exercise.

 

We have commenced discussion on the majority of the remaining facilities to extend terms and reduce amortisation and these are progressing positively. We hope to have all formal arrangements in place on these by the end of the year.

 

As explained in note 9 to the interim financial statements, a cash sweep mechanism continues on the facility secured on the office block in St Petersburg.

 

Foreign exchange 

 

Foreign exchange movements in the period have been positive, profit in the income statement of $10.3 million being a factor of the Sterling functional currency of the holding company and its US Dollar cash reserves. Weak Sterling also gave a boost to reserves, reducing the US Dollar value of our Sterling preference shares.

 

Cash flow

 

Cash flows in the period show the effect of reduced operating income, dropping $19.9 million to $49.9 million compared to the previous year. Debt amortisation, interest and preference share coupon totalled $76.2 million (30 June 2015: $71.9 million). Distributions to ordinary shareholders for the period were $5.8 million (30 June 2015: $32 million). We did benefit by the sale of ordinary shares held by an Employee Benefit Trust ("EBT"), raising $14.7 million but this is simply a timing difference as the majority of those funds were then used by the EBT in subscribing for new convertible preference shares in early July. Cash outflows for the period before foreign exchange movements were $21.2 million.

 

Tender offer

 

The investment world is desperately short of income and despite the issues we have faced our portfolio still generated a healthy operating profit.

 

Although far from the 6p we have achieved historically, we propose a distribution of the equivalent of 0.5p per ordinary share by way of tender offer buy back of 1 in 80 shares at 40p (30 June 2015: 1p by way of an offer of 1 in 47 shares at 47p).

 

The distribution demonstrates the resilience of our business and our commitment to providing income for our shareholders. 

 

Outlook

 

It may not be the bottom of the market but it certainly feels as though things have stopped deteriorating.

 

We are getting used to the new business conditions and the market is adapting and stabilising too. With our considerably strengthened balance sheet we feel well placed for the next phase for the Group. Significant progress has been made in restructuring our bank loans and we are actively engaged in finding attractive income producing acquisitions which will further enhance cash flow and returns.

 

In the short to medium term, the stabilising Russian economy may have a positive impact. Inflation is generally forecast to fall to around 5% and interest rates below 7% in the next few years.

 

What price a warehouse currently yielding 12% in Roubles with annual indexed increases in that scenario? Something to look forward to I hope, as well as the upside potential of any future strengthening of the Rouble against the Dollar.

 

 

Glyn Hirsch

Chief Executive Officer

29 August 2016

 

 

Corporate Governance

 

Principal risks and uncertainties

 

Internal controls and an effective risk management regime are integral to the Group's continued operation. The assessment of risks faced by the Group is set out in the Risk Report on pages 35 to 38 of the Group's 2015 Annual Report. The principal risks and uncertainties to which the Group is subject have remained consistent with those at the 2015 year end.

 

A summary of the principal risks and uncertainties are as follows:

 

Financial Risks

 

Oil Price and Foreign Exchange

The current oil price and Rouble/US Dollar exchange rate levels remain or deteriorate further in the long term, reducing the Group's US Dollar denominated earnings.

 

Bank Financing and Costs

Reduced access to funding and potential increases in funding costs hinders the Group's ability to refinance maturing facilities. Reduced income and asset values driven by a weak Rouble increases the risk of covenant breaches.

 

Russian Domestic Risk

 

Legal and Taxation Frameworks

The Russian legal and taxation frameworks are still developing with large volumes of new legislation being open to interpretation and abuse.

 

Personnel Risks

 

Key personnel

The risk of failing to retain key personnel has increased with the downturn in the Russian market. A new incentive scheme was presented to shareholders and approved at the AGM on 15 June 2016.

 

Political Risk

 

Ukraine

The situation in Ukraine escalates resulting in increased isolation of Russia from international markets and increased sanctions which exacerbate the slow down in the Russian economy.

 

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 half year, 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 2015 Annual Report of the Group.

 

This responsibility statement was approved by the Board of Directors on the 29 August 2016 and is signed on its behalf by

 

 

Mark Sinclair                                                             Colin Smith

Chief Financial Officer                                             Chief Operating Officer

 

 

Independent review report to Raven Russia Limited

 

We have been engaged by the Company to review the condensed set of financial statements in the Interim Results financial report for the six months ended 30 June 2016 which comprises the Condensed Unaudited Group Income Statement, the Condensed Unaudited Group Statement of Comprehensive Income, the Condensed Unaudited Group Statement of Changes in Equity, the Condensed Unaudited Group Balance Sheet, the Condensed Unaudited Group Cash Flow Statement and the related notes 1 to 18. We have read the other information contained in the Interim Results 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 Results financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Results 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 half-yearly 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 Interim Results 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 Results report for the six months ended 30 June 2016 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

29 August 2016

 

 

 

Condensed Unaudited Group Income Statement










For the six months ended 30 June 2016
















Six months ended 30 June 2016


Six months ended 30 June 2015



Notes


Underlying earnings

Capital and other

Total

Underlying earnings

Capital and other

Total





$'000


$'000


$'000


$'000


$'000


$'000































Gross revenue


2


97,705


-


97,705


118,289


-


118,289

Property operating expenditure and cost of sales




(20,701)


-


(20,701)


(22,838)


-


(22,838)

Net rental and related income

2


77,004   


-


77,004


95,451


-


95,451
















Administrative expenses


3


(10,471)


(544)


(11,015)


(17,567)


(17)


(17,584)

Share-based payments and other long term incentives


15e


(2,231)


(4,669)


(6,900)


-


(3,280)


(3,280)

Foreign currency profits




10,283


-


10,283


1,974


-


1,974

Operating expenditure




(2,419)


(5,213)


(7,632)


(15,593)


(3,297)


(18,890)

Share of profits of joint ventures




697


-


697


717


-


717
















Operating profit / (loss) before profits and losses on investment property

75,282   


(5,213)


70,069


80,575


(3,297)


77,278
















Unrealised loss on revaluation of investment property


6


-


(6,534)


(6,534)


-


(51,901)


(51,901)

Unrealised (loss) / profit on revaluation of investment property under construction


7


-


(1,931)


(1,931)


-


1,128


1,128

Operating profit / (loss)


2


75,282


(13,678)


61,604


80,575


(54,070)


26,505
















Finance income


4


1,405


1,776


3,181


1,636


1,965


3,601

Finance expense


4


(41,944)


(6,326)


(48,270)


(42,280)


(5,904)


(48,184)
















Profit / (loss) before tax




34,743


(18,228)


16,515


39,931


(58,009)


(18,078)
















Tax




(3,252)


(4,495)


(7,747)


(5,448)


2,919


(2,529)

Profit / (loss) for the period



31,491


(22,723)


8,768


34,483


(55,090)


(20,607)
















Earnings per share:


5













Basic (cents)








1.35






(3.01)

Diluted (cents)








1.34






(3.01)
















Underlying earnings per share:

5













Basic (cents)




4.84






5.04





Diluted (cents)




4.76






4.90




















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 5.


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 2016







Six months ended


Six months ended



30 June 2016


30 June 2015



$'000


$'000






Profit / (loss) for the period


8,768


(20,607)





Items to be reclassified to profit or loss in subsequent periods:




Foreign currency translation on consolidation


4,499


(953)






Total comprehensive income for the period, net of tax

13,267


(21,560)






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 2016







30 June


31 December



2016


2015


Notes

$'000


$'000

Non-current assets





Investment property

6

1,330,441


1,333,987

Investment property under construction

7

39,775


39,129

Plant and equipment


3,176


3,141

Goodwill


2,036


2,245

Investment in joint ventures


13,579


14,968

Other receivables


7,354


6,145

Derivative financial instruments


1,402


5,585

Deferred tax assets


26,630


25,523



1,424,393


1,430,723






Current assets





Inventory


1,258


1,381

Trade and other receivables


54,457


50,264

Derivative financial instruments


82


233

Cash and short term deposits


182,995


202,291



238,792


254,169






Total assets


1,663,185


1,684,892






Current liabilities





Trade and other payables


54,112


53,384

Derivative financial instruments


1,451


2,097

Interest bearing loans and borrowings

9

201,702


104,724



257,265


160,205






Non-current liabilities





Interest bearing loans and borrowings

9

684,164


814,021

Preference shares

10

141,897


156,558

Other payables


29,095


31,653

Derivative financial instruments


618


1,794

Deferred tax liabilities


61,527


55,619



917,301


1,059,645






Total liabilities


1,174,566


1,219,850






Net assets


488,619


465,042






Equity





Share capital

11

12,631


12,776

Share premium


219,049


224,735

Warrants

12

1,166


1,167

Own shares held

13

(7,947)


(52,101)

Capital reserve


(218,362)


(210,176)

Translation reserve


(183,642)


(188,141)

Retained earnings


665,724


676,782

Total equity


488,619


465,042

Net asset value per share (cents):

14




Basic


73


72

Diluted


72


70

Adjusted net asset value per share (cents):

14




Basic


72


72

Diluted


70


70

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 2016

















Share

Share


Own Shares

Capital

Translation




Capital

Premium

Warrants

Held

Reserve

Reserve

Total


Notes

$'000

$'000

$'000

$'000

$'000

$'000

$'000










At 1 January 2015


13,623

267,992

1,195

(63,649)

16,597

(186,388)

697,289










Loss for the period


-

-

-

-

-

-

(20,607)

Other comprehensive income

-

-

-

-

-

(953)

(953)

Total comprehensive income for the period

-

-

-

-

-

(953)

(20,607)

(21,560)










Warrants exercised


1

15

(2)

-

-

-

14

Own shares acquired


-

-

-

(76)

-

-

(76)

Ordinary shares cancelled


(626)

(32,660)

-

2,746

-

-

(30,540)

Own shares allocated


-

-

-

7,056

-

-

(1,368)

Share-based payments


-

-

-

-

-

-

3,280

Transfer in respect of capital losses

-

-

-

-

(44,852)

-

-










At 30 June 2015


12,998

235,347

1,193

(53,923)

(28,255)

(187,341)

667,020

647,039











At 1 January 2016


12,776

224,735

1,167

(52,101)

(210,176)

(188,141)

465,042










Profit for the period


-

-

-

-

-

-

8,768

Other comprehensive income

-

-

-

-

-

4,499

4,499

Total comprehensive income for the period

-

-

-

-

-

4,499

8,768

13,267










Warrants exercised

11 / 12

-

5

(1)

-

-

-

4

Ordinary shares cancelled

11 / 13

(145)

(5,691)

-

48

-

-

(5,788)

Own shares disposed

13

-

-

-

43,161

-

-

14,656

Own shares allocated

13

-

-

-

945

-

-

(58)

Share-based payments

15e

-

-

-

-

-

-

1,496

Transfer in respect of capital losses

-

-

-

-

(8,186)

-

-










At 30 June 2016


12,631

219,049

1,166

(7,947)

(218,362)

(183,642)

665,724

488,619











The accompanying notes are an integral part of this statement.





 

 

Condensed Unaudited Group Cash Flow Statement





For the six months ended 30 June 2016










Six months ended

Six months ended





30 June 2016

30 June 2015




Notes

$'000

$'000













Cash flows from operating activities






Profit / (loss) before tax




16,515

(18,078)







Adjustments for:






  Depreciation



3

544

946

  Provision for bad debts



3

(712)

2,486

  Share of profits of joint ventures




(697)

(717)

  Finance income



4

(3,181)

(3,601)

  Finance expense



4

48,270

48,184

  Loss on revaluation of investment property



6

6,534

51,901

  Loss / (profit) on revaluation of investment property under construction

7

1,931

(1,128)

  Foreign exchange profits




(10,283)

(1,974)

  Share-based payments and other long term incentives


15e

4,669

3,280





63,590

81,299

Increase in operating receivables




(2,571)

(436)

Increase in other operating current assets




(2)

(16)

Decrease in operating payables




(8,644)

(9,269)





52,373

71,578

Receipts from joint ventures




694

1,349

Tax paid




(3,186)

(3,194)

Net cash generated from operating activities



49,881

69,733







Cash flows from investing activities






Payment for investment property and investment property under construction


(4,369)

(12,260)

Refunds of VAT on construction




172

5,058

Release of restricted cash




-

25,392

Purchase of plant and equipment




(294)

(531)

Loans repaid




227

290

Interest received




1,405

1,636

Net cash (used in) / generated from investing activities


(2,859)

19,585







Cash flows from financing activities






Proceeds from long term borrowings




-

65,944

Repayment of long term borrowings




(33,698)

(28,006)

Bank borrowing costs paid




(34,639)

(34,934)

Exercise of warrants




4

14

Ordinary shares purchased




(5,846)

(31,984)

Ordinary shares disposed




14,656

-

Dividends paid on preference shares




(7,906)

(8,938)

Purchase of preference shares




(780)

-

Settlement of derivative financial instruments




-

(3,999)

Premium paid for derivative financial instruments



-

(855)

Net cash used in financing activities




(68,209)

(42,758)













Net (decrease) / increase in cash and cash equivalents


(21,187)

46,560







Opening cash and cash equivalents




202,291

171,383







Effect of foreign exchange rate changes




1,891

2,969







Closing cash and cash equivalents




182,995

220,912







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 2016



























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 2015.

 

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 2015.

 

The Group has adopted new and amended IFRS and IFRIC interpretations as of 1 January 2016, 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.

 

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 2016













For the six months ended 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










As at 30 June 2016




Property


Raven







Investment

Roslogistics

Mount

Total






$'000

$'000

$'000

$'000

Assets









Investment property



1,330,441

-

-

1,330,441

Investment property under construction


39,775

-

-

39,775

Investment in joint ventures



-

-

13,579

13,579

Inventory





-

-

1,258

1,258

Cash and short term deposits



177,947

1,378

3,670

182,995

Segment assets




1,548,163

1,378

18,507

1,568,048










Other non-current assets






40,598

Other current assets






54,539

Total assets







1,663,185










Segment liabilities








Interest bearing loans and borrowings


885,866

-

-

885,866

Capital expenditure







Payments for investment property and investment property under construction

4,369

-

-

4,369










(b) Segmental information for the six months ended 30 June 2015















Property


Raven

Segment

Central





Investment

Roslogistics

Mount

Total

Overhead

Total




$'000

$'000

$'000

$'000

$'000

$'000










Gross revenue


109,905

7,699

685

118,289

-

118,289

Operating costs / cost of sales

(19,876)

(2,928)

(34)

(22,838)

-

(22,838)

Net operating income

90,029

4,771

651

95,451

-

95,451










Administrative expenses







Running general & administration expenses

(13,781)

(699)

(601)

(15,081)

(2,486)

(17,567)

Other acquisition / abortive project costs

929

-

-

929

-

929

Depreciation


(812)

(132)

(2)

(946)

-

(946)

Share-based payments and other long term incentives

(1,979)

-

-

(1,979)

(1,301)

(3,280)

Foreign currency profits

1,797

177

-

1,974

-

1,974




76,183

4,117

48

80,348

(3,787)

76,561

Unrealised loss on revaluation of investment property

(51,901)

-

-

(51,901)

-

(51,901)

Unrealised profit on revaluation of investment property under construction

1,128

-

-

1,128

-

1,128

Share of profits of joint ventures

-

-

717

717

-

717

Segment profit / (loss)

25,410

4,117

765

30,292

(3,787)

26,505










Finance income







3,601

Finance expense







(48,184)

Loss before tax







(18,078)










(c) Segmental information as at 31 December 2015










Property


Raven







Investment

Roslogistics

Mount

Total






$'000

$'000

$'000

$'000

Assets









Investment property




1,333,987

-

-

1,333,987

Investment property under construction


39,129

-

-

39,129

Investment in joint ventures



-

-

14,968

14,968

Inventory





-

-

1,381

1,381

Cash and short term deposits



196,861

691

4,739

202,291

Segment assets




1,569,977

691

21,088

1,591,756










Other non-current assets






42,639

Other current assets







50,497

Total assets







1,684,892










Segment liabilities







Interest bearing loans and borrowings


918,745

-

-

918,745

Capital expenditure







Payments for investment property under construction

20,028

-

-

20,028



















3. Administrative expenses













Six months

Six months








ended

ended








30 June

30 June








2016

2015








$'000

$'000










Employment costs






5,521

9,154

Directors' remuneration






1,788

1,760

Bad debts







(712)

2,486

Office running costs and insurance





1,691

2,139

Travel costs






799

901

Auditors' remuneration






335

343

Abortive project costs





-

(929)

Legal and professional






754

560

Depreciation






544

946

Registrar costs and other administrative expenses




295

224








11,015

17,584



















4.  Finance income and expense













Six months

Six months








ended

ended








30 June

30 June








2016

2015

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



1,405

1,636

Other finance income








Change in fair value of open interest rate derivative financial instruments


177

557

Change in fair value of foreign currency embedded derivatives



1,599

1,408

Finance income






3,181

3,601










Finance expense








Interest expense on loans and borrowings measured at amortised cost


35,378

35,085

Interest expense on preference shares



8,759

9,278

Total interest expense on financial liabilities not at fair value through profit or loss


44,137

44,363










Change in fair value of open forward currency derivative financial instruments


1,676

848

Change in fair value of open interest rate derivative financial instruments


2,457

2,973

Finance expense






48,270

48,184



















5.  Earnings measures
















In addition to reporting IFRS earnings the Group adopts the European Public Real Estate Association ("EPRA") earnings measure, as set out in their Best Practice Policy Recommendations document issued in December 2014 and also reports its own underlying earnings measure.

 

EPRA earnings

 

The EPRA earnings measure excludes investment property revaluations and gains or losses on disposal of investment property, intangible asset movements, gains and losses on derivative financial instruments and related taxation.

 

Underlying earnings

 

Underlying earnings consist of the EPRA earnings measure, with additional group adjustments.  Adjustments include share-based payments and other long term incentives, the accretion of premiums payable on redemption of preference shares, material non-recurring items, depreciation and amortisation of loan origination costs.








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:


2016

2015








$'000

$'000

Earnings









Earnings for the purposes of basic and diluted earnings per share being the



profit / (loss) for the period prepared under IFRS


8,768

(20,607)










Adjustments to arrive at EPRA earnings:













Unrealised loss on revaluation of investment property


6,534

51,901

Unrealised loss / (profit) on revaluation of investment property under construction

1,931

(1,128)

Change in fair value of open forward currency derivative financial instruments

1,676

848

Change in fair value of open interest rate derivative financial instruments

2,280

2,416

Change in fair value of foreign currency embedded derivatives


(1,599)

(1,408)

Movement on deferred tax thereon



2,033

(3,054)










EPRA earnings




21,623

28,968










Abortive project costs





-

(929)

Share-based payments and other long term incentives



4,669

3,280

Premium on redemption of preference shares and amortisation of issue costs


278

317

Depreciation






544

946

Amortisation of loan origination costs



1,915

1,766

Tax charge on unrealised foreign exchange movements in loans


2,462

135










Underlying earnings





31,491

34,483

















30 June

30 June








2016

2015






Number

Number

Number of shares





'000

'000





Weighted average number of ordinary shares for the purpose of basic EPS  (excluding own shares held)

650,946

683,750










Effect of dilutive potential ordinary shares:





Warrants







6,351

12,310

ERS







43

298

LTIP







1,111

2,566

CBLTIS 2012






-

3,885

CBLTIS 2015






2,231

-





Weighted average number of ordinary shares for the purposes of diluted EPS (excluding own shares held)

660,682

702,809

















Six months

Six months








ended

ended








30 June

30 June








2016

2015








Cents

Cents










EPS basic







1.35

(3.01)

Effect of dilutive potential ordinary shares:





Warrants







(0.01)

-

ERS







-

-

LTIP







-

-

CBLTIS 2012






-

-

CBLTIS 2015






-

-

Diluted EPS






1.34

(3.01)










EPRA EPS basic





3.32

4.24

Effect of dilutive potential ordinary shares:





Warrants







(0.03)

(0.08)

ERS







-

-

LTIP







(0.01)

(0.02)

CBLTIS 2012






-

(0.02)

CBLTIS 2015






(0.01)

-

EPRA diluted EPS





3.27

4.12










Underlying EPS basic





4.84

5.04

Effect of dilutive potential ordinary shares:





Warrants







(0.05)

(0.09)

ERS







-

-

LTIP







(0.01)

(0.02)

CBLTIS 2012






-

(0.03)

CBLTIS 2015






(0.02)

-

Underlying diluted EPS





4.76

4.90










6.  Investment property
















Asset class




Logistics

Logistics

Logistics

Office

30 June

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

3,174

203

54

(85)

3,346

Unrealised (loss) / profit on revaluation

(1,943)

(2,279)

(3,882)

151

(7,953)

Market value at 30 June 2016


1,045,183

137,030

144,821

25,206

1,352,240










Tenant incentives and contracted rent uplift balances

(16,305)

(5,320)

(1,176)

(371)

(23,172)

Head lease obligations


1,373

-

-

-

1,373

Carrying value at 30 June 2016

1,030,251

131,710

143,645

24,835

1,330,441










Revaluation movement in the period ended 30 June 2016














Gross revaluation


(1,943)

(2,279)

(3,882)

151

(7,953)

Effect of tenant incentives and contracted rent uplift balances

242

12

142

1,023

1,419

Revaluation reported in the Income Statement

(1,701)

(2,267)

(3,740)

1,174

(6,534)










Asset class




Logistics

Logistics

Logistics

Office

31 December

Location




Moscow

St Petersburg

Regions

St Petersburg

2015

Fair value hierarchy *



Level 3

Level 3

Level 3

Level 3

Total





$'000

$'000

$'000

$'000

$'000










Market value at 1 January 2015

1,222,101

170,074

191,576

28,852

1,612,603

Property improvements and movement in completion provisions

(2,768)

(1,194)

114

(266)

(4,114)

Unrealised loss on revaluation

(175,381)

(29,774)

(43,041)

(3,446)

(251,642)

Market value at 31 December 2015

1,043,952

139,106

148,649

25,140

1,356,847










Tenant incentives and contracted rent uplift balances

(16,547)

(5,332)

(1,318)

(1,394)

(24,591)

Head lease obligations



1,731

-

-

-

1,731

Carrying value at 31 December 2015

1,029,136

133,774

147,331

23,746

1,333,987










*Classified in accordance with the fair value hierarchy.  There were no transfers between fair value hierarchy in 2015 or 2016.










At 30 June 2016 the Group has pledged investment property with a value of $1,340 million (31 December 2015: $1,348 million) to secure banking facilities granted to the Group (note 9).










 

 

7. Investment property under construction
















Asset class

Assets under construction

Land Bank

30 June

Location

Moscow

Regions

Sub-total

Moscow

St Petersburg

Regions

Sub-total

2016

Fair value hierarchy *

Level 3

Level 3

Level 3

Level 3

Level 3

Total


$'000

$'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

124

12

136

-

474

160

634

770

Effect of foreign exchange rate changes

1,181

714

1,895

-

54

395

449

2,344

Unrealised loss on revaluation

(1,305)

(626)

(1,931)

-

-

-

-

(1,931)

Market value at 30 June 2016

27,700

7,400

35,100

-

941

3,269

4,210

39,310

Head lease obligations

465

-

465

-

-

-

-

465

Carrying value at 30 June 2016

28,165

7,400

35,565

-

941

3,269

4,210

39,775










Asset class

Assets under construction

Land Bank

31 December

Location

Moscow

Regions

Sub-total

Moscow

St Petersburg

Regions

Sub-total

2015

Fair value hierarchy *

Level 3

Level 3

Level 3

Level 3

Level 3

Total


$'000

$'000

$'000

$'000

$'000

$'000

$'000

$'000










Market value at 1 January 2015

34,000

9,500

43,500

-

-

3,216

3,216

46,716

Costs incurred

789

-

789

-

413

283

696

1,485

Effect of foreign exchange rate changes

(2,369)

(1,570)

(3,939)

-

-

(785)

(785)

(4,724)

Unrealised loss on revaluation

(4,720)

(630)

(5,350)

-

-

-

-

(5,350)

Market value at 31 December 2015

27,700

7,300

35,000

-

413

2,714

3,127

38,127

Head lease obligations

1,002

-

1,002

-

-

-

-

1,002

Carrying value at 31 December 2015

28,702

7,300

36,002

-

413

2,714

3,127

39,129










 *Classified in accordance with the fair value hierarchy








Six months

Six months








ended

ended








30 June

30 June








2016

2015








$'000

$'000

Revaluation movement in the period








Unrealised (loss) / profit on revaluation of assets carried at external valuations



(1,931)

1,128

Unrealised loss on revaluation of assets carried at directors' valuation




-

-








(1,931)

1,128










No borrowing costs were capitalised in the period  (31 December 2015: $nil).

 

At 30 June 2016 the Group has pledged investment property under construction with a value of $35.1 million (31 December 2015: $35.0 million) to secure banking facilities granted to the Group (note 9).

 

8. Valuation assumptions and key inputs















Class of property


Carrying amount




Range



30 June

31 December

Valuation technique



30 June

31 December



2016

2015

Input


2016

2015



 $'000

 $'000






Completed investment property
















Moscow - Logistics


1,030,251

1,029,136

Income

Long term ERV per sqm for







capitalisation

existing tenants

$90 to $110

$90 to $110






Short term ERV per sqm for vacant space

Rub4,300

Rub4,500






Initial yield


2.18% to 15.1%

11.2% to 14.9%






Equivalent yield

10.9% to 12.5%

10.8% to 12.7%






Vacancy rate


6% to 77%

13.9% to 100.0%






Passing rent per sqm

$70 to $158

$62 to $158






Passing rent per sqm

Rub3,500 to Rub6,744

Rub4,500 to Rub6,300










St Petersburg - Logistics

131,710

133,774

Income

Long term ERV per sqm for







capitalisation

existing tenants

$75

$75






Short term ERV per sqm for vacant space

Rub3,800

Rub4,000






Initial yield


12.3% to 13.5%

13.3% to 14.1%






Equivalent yield

12.3% to 12.6%

12.7% to 13.3%






Vacancy rate


2% to 19%

11.7% to 40.0%






Passing rent per sqm

$105 to $136

$80 to $133






Passing rent per sqm

Rub3,500 to Rub4,968

Rub3,060 to Rub4,600










Regional - Logistics


143,645

147,331

Income

Long term ERV per sqm for







capitalisation

existing tenants

$74

$75






Short term ERV per sqm for vacant space

Rub3,800

Rub4,000













Initial yield


12.9% to 13.9%

12.2% to 13.1%






Equivalent yield

12.5%

12.7%






Vacancy rate


17% to 21%

13.0% to 21.0%






Passing rent per sqm

$101 to $129

$101 to $128






Passing rent per sqm

Rub3,900 to Rub6,547

Rub3,060 to Rub4,600










St Petersburg - Office

24,835

23,746

Income

ERV per sqm


$235

$235





capitalisation

Initial yield


17.9%

15.8%






Equivalent yield

13.0%

13.0%






Vacancy rate


0%

0%






Passing rent per sqm

$293

$294

















 Range

Other key information


Description


30 June

 31 December








 2016

 2015










Moscow - Logistics




Land plot ratio


34% - 65%

31% - 65%





Age of building


1 to 12 years

1 to 11 years





Outstanding costs (US$'000)

5,873

6,931










St Petersburg - Logistics



Land plot ratio


51% - 57%

51% - 57%





Age of building


2 to 8 years

1 to 7 years





Outstanding costs (US$'000)

1,092

743










Regional - Logistics




Land plot ratio


48% - 61%

48% - 61%





Age of building


7 years

6 years





Outstanding costs (US$'000)

487

81










St Petersburg - Office



Land plot ratio


320%

320%





Age of building


10 years

9 years





Outstanding costs (US$'000)

-

53













Carrying amount



Range

Investment property under construction

30 June

31 December

Valuation technique


30 June

31 December

2016

2015

Input

2016

2015




$'000

$'000














Moscow - Logistics



28,165

28,702

Comparable

Value per ha ($m)

$0.30 - $0.62

$0.29 - $0.61










Regional - Logistics



7,400

7,300

Comparable

Value per ha ($m)

$0.29

$0.29










In preparing their valuations at 30 June 2016, 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 2015 and the impact of this on the valuation process is set out more fully in note 13 of the 2015 Annual Report.

 

9.  Interest bearing loans and borrowings




30 June

31 December








2016

2015








$'000

$'000










Loans due for settlement within 12 months




201,702

104,724

Loans due for settlement after 12 months




684,164

814,021








885,866

918,745










The Group's borrowings have the following maturity profile:





On demand or within one year





201,702

104,724

In the second year







158,597

162,222

In the third to fifth years





411,371

527,861

After five years







114,196

123,938








885,866

918,745










The amounts above include unamortised loan origination costs of $9.7 million (31 December 2015: $11.3 million) and interest accruals of $1.6 million (31 December 2015: $2.3 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 2016






Interest

Maturity








Rate

(years)

$'000










Secured on investment property and investment property under construction

7.1%

3.5

864,616

Unsecured facility of the Company




8.6%

4.2

21,250









885,866

As at 31 December 2015
















Secured on investment property and investment property under construction

7.2%

4.0

894,995

Unsecured facility of the Company




8.5%

4.7

23,750









918,745










The interest rates shown above are the weighted average cost, including US LIBOR, as at the Balance Sheet dates.











As previously disclosed, the facility secured on the office block in St Petersburg continued to be in technical breach of its debt service covenant ratio and thus the cash sweep has also continued.  In accordance with accounting standards, the amount outstanding of $32 million has been included in loans due for settlement within 12 months.










10.  Preference shares






30 June

31 December








2016

2015








$'000

$'000

Authorised share capital:
















400,000,000 preference shares of 1p each





5,981

5,981

















30 June

31 December








2016

2015

Issued share capital:







Number

Number










At 1 January







98,328,017

98,012,427

Purchased in the period / year





(450,000)

-

Scrip dividends







202,877

315,590

At 30 June / 31 December





98,080,894

98,328,017










Shares in issue







98,567,943

98,365,066

Held by the Company's Employee Benefit Trusts





(487,049)

(37,049)

At 30 June / 31 December





98,080,894

98,328,017

















30 June

31 December








2016

2015

Issued share capital







$'000

$'000










At 1 January







156,558

164,300

Purchased in the period / year





(780)

-

Premium on redemption of preference shares and amortisation of issue costs


278

614

Scrip dividends







335

643

Effect of foreign exchange rate changes





(14,494)

(8,999)

At 30 June / 31 December





141,897

156,558



















11.  Share capital







30 June

31 December








2016

2015








$'000

$'000

Authorised share capital:

















1,500,000,000 ordinary shares of 1p each





27,469

27,469

















30 June

31 December








2016

2015

Issued share capital:







$'000

$'000










At 1 January







12,776

13,623

Issued in the period / year for cash on warrant exercises




-

7

Repurchased and cancelled in the period / year





(145)

(854)

At 30 June / 31 December





12,631

12,776

















30 June

31 December








2016

2015

Issued share capital:







Number

Number










At 1 January







682,560,376

737,598,353

Issued in the period / year for cash on warrant exercises




12,165

457,589

Repurchased and cancelled in the period / year





(10,236,175)

(55,495,566)

At 30 June / 31 December





672,336,366

682,560,376










Of the authorised ordinary share capital at 30 June 2016, 25.0 million (31 December 2015: 25.0 million) ordinary shares are reserved for warrants.










Details of own shares held are given in note 13.















12.  Warrants







30 June

31 December








2016

2015








Number

Number










At 1 January







25,008,823

25,466,412

Exercised in the period / year





(12,165)

(457,589)

At 30 June / 31 December






24,996,658

25,008,823

















30 June

31 December








2016

2015








$'000

$'000










At 1 January







1,167

1,195

Exercised in the period / year





(1)

(28)

At 30 June / 31 December






1,166

1,167



















13.  Own shares held







30 June

31 December








2016

2015








Number

Number










At 1 January







38,456,594

49,048,873

Acquisition







-

98,040

Disposal







(30,937,631)

-

Cancelled







(40,047)

(3,395,130)

Allocation to satisfy ERS options exercised (note 15a)





(62,755)

(237,146)

Allocation to satisfy LTIP options exercised (note 15a)





-

(828,515)

Allocation to satisfy CBLTIS 2012 awards vesting (note 15b)




-

(6,229,528)

Allocation to satisfy CBLTIS 2015 awards vesting (note 15c)




(729,608)

-

At 30 June / 31 December





6,686,553

38,456,594

















30 June

31 December








2016

2015








$'000

$'000










At 1 January







(52,101)

(63,649)

Acquisition







-

(76)

Disposal







43,161

-

Cancelled







48

3,692

Allocation to satisfy ERS options exercised (note 15a)





68

258

Allocation to satisfy LTIP options exercised (note 15a)




-

901

Allocation to satisfy CBLTIS 2012 awards vesting (note 15b)




-

6,773

Allocation to satisfy CBLTIS 2015 awards vesting (note 15c)




877

-

At 30 June / 31 December





(7,947)

(52,101)










Allocations are transfers by the Company's Employee Benefit Trusts to satisfy ERS and LTIP options exercised in the period and the vesting of CBLTIS 2012 and CBLTIS 2015 awards.  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 15a.










14.  Net asset value per share





30 June

31 December








2016

2015








$'000

$'000










Net asset value







488,619

465,042

Goodwill







(2,036)

(2,245)

Goodwill in joint venture






(4,656)

(5,134)

Unrealised foreign exchange (profits) / losses on preference shares




(9,538)

4,956

Excess liabilities over assets on non-recourse secured debt




7,050

-

Fair value of interest rate derivative financial instruments




(10)

(2,289)

Fair value of embedded derivatives





1,633

3,231

Fair value of foreign exchange derivative financial instruments




(1,038)

(2,869)

Adjusted net asset value






480,024

460,692










Assuming exercise of all potential ordinary shares






- Warrants (note 12)







8,354

9,215

- ERS (note 15)







-

-

- LTIP (note 15)







1,461

1,611

- CBLTIS 2015 (note 15)





-

-

Adjusted fully diluted net asset value





489,839

471,518

















30 June

31 December








2016

2015








Number

Number










Number of ordinary shares (note 11)





672,336,366

682,560,376

Less own shares held (note 13)





(6,686,553)

(38,456,594)








665,649,813

644,103,782










Assuming exercise of all potential ordinary shares






- Warrants (note 12)







24,996,658

25,008,823

- ERS (note 15)







-

75,000

- LTIP (note 15)







4,372,973

4,372,973

- CBLTIS 2015 (note 15)






-

2,993,670

Number of ordinary shares assuming exercise of all potential ordinary shares


695,019,444

676,554,248

















30 June

31 December








2016

2015








Cents

Cents










Net asset value per share






73

72

Diluted net asset value per share





72

70

Adjusted net asset value per share





72

72

Adjusted diluted net asset value per share





70

70










Where the quantum of non-recourse secured debt exceeds the value of the relevant assets upon which it is secured, the excess will be added back to arrive at the Group's adjusted net asset value.  This is to reflect that the Group does not have an obligation to make good this shortfall to the relevant lender.










15.  Share-based payments and other long term incentives

Six months ended

30 June 2016

Six months ended

30 June 2015







Weighted


Weighted

(a) Movements in Executive Share Option Schemes

No of options

average

No of

average






exercise

options

exercise






price


price










Outstanding at the beginning of the period


4,447,973

25p

5,708,784

24p

Exercised during the period








- ERS





(75,000)

0p

(75,000)

0p

- LTIP





-

25p

(200,000)

25p

Outstanding at the end of the period



4,372,973

25p

5,433,784

24p










Represented by:









- ERS





-


250,000


- LTIP





4,372,973


5,183,784







4,372,973


5,433,784











Exercisable at the end of the period



4,372,973

25p

5,433,784

24p










(b) Movements in Combined Bonus and Long Term Incentive Scheme 2012 Awards ("CBLTIS 2012")









Six months

Six months








ended

ended








30 June 2016

30 June 2015








No. of award

No. of award








shares

shares

Awards of Ordinary shares:







Outstanding at the beginning of the period




-

7,401,158

- Vested during the period





-

(7,401,158)

Outstanding at the end of the period





-

-



















(c) Movements in Combined Bonus and Long Term Incentive Scheme 2015 Awards ("CBLTIS 2015")









Six months

Six months








ended

ended








30 June 2016

30 June 2015








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





-

34,800,000

- Waived during the period





(20,900,625)

-

- Vested during the period





(791,435)

-

- Lapsed during the period





(6,207,940)

-

- Cancelled during the period





(6,900,000)

-

Outstanding at the end of the period





-

34,800,000



















(d) 2016 Retention Scheme Awards
















During the period the Group terminated the CBLTIS 2015 and the Company's shareholders approved the introduction of the 2016 Retention Scheme.  Awards under the scheme have been made to the executive directors of the Company and two senior managers of the Group.  The awards entitle the participants to three equal payments each equivalent to 150% of their basic salary.  The first instalment was payable upon approval of the scheme and the second and third instalments will be payable on 31 December 2017 and 31 March 2019.  The sole condition for each instalment being paid is the continuing employment of the participant at the relevant payment date.

 

Participants will receive payment of an instalment in a combination of the Company's listed securities and cash.  The number of listed securities to be issued to satisfy such payments will be calculated with reference to the average price of the relevant security prior to the payment date.  On 13 July 2016 an employment benefit trust of the Company transferred 2,148,375 convertible preference shares (see note 18) to participants of the scheme in satisfaction of the first instalment.  It is intended that convertible preference shares held by an employment benefit trust will also be used to satisfy the proportion of the second and third instalments that are to be settled in listed securities.

















Six months ended

Six months ended

(e) Income statement charge for the period




30 June 2016

30 June 2015








$'000

$'000










CBLTIS 2015







1,496

3,320

CBLTIS 2012







-

(40)

2016 Retention Scheme







5,404

-








6,900

3,280

To be satisfied by allocation of:







Ordinary shares (IFRS 2 expense)





1,496

3,280

Convertible preference shares (IFRS 2 expense)





3,173

-

Cash







2,231

-








6,900

3,280










16. Ordinary dividends

 

The Company did not declare a final dividend for the year ended 31 December 2015 (2014: none) and instead implemented a tender offer buy back for ordinary shares on the basis of 1 in every 40 shares held and a tender price of 40 pence per share, the equivalent of a final dividend of 1 pence per share. (2014: 1 in every 15 shares at 52p per share the equivalent of 3.5p per share).










17. Financial instruments

 

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 2016

31 December 2015






Carrying

Fair

Carrying

Fair






Value

Value

Value

Value






$'000

$'000

$'000

$'000

Non-current assets









Loans receivable





349

296

606

567

Security deposits





4,000

4,000

2,391

2,391

Derivative financial instruments



1,402

1,402

5,585

5,585










Current assets









Trade receivables





41,471

41,471

38,683

38,683

Security deposits





2,393

2,393

2,041

2,041

Other current receivables



264

264

202

202

Derivative financial instruments



82

82

233

233

Cash and short term deposits



182,995

182,995

202,291

202,291










Non-current liabilities







Interest bearing loans and borrowings



684,164

549,314

814,021

623,340

Preference shares





141,897

166,024

156,558

184,705

Derivative financial instruments



618

618

1,794

1,794

Rent deposits





27,264

20,775

28,932

21,999

Other payables





1,831

1,831

2,721

2,721










Current liabilities









Interest bearing loans and borrowings



201,702

201,702

104,724

104,724

Derivative financial instruments



1,451

1,451

2,097

2,097

Rent deposits





8,324

8,324

6,827

6,827

Other payables





8,029

8,029

6,090

6,090










Fair value hierarchy


















The following table shows an analysis of the fair values of financial instruments recognised in the balance sheet by level of the fair value hierarchy*:


















Total Fair






Level 1

Level 2

Level 3

Value

As at 30 June 2016





$'000

$'000

$'000

$'000

Assets measured at fair value







Investment property





-

-

1,330,441

1,330,441

Investment property under construction



-

-

39,775

39,775

Derivative financial instruments



-

1,484

-

1,484










Liabilities measured at fair value







Derivative financial instruments



-

2,069

-

2,069










As at 31 December 2015







Assets measured at fair value







Investment property





-

-

1,333,987

1,333,987

Investment property under construction



-

-

39,129

39,129

Derivative financial instruments



-

5,818

-

5,818










Liabilities measured at fair value







Derivative financial instruments



-

3,891

-

3,891










*Explanation of 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.










18. Placing of Convertible Preference Shares

 

On 7 July 2016 the Company created and issued 108,689,501 convertible preference shares at a subscription price of £1 per share.  The convertible preference shares entitle the holders to a cumulative annual dividend of 6.5 pence per share and are redeemable by the Company on 6 July 2026 at £1.35 per share.  The convertible preference shares are convertible to ordinary shares at the holder's request at any time prior to redemption at a rate of 1.818 ordinary shares for each convertible preference share.

 

One of the Company's employee benefit trusts subscribed for 8,000,000 convertible preference shares and has subsequently transferred 2,148,375 to participants of the 2016 Retention Scheme (see note 15d).

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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