Last checked at 30 Sep 2009 13:25
30 September 2009
Aisi Realty Public Limited ("Aisi" or "the Company")
Unaudited Financial Results for the six months ended 30 June 2009
Aisi, a property investment company focusing on development projects and related investments in Ukraine, announces its unaudited results for the six months ended 30 June 2009.
Financial Summary
Operational Summary
Post-period Summary
Commenting on the results, Beso Sikharulidze, executive director of Aisi, said: "Trading conditions in the Ukrainian property market have remained difficult due to an uncertain macroeconomic environment. However, the Company remains debt free and is nearing completion of its first income-generating property. We are now focusing on securing the release of EBRD funds, which have already been approved, to complete construction as planned in the first quarter of 2010."
A copy of the financial statements, as well as the full interim report, may also be found on the Company's website: www.aisicap.com
Enquiries:
| Aisi Realty | |
| Beso Sikharulidze | 0038 044 459 3000 |
| Paul Ensor | 0759 521 9011 |
| Seymour Pierce | |
| Nandita Saghal, Christopher Wren | 020 7107 8000 |
| Corfin Communications | |
| Neil Thapar, Martin Sutton, Claire Norbury | 020 7977 0020 |
Overview
The Board of Aisi today reports its half year results for the six months ended 30 June 2009. As of period end, the investment portfolio was valued by the independent surveyor DTZ Kiev B.V at $48.7 million compared with $64.8 million as at 31 December 2008, reflecting an exceptionally challenging economic environment and lack of market transactions. The revision of the portfolio valuation resulted in a pre-tax loss of $19.5 million. However, post-period end, Aisi successfully raised additional funding, the proceeds of which have been used by the Company primarily to finance the construction of Brovary Logistics Center to meet the equity spending requirement for accessing the EBRD facility. In addition, in September 2009, Marfin Popular Bank Public Co Ltd of Cyprus signed a participation agreement with EBRD, which should enable the release of the first $16 million tranche of funding that will contribute to completing this project. Construction is now 80% complete, and is due for finalization and occupancy by Q1 2010.
As part of the equity raising, the Company communicated to its shareholders that it would consider its options for internalizing the current external management structure of the Company. Aisi is currently reviewing the Company's options in this matter.
Operational Review
In response to the challenging operating conditions, during the period the Company revised its investment strategy from aggressive growth to consolidation of existing assets. In particular, Aisi is focusing on:
Tight management of cash flow and working capital;
Generation of cash from completed projects;
Recovery of advances from the pipeline projects and asset sales.
While economic conditions remain severe, Aisi has managed to take important actions to mitigate the detrimental impact and was able to progress some of its key developments.
Key projects
Brovary Logistics Center
The most imminent cash flow-generating asset for the Company is the wholly-owned Brovary Logistics Center, a 49,180 sq.m. warehouse on the outskirts of Kiev. During the period, the Company signed a $34.4 million loan facility agreement with the European Bank for Reconstruction and Development for this project. Progress on the project's development was hampered by delays in access to the first tranche of funding. However, in August 2009 the Company finalized an equity raising of $5.4 million, the proceeds of which have been used primarily to finance the construction of Brovary Logistics Center to meet the spending requirement for accessing the EBRD facility. Also after the period, on 24 September, Marfin Bank signed a participation agreement with the EBRD for syndication of the first tranche of funding, which will amount to $16 million. Aisi is now finalizing the condition precedents in order for the EBRD to release the already-approved funds. The project is now 80% complete, and is due for finalization and occupancy by the first quarter of 2010.
In addition, post-period end, Aisi renewed an agreement with UVK, a leading Ukrainian logistics operator, for the pre-letting of Brovary Logistics Center. The agreement covers a 10-year lease term that commences in January 2010, and is for the entire development at rental values in line with current market rates. The new rental rate per sq.m. per month is approximately 30% lower than the comparable rate in the original agreement (announced 4 July 2008), which reflects prevailing market conditions in the property sector. Aisi has also made an arrangement with the tenant to extend a $3 million penalty payment for non-delivery of the property in July 2009, to 1 January 2010.
Bela Logistics Park
Construction on the Company's second project, Bela Logistics Park, a 100,000 sq.m. warehousing facility located outside of Odessa, will resume once the space has been pre-leased.
Construction of two residential projects in Kiev has been put on hold until a clearer picture of market demand emerges.
Placing
In August 2009, the Company finalized the raising of $5.4 million through the placing of 222,081,507 new ordinary shares at a placing price of 1.5 pence per share with new and existing investors.
The net proceeds of the fundraising have been used by the Company primarily to finance the construction of Brovary Logistics Center to fulfill the spending requirement for accessing the EBRD funding facility. Funds will also be used to pay certain outstanding operating expenses of the Company, excepting any accrued or outstanding annual management fees due to the Company's principals.
Outlook
The Company is focusing on managing its assets and working diligently to recover advances to strengthen its cash position. Aisi looks forward to bringing on-stream its first income-generating property, which is now 80% complete and is due for finalization and occupancy by the first quarter of 2010.
INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2009
| Six months ended | |||
| 30 Jun 2009 | 30 Jun 2008 | ||
| US$ | US$ | ||
| Revenue from operations | |||
| Fair value gains/(loss) on investment property | (18,410,447) | 37,822,050 | |
| Miscellaneous (costs)/ income, net | (20,345) | 345,084 | |
|
| |||
| Income from investing activities, net | 449,264 | 495,239 | |
| Expenses | |||
| Administration expenses | (2,021,779) | (4,939,255) | |
| Finance (costs)/ income, net | 536,039 | (20,258) | |
| Other (costs)/ income, net | (878) | 2,346,000 | |
| Profit /(loss) before income tax | (19,468,146) | 36,048,860 | |
| Income tax (expense)/ income, net | 2,450 | (9,711,081) | |
| Comprehensive income | (19,465,696) | 26,337,779 | |
| Net comprehensive income attributable to: | |||
| Owners of the parent | (19,213,250) | 26,470,266 | |
| Minority interest | (252,446) | (132,487) | |
| (19,465,696) | 26,337,779 | ||
| Earnings/(Loss) per share attributable to equity holders of the parent (cent) | (10.0) | 13.8 | |
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2009
| 30 Jun 2009 | 30 Jun 2008 | 31 Dec 2008 | |
| US$ | US$ | US$ | |
| ASSETS | |||
| Nonߛcurrent assets | |||
| Property, plant and equipment | 165,053 | 386,224 | 207,703 |
| Investment property under construction | 26,506,000 | - | 41,867,000 |
| Investment property | 22,153,000 | 89,870,000 | 22,894,000 |
| Intangible assets | - | 2,003,407 | - |
| Advances for investments | 15,424,000 | 10,926,093 | 15,426,229 |
| Prepayments under development contracts | 1,820,908 | 27,154,521 | 2,511,292 |
| 66,068,981 | 130,340,245 | 82,906,224 | |
| Current assets | |||
| Accounts receivable | 7,536,248 | 10,194,480 | 6,372,133 |
| Cash and cash equivalents | 9,268 | 6,706,626 | 35,733 |
| 7,545,516 | 16,901,106 | 6,407,866 | |
|
| |||
| Total assets | 73,614,497 | 147,241,351 | 89,314,090 |
INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION (continued)
as at 30 June 2009
| 30 Jun 2009 | 30 Jun 2008 | 31 Dec 2008 | |
| EQUITY AND LIABILITIES | US$ | US$ | US$ |
| Equity attributable to owners of the parent | |||
| Share capital | 2,283,299 | 2,283,299 | 2,283,299 |
| Share premium | 92,683,930 | 92,683,930 | 92,683,930 |
| (Accumulated losses) / Retained earnings | (29,595,205) | 31,405,264 | (10,381,955) |
| Other reserves | 46,710 | - | 46,710 |
| Translation reserve | (2,300,133) | - | (2,091,777) |
| 63,118,601 | 126,372,492 | 82,540,207 | |
| Minority interest | 1,401,544 | 920,305 | 1,635,510 |
| Total equity | 64,520,145 | 127,292,797 | 84,175,717 |
| Nonߛcurrent liabilities | |||
| Obligations under finance leases | 118,122 | 113,928 | 52,747 |
| Deferred tax liabilities | - | 16,098,524 | - |
| Accounts payable | 212,410 | - | 1,018,414 |
| 330,532 | 16,212,452 | 1,071,161 | |
| Current liabilities | |||
| Accounts payable | 7,896,826 | 3,640,819 | 3,211,194 |
| Obligations under finance leases | 44,212 | - | 33,236 |
| Current tax liabilities | 822,782 | 95,283 | 822,782 |
| 8,763,820 | 3,736,102 | 4,067,212 | |
|
| |||
| Total liabilities | 9,094,352 | 19,948,554 | 5,138,373 |
|
| |||
| Total equity and liabilities | 73,614,497 | 147,241,351 | 89,314,090 |
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months period ended 30 June 2009
| Attributable to equity holders of the Parent | |||||||||
| Share capital | Share premium | Notes payables from shareholders | Accumulated loss, net of minority interest | Other reserves | Translation difference | Total | Minority interest | Total | |
| US$ | US$ | US$ | US$ | US$ | US$ | US$ | US$ | US$ | |
| Balance as at 1 January 2008 | 1,881,092 | 92,683,930 | - | 5,100,870 | - | - | 99,665,892 | 754,053 | 100,419,945 |
| Total comprehensive income/ (loss) | (15,482,825) | (15,482,825) | 1,791,363 | (13,691,462) | |||||
| Issue of share capital | 402,207 | 402,207 | 402,207 | ||||||
| Acquisition of minority interest | - | (109,000) | (109,000) | ||||||
| Directors' options | 46,710 | 46,710 | 46,710 | ||||||
| Translation to presentation currency | (2,091,777) | (2,091,777) | (800,906) | (2,892,683) | |||||
| Balance as at 1 Jan 2009 | 2,283,299 | 92,683,930 | - | (10,381,955) | 46,710 | (2,091,777) | 82,540,207 | 1,635,510 | 84,175,717 |
| Total comprehensive income/ (loss) | (19,213,251) | (19,213,251) | (252,446) | (19,465,697) | |||||
| Translation to presentation currency | (208,357) | (208,357) | 18,480 | (189,877) | |||||
| Balance as at 30 Jun 2009 | 2,283,299 | 92,683,930 | (29,595,206) | 46,710 | (2,300,133) | 63,118,599 | 1,401,544 | 64,520,143 | |
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months period ended 30 June 2009
| Six months ended | ||||
| 30 Jun 2009 | 30 Jun 2008 | |||
| US$ | US$ | |||
| Operating activities | ||||
| Profit/(loss) before tax | (19,468,146) | 36,048,860 | ||
| Adjustments for: | ||||
| Depreciation of property, plant and equipment | 44,200 | 218,888 | ||
| Foreign exchange losses | (543,236) | |||
| (Gain)/Loss on revaluation of investment property | 18,410,447 | (37,822,050) | ||
| Other finance expenses | 44,884 | (69,256) | ||
| Interest income | (449,264) | |||
| Operating profit /(loss) before working capital changes | (1,961,115) | (1,623,558) | ||
| (Increase)/Decrease in trade accounts receivable | (1,164,115) | (4,013,307) | ||
| (Increase)/Decrease in advances to related parties | - | 857 | ||
| (Increase)/Decrease in prepayments and other current assets | - | 3,928,133 | ||
| Increase/(Decrease) in trade and other payables | 56,324 | 1,701,962 | ||
| Increase/(Decrease) in payables due to related parties | 1,454,634 | 233,460 | ||
| Increase/(Decrease) in financial lease liabilities | (73,240) | - | ||
| Cash flows used in operating activities | (1,687,512) | 227,547 | ||
| Investing activities | ||||
| (Increase)/Decrease in prepayments under development contracts | 690,385 | (34,982,885) | ||
| (Increase)/ Decrease in advances for investments | (15,215) | 9,998,745 | ||
| Increase in payables to constructors | 2,368,669 | - | ||
| Additions to investment property | (1,820,837) | (12,495,815) | ||
| Additions to property, plant and equipment | - | (313,957) | ||
| Additions to intangible assets | - | (4,019) | ||
| Acquisition of / Changes in minority interest | - | 166,251 | ||
| Cash flows used in investing activities | 1,223,001 | (331,957) | ||
| Financing activities | ||||
| Proceeds from issue of share capital | - | 402,207 | ||
| Net cash from financing activities | - | 402,207 | ||
| Effect of foreign exchange rates on cash and cash equivalents | 438,046 | |||
| Net (decrease)/increase in cash and cash equivalents | (26,465) | (37,001,926) | ||
| Cash and cash equivalents: | ||||
| At beginning of the period | 35,733 | 43,708,552 | ||
| At the end of the period | 9,268 | 6,706,626 | ||