Secure Prop Regulatory News (SPDI)

8 May 2008 07:01

Aisi Realty Public Limited08 May 2008 8 May 2008 Aisi Realty Public Limited ("Aisi or "the Company") Aisi, a property investment company focusing on development projects and relatedinvestments in Ukraine, announces its results for the year ended 31 December2007. Financial Highlights • Raised $33.1m through a share placing on London's AIM market in August 2007 in addition to over $67m raised prior to the IPO• Adjusted net assets of $116.1m at December 2007• Cash balance at December 31 2007 of $43.7m• Adjusted net assets per share amounted to $0.70 as at 31 December 2007 Operating Highlights •Acquired Aisi Outdoor LLC, an outdoor advertising real estate business, in September 2007 •Commenced construction of its first logistics development in Brovary with completion on schedule for H2 2008 •Sold 60.6% interest in Tarasovskaya residential project for $3.0m realising Internal Rate of Return of 43% Post-Year End Highlights •Agreement signed with general contractor to commence construction at Bela Logistics Park in Odessa following receipt of building approval Commenting on the results, Beso Sikharulidze, Director of Aisi, said: "I ampleased that Aisi has quickly established itself as a prominent investor in thefast growing real estate market of Ukraine. The results demonstrate thesuccessful execution of our investment strategy and show significant valuecreation through the effective management of the development process. We have astrong pipeline of eight development projects across Ukraine and remain verypositive on the market fundamentals in all segments in which Aisi is aparticipant." A copy of the full audited financial statements may be found on the Company'swebsite: www.aisicapital.com. Enquiries: Aisi Realty:Beso Sikharulidze 0038 044 459 3000 Corfin Communications:Neil Thapar, William Cullum 020 7977 0020 Libertas Capital:Andrew Hardy, Aamir Quraishi 020 7569 9650 OverviewThe Board of Aisi is pleased to report its maiden full year results since itsadmission to AIM on 1 August 2007. During 2007, the Company made good progressin consolidating its position as a major investor in the Ukrainian real estatemarket. The placing and admission to AIM in August 2007, in which an additional$33.1m was raised from institutional investors, has enabled the Company toadvance its portfolio of development projects as well as execute on its strategyof concentrating on attractive office, residential and warehouse developments inUkraine. At 31 December 2007, the Company's interest in the portfolio projects was valuedat $57.6m. Operational ReviewThe Ukrainian property market continues to benefit from strong long-termfundamentals driven by high economic growth, urbanisation, and a shortage ofhigh quality commercial and residential property. In particular, the demand forquality logistics facilities is high and the Company has seen considerableinterest in its two logistics projects. Overall, the Company currently has investments in five development projects andan outdoor advertising business, all of which were advanced significantly during2007 with respect to local planning. In addition the Investment Manager hasprogressed its other pipeline opportunities. A summary of the status of each of the existing five projects and Aisi Outdooris given below: Terminal BrovaryCurrently under construction, this is Aisi's most advanced project. As one ofUkraine's first Class A logistics warehouses situated approximately 30kilometres north-east of Kiev it will feature some 42,800 square metres ofmodern warehouse space. In November 2007, building approval was received from Brovary City Council ofKiev Region, allowing the commencement of construction. A building contractorhas been chosen and construction work is now in progress, with completionexpected during H2 2008. In addition, Aisi increased its shareholding to 100% in Terminal Brovary throughthe acquisition of the 40% stake owned by the original vendors for a total of$1.7m in accordance with the sales and purchase agreement entered into inSeptember 2006. Bela Logistics Park, OdessaA logistics complex situated approximately 15km from Odessa and comprising threeindependent warehouse buildings constructed with a gross area of 108,000 sq. m.incorporating approximately 11,000 sq. m. of chilled storage. All the necessary permissions and approvals have been obtained and an agreementwith a general contractor for the building construction has recently beensigned. Construction should commence imminently and it is expected that it willbe completed within 18 months. Kiyanivsky LaneKiyanivsky Lane, a residential development overlooking the historic Podildistrict of Kiev, is in the final permitting stage and is expected to commenceconstruction in the second half of 2008. Tsimliansky LaneTsimlyansky Lane, a residential development in the Podil district of Kiev, isalso in the final permitting stages and expects to be breaking ground in thesecond half of 2008. Podil ResidentialA residential development situated in the Podil district of Kiev. The Companyhas extended the term of the loan for this project till June 30, 2008, by whichdate it anticipates that the loan will convert to equity once all necessarypermits are obtained and confirmed by the legal due diligence or that the loanwill be repaid with interest. Aisi OutdoorIn September 2007, Aisi acquired an outdoor advertising business and itsproperty assets in Kiev for a total consideration of $2.1m for the business andassociated property assets. Aisi intends to grow this business organically through the addition of suitableadvertising sites and improving utilization of existing assets. Sinceacquisition, the Company has met utilization targets, and has continued itsgrowth from adding new sites from its internally generated cash flow. Completed InvestmentsIn May 2007, the company sold Aisi Taurus with its 60.6% interest inTarasovskaya residential project for $3m, realizing net gain of $1.2m, andInternal Rate of Return of 43%. BoardIn October 2007, Dr Franz Hoerhager was appointed to the Board as a non-executive director of the Company. He has extensive experience in Central and Eastern Europe and is a founding partner and executive director of Mezzanine Management GmbH, the manager of Accession Mezzanine Capital, which is the leading fund provider of subordinated debt to businesses in Central and Eastern Europe. Outlook and PipelineThe Company's current portfolio projects continue to make good progress and thereal estate market in Ukraine, particularly for development projects, remainsstrong. The Company has a strong pipeline of potential new projects which include twooffice sites for construction in Kiev, two office sites in Odessa, and sixindustrial sites in Donetsk, Brovary, Kharkiv, Dnipropetrovsk and Hlivaha.Preliminary agreements have been entered into on four of these pipelineprojects, as described below, and definitive sale and purchase agreements shouldbe entered into during 2008. Consistent with the strategy of the Fund, all pipeline developments are in thevicinity of major metropolitan areas with a population of one million or more.In addition, many of the metropolitan areas are host cities for the EuropeanFootball Championships in 2012. Prime City Centre Office Development - OdessaThe Company has the opportunity to participate with a local partner on an 80:20basis in the refurbishment of an existing factory in Odessa. The existingfactory comprises 4 floors totalling 6,000 sq. m. on a 20,000 sq. m. of landplot and is situated on a main road with access to public transport and adequateparking. The project design is well advanced and the designers estimate that theconversion will provide 15, 178 sq. m. of class A offices over 8 floors. Theestimated development cost is $22m with an equity capital commitment of $9mwhich is 100% of the equity capital required for the project. As part of the preliminary agreement, Aisi has provided an advance of $4.8msecured on mortgaged land which will be deducted from the total purchase priceonce the vendor has satisfied various conditions. City Centre Retail and Office Development - OdessaThe Company has the opportunity to participate with a local partner on an 80:20basis in the development of a retail and office development on a majorthoroughfare near the centre of Odessa. The project is to involve thedevelopment of 13,175 sq. m. over six floors - consisting of 5,360 sq. m. ofretail space, 5,535 sq. m. of office space and 2,280 sq. m. of parking space.The estimated development cost is $26m with an equity capital commitment of$10.2m which is 100% of the equity capital required for the project. As part of the preliminary agreement, Aisi has provided an advance of $0.6msecured on mortgaged land which will be deducted from the total purchase priceonce the vendor has satisfied various conditions. Prime City Centre Office Development - KievThe Company has the opportunity to purchase a 2,700 sq. m. land plot with thepossibility of constructing 20,000 sq. m. of office space. It is envisaged thatthe ground floor will be used for retail banking. The land plot is situated on amain road, close to the Ukraine parliament and with easy access to the citytransport system. The estimated development cost is $66m with a capitalcommitment of $20m. As part of the preliminary agreement, Aisi has signed an Escrow Agreement anddeposited $1 million with the Bank of Cyprus which is acting as a Custodian inthis transaction. Warehouse - DonetskA 228,000 sq. m. site within 5km of the city boundary and close to a majorintersection of the proposed new ring road suitable for the provision ofapproximately 108,000 sq. m. of class 'A' warehouse and office space. Theestimated development cost is $101m with an equity capital commitment of $40m. As part of the preliminary agreement, Aisi has provided an advance of $0.9msecured by bank guarantee which will be deducted from the total purchase priceonce the vendor has satisfied various conditions. CONSOLIDATED INCOME STATEMENTYear ended 31 December 2007 2007 2006 Note US$ US$ IncomeFair value gains on investment property 7.700.6022 14.110.0877Miscellaneous income 106.3200 50.0400 7.806.922 14.160.127Other income 2.984 (5.481) ExpenditureAdministration expenses 1 (4.576.062) (3.532.597)Net finance costs 5 (158.521) (46.046) Net profit from investing activities 6 1.905.564 -Profit before tax 2 4.980.887 10.576.003 Tax 7 (2.299.572) (4.511.103)Net profit for the year 2.681.315 6.064.900 --- ---Attributable to: --- ---Equity holders of the parent 2.555.372 3.252.010Minority interest 125.943 2.812.890 2.681.315 6.064.900 ------------- ------------- Earnings per share attributable to equityholders of the parent (cent) 8 2,13 23,35 CONSOLIDATED BALANCE SHEET31 December 2007 2007 2006 Note US$ US$ASSETS Non-current assetsProperty, plant and equipment 9 295.376 64.418Property under construction 10 6.722.135 -Investment properties 11 32.830.000 25.176.948Intangible assets 12 1.999.388 - ------------- ----- 41.846.899 25.241.366 -------------- -------------- Current assetsTrade and other receivables 13 23.206.636 342.388Cash at bank and in hand 14 43.708.552 373.473 -------------- ----------- 66.915.188 715.861 -------------- ----------- Total assets 108.762.087 25.957.227 ============== ============== EQUITY AND LIABILITIES Equity and reserves attributable to equityholders of the parentShare capital 15 1.881.092 332.508Share premium 92.683.930 14.288.867Retained earnings net of minority interest 5.100.870 2.545.498Notes payable by shareholders - (1.499.981) ----- -------------- 99.665.892 15.666.892 Minority interest 754.053 2.867.265 ----------- -------------Total equity 100.419.945 18.534.157 -------------- -------------- Non-current liabilitiesObligations under finance leases 16 94.455 47.540Deferred tax liabilities 17 6.423.314 4.433.642 ------------- ------------- 6.517.769 4.481.182 ------------- ------------- Current liabilitiesTrade and other payables 18 1.708.039 2.854.123Obligations under finance leases 16 23.695 10.304Current tax liabilities 19 92.639 77.461 ---------- ---------- 1.824.373 2.941.888 ------------- ------------- --- ---Total liabilities 8.342.142 7.423.070 ------------- ------------- Total equity and liabilities 108.762.087 25.957.227 ============== ============== On 24 April 2008 the Board of Directors of Aisi Realty Public Ltd authorised theissue of these financial statements. Paul Robert Ensor Besik SikharulidzeDirector Director CONSOLIDATED STATEMENT OF CHANGES IN EQUITYYear ended 31 December 2007 Attributable to equity holders of the Company -------------------- --------- ---------- ---------- Share capital Share premium Notes Retained payables earnings, from net of shareholders minority interest US$ US$ US$ US$ Balance - 1January 2006 42.000 2.058.000 (192.280) (706.512) Net profit forthe year - - - 3.252.010Shares issued 290.508 12.634.473 - -Capital raisingcosts - (403.606) - -Payments forshares issued in2005 - - 192.280 -Minority interest - - - -from purchase ofsubsidiariesNotes payablefrom shareholders - - (1.499.980) -At 31 December2006/ 1 January2007 332.508 14.288.867 (1.499.980) 2.545.498 Net profit forthe year - - - 2.555.372Shares issued 1.548.584 83.590.413 - -Capital raisingcosts - (5.195.350) - -Minority interest - - - -fromsubsidiariesPayments forshares issued in2006 - - 1.499.980 -At 31 December2007 1.881.092 92.683.930 - 5.100.870 Attributable to equity holders of the Company -------- Total Minority interest Total US$ US$ US$ Balance - 1 January 2006 1.201.208 - 1.201.208 Net profit for the year 3.252.010 2.812.890 6.064.900Shares issued 12.924.981 - 12.924.981Capital raising costs (403.606) - (403.606)Payments for shares issued in2005 192.280 - 192.280Minority interest frompurchase of subsidiaries - 54.375 54.375Notes payable fromshareholders (1.499.980) - (1.499.980) --------------- ----- ---------------At 31 December 2006/ 1January 15.666.893 2.867.265 18.534.1582007 Net profit for the year 2.555.372 125.943 2.681.315Shares issued 85.138.997 - 85.138.997Capital raising costs (5.195.350) - (5.195.350)Minority interest fromsubsidiaries - (2.239.155) (2.239.155)Payments for shares issued in2006 1.499.980 - 1.499.980 --------------- ----- ---------------At 31 December 2007 99.665.892 754.053 100.419.945 =============== =============== =============== CONSOLIDATED CASH FLOW STATEMENTYear ended 31 December 2007 2007 2006 Note US$ US$CASH FLOWS FROM OPERATING AND INVESTINGACTIVITIESProfit before tax 4.980.887 10.576.003Adjustments for:Depreciation of property, plant andequipment 9 85.526 14.316(Increase)/decrease in advances forinvestments (10.000.000) 1.244.000(Increase)/decrease in accounts (19.714) -receivable(Increase)/decrease to advances torelated 120.000 (120.000)parties(Increase)/decrease in prepayments andother current assets (9.868.062) (184.188)Advances under investment contracts (3.096.473) -Increase in intangible assets (1.999.388) -Increase/(decrease) in trade and otherpayables 18 (1,283,906) 2.102.080Increase/(decrease) in amounts due torelated parties 20.2 137,822 608.824Increase in taxes payable 15.177 -Purchase and development of property 47.551 (11.066.862)Gain on revaluation of investment (7.700.602) (14.110.087)propertyPurchase of property plant and equipment (256.181) (20.888)Increase in deferred tax liability (309.900) -Increase in minority shareholders'liability (2.239.152) 54.375Increase in properties under (6.722.135) -construction --------------- ----- Net cash used in operating activities (38.108.549) (10.902.427) ---------------- --------------- --- --- - - ----- ----- CASH FLOWS FROM FINANCING ACTIVITIESProceeds from issue of share capital 81.443.629 11.213.674 -------------- --------------Net cash from financing activities 81.443.629 11.213.674 -------------- -------------- Net increase in cash and cash 43.335.079 311.247equivalentsCash and cash equivalents:At beginning of the year 14 373.473 62.228 ----------- ----------At end of the year 14 43.708.552 373.473 ============== =========== 1. Administration expenses 2007 2006 US$ US$Directors remuneration 139.841 -Wages & Administrator 300.424 90.313Lease expenses 204.792 99.152VAT, taxes & duties 66.922 17.307Management fee 1.751.944 198.007Public group expenses 191.247 -Transaction costs 96.645 138.735Office expenses 349.844 125.677Bad debts expenses - 134.007Accounting fees 380.111 311.389Legal fees 159.743 314.413Travelling expenses 505.168 497.344Marketing fees 2.938 30.973Consulting fees 495.848 -Litigation (230.000) 1.510.000Other expenses 75.069 50.964Depreciation 85.526 14.316 ---------- ---------- 4.576.062 3.532.597 ============= ============= 2. Profit before tax 2007 2006 US$ US$Profit before tax is stated after charging the followingitems:Depreciation of property, plant and equipment (Note 13) 85.526 14.316Staff costs including directors in their executivecapacity 440.265 90.313 =========== ========== 3. Stock based compensation for directors Share Option for DirectorsOn 25 July, 2007, the Company adopted a share option scheme for each of theDirectors as at that date. Under the Option scheme, which was approved by themembers on 31 March 2008, each director is entitled to subscribe for 263.158Ordinary shares exercisable as set out below: Exercise Price Amount of US$ SharesExercisable from admission of the Company to AIMtill 1 August 2017 0,57 175.439Exercisable from 1st anniversary to AIM till 1August 2017 0,83 87.719 On 12 October, 2007, the Company adopted a share option scheme for its DirectorFranz M. Hoerhager which entitles him to subscribe for 182.917 Ordinary sharesexercisable as set out below: Exercise Price Amount of US$ SharesExercisable immediately after the Appointmenttill 1 August 2017 0,40 121.929Exercisable from 1st anniversary to AIM till 1August 2017 0,50 60.988 If a director resigns from the Board any unvested options lapse, unless theDirectors resolve otherwise. The above options were approved, verified and adopted in every respect by themembers of the Company in General Meeting on 31 March 2008. 4. Shareholder Warrants Founding Shareholder WarrantsThe Board of Directors approved the issue of warrants to the FoundingShareholders of the Company, entitling them to subscribe at par value perordinary share, for such a number of ordinary shares which when multiplied byUS$0.57 equals 100% of the difference between the market value of the Company'sinterest in its Investment Portfolio at the date of Admission to AIM (1 August2007) and six months following admission to AIM (1 February 2008), net of directproject cash costs, and net gain proceeds from the sale of Tarasovskaya project. The Board of Directors have approved the valuation of the Investment Portfolioof February 2008 of the Company at 31 March 2008. The exercise date of the warrants is within 30 days of the Board approval andannouncement of the number of warrants to be issued to the FoundingShareholders. Tudor BVI Global Portfolio Ltd WarrantsThe Company granted to a shareholder, Tudor BVI Global Portfolio Ltd, warrantsto subscribe for 10.937.500 Ordinary shares at the exercise price of US$0.64 pershare. The exercise day is within 30 days following the first anniversary of admissionto AIM (1 August 2008). The above warrants were approved, verified and adopted in every respect by themembers of the Company in General Meeting on 31 March 2008. 5. Finance costs 2007 2006 US$ US$ Net foreign exchange transaction losses 158.521 12.404Interest payable - 33.642 ----- ---------- 158.521 46.046 =========== ========== 6. Profit from investing activities 2007 2006 US$ US$Profit from sale of investments in subsidiaries 1.210.492 -Interest income 695.072 - ----------- ----- 1.905.564 - ============= ===== The profit from sale of investment in subsidiary arose from the sale of LLC AisiTaurus. 7. Tax 2007 2006 US$ US$Corporation tax - current year 233.544 77.462Defence contribution - current year 76.356 -Deferred tax - charge (Note 21) 1.989.672 4.433.641 ------------- -------------Charge for the year 2.299.572 4.511.103 ============= ============= The tax on the Group's profit before tax differs from the theoretical amountthat would arise using the applicable tax rates as follows: 2007 2006 US$ US$Profit before tax 4.980.887 10.576.003Tax calculated at the applicable tax rates 1.245.222 2.644.000Deferred tax asset not recognised 127.006 883.522Defence contribution current year 76.356 -Other movements in deferred tax 850.988 983.581Tax charge 2.299.572 4.511.103 8. Earnings and net assets per share attributable to equity holders of theparentWeighted average number of ordinary sharesWeighted average number of ordinary shares 2007 2006 Number NumberIssued ordinary shares capital at 1January 26,293,717 3,675,000Ordinary shares 139,898,112 22,618,717 ----------- -----------Issued Ordinary shares capital at 31December 166,191,829 26,293,717 ------------ -----------Weighted average number of ordinary shares 119,813,838 13,925,805 ------------ -----------Diluted weighted average number ofordinary shares 119,813,838 13,925,805 ======================================= The per-share computations below retroactively reflect the changes in number ofshares occurred as a result of conversions in March 2006 and April 2007 for allperiods presented. Basic, diluted andadjusted 2007 2007 2006 2006earnings per share Profit Earnings Profit Earnings after tax per share after tax per share US$ US$ US$ US$Basic 2,555,372 0.02 3,252,009 0.23Diluted 2,555,372 0.02 3,252,009 0.23Market value ofinvestment 9,427,865 0.08 - -property underconstructionDeferred tax onrevaluation 6,423,313 0.05 4,433,641 0.32of investmentpropertiesLigation accrual - - 1,510,000 0.11Minority interest, net 600,165 0.00 700,000 0.05 Adjusted 19,006,715 0.16 9,895,650 0.71 ============== ================ ============= ============= The deferred tax adjustment above has been made on the basis that the Groupwould dispose of shares in subsidiary companies, rather than assets, and wouldnot expect to crystallise a tax charge on disposal. Net assets per share Net assetsper 2007 2007 2007 2006 2006 2006share Net Net assets Number assets Net Number Net assets of shares per assets of shares per share shareBasic 99,665,892 166,191,829 0.60 15,666,891 26,293,717 0.60Diluted 99,665,892 166,191,829 0.60 15,666,891 26,293,717 0.60 Deferred taxonrevaluationof 6,423,313 166,191,829 0.04 4,433,641 26,293,717 0.17investmentpropertiesMarket valueofinvestmentproperty 9,427,865 166,191,829 0.06 26,293,717 -underconstructionLitigationaccrual 1,510,000 26,293,717 0.06Minorityinterest 600,165 166,191,829 0.00 700,000 26,293,717 0.03 Adjusted 116,117,235 166,191,829 0.70 22,310,532 26,293,717 0.85 ============================================================================== 9. Property, plant and equipment Leasehold Citylights Motor Furniture, Software Total vehicles fixtures and and equipment hardware US$ US$ US$ US$ US$ US$CostAdditions - - 66.265 12.275 - 78.540At 31 December2006/ 1January 2007 - - 66.265 12.275 - 78.540Additions 42.017 99.542 77.178 58.130 39.618 316.485At 31 December2007 42.017 99.542 143.443 70.405 39.618 395.025 DepreciationCharge for theyear - - 11.053 3.069 - 14.122At 31 December2006/ 1January 2007 - - 11.053 3.069 - 14.122Charge for theyear 7.003 29.863 23.501 15.255 9.905 85.527At 31 December2007 7.003 29.863 34.554 18.324 9.905 99.649 Net bookamountAt 31 December2007 35.014 69.679 108.889 52.081 29.713 295.376At 31 December2006 - - 55.212 9.206 - 64.418 10. Property under construction 2007 2006 US$ US$At 1 January - -Transfer from investment properties 6.124.000 -Construction costs 598.135 - ----------- -----At 31 December 6.722.135 - ============= ===== 11. Investment properties 2007 2006 US$ US$At 1 January 25.176.948 -Additions 6.000.001 10.481.808Disposals (2.413.334) -Transfer to property under construction (6.124.000) -Investment property related costs 2.489.783 585.053Revaluation gain on investment property 7.700.602 14.110.087 ------------- --------------At 31 December 32.830.000 25.176.948 ============== ============== On acquisitions dates and as at December 31, 2007, the property was valued byDTZ Kiev B.V ("DTZ"), an external valuer. All valuations were carried out byappropriately qualified valuers. The valuers' opinion of the Market Value ofeach property has been primarily derived using comparable recent markettransactions on an arm's length basis and an estimate of the future potentialnet income generated by use of the properties because their specialised naturemeans that there is no market based evidence available. Project related prepayments include advances for contractors and consultants onworks preceding development of properties. In May 2007 the Group sold its interest in Tarasovskaya project. In October 2007the Group obtained building permit for one of its projects which wasreclassified from Investment Property to in Property under development accordingto IAS 40. 12. Intangible assets Advertising Total rights US$ US$CostAdditions 1.999.388 1.999.388 ------------- ------------- Net book amountAt 31 December 2007 1.999.388 1.999.388 ============= ============= 13. Trade and other receivables 2007 2006 US$ US$Trade receivables 19.714 -Advances for investments 13.096.473 -Receivables from related companies - 120.000Deposits and prepayments 205.406 87.286VAT and other taxes receivable 604.832 135.102Contractors advances 9.280.211 - ------------- ----- 23.206.636 342.388 ============== =========== In October 2007, the Group entered into a Preliminary agreement with theintention to subsequently enter on a Definitive Agreement for the purchase ofall the equity of an English property holding Group. A condition precedent forconcluding the above Agreement is the receipt of a satisfactory due diligencereport on compliance on UK and Ukrainian legislation. As part of thistransaction the Group has signed an Escrow Agreement and deposited US$1millionwith the Bank of Cyprus who is acting as a Custodian in this transaction. VAT is levied at a 20% rate on Ukrainian domestic sales and imports of goods,works and services. A VAT credit is the amount that a taxpayer is entitled tooffset against its VAT liability in the reporting period. Rights to VAT creditarise on the earlier of the date of payment to the supplier or from the datewhen good are received. 14. Cash and cash equivalents For the purposes of the cash flow statement, the cash and cash equivalentsinclude the following: 2007 2006 US$ US$Cash at bank and in hand 43.708.552 373.473 -------------- ----------- 43.708.552 373.473 ============== =========== 15. Share capital 2007 2007 2007 2006 2006 2006 Number of Share Share Number of Share Share shares Capital Premium shares Capital Premium US$ US$ US$ US$AuthorisedOrdinaryshares ofCY£0.01 eachconvertedinto 875.000.000 - - 500.000.000 - -EUR0.01 each Issued andfully paidAt 1 15.024.981 332.508 14.288.867 21.000 42.000 2.058.000JanuaryIssue ofshares 94.879.365 1.548.584 78.395.063 12.924.981 290.508 12.230.867Conversionof 56.287.483 - - 2.079.000 - -sharesAt 31 166.191.829 1.881.092 92.683.930 15.024.981 332.508 14.288.867December During the year the following increases in the issued share capital of theCompany took place: Number of Issued Price shares US$2 March 2007 45.000.000 1,00Conversion into Euro (Note 14.1) - -22 June 2007 10.937.500 0,6424 July 2007 50.210.601 0,66 15.1 Conversion into Euro On 30 April 2007, the nominal share capital of the Company was converted intoEUR8.75 million divided into 875 million new ordinary shares of EUR0.01 each bythe cancellation of the existing ordinary shares and the issuance of 7 newordinary shares for every 4 ordinary shares held at the above date by theshareholders of the Company. 16. Obligations under finance leases Minimum lease Interest Principal Minimum lease Interest Principal payments payments 2007 2007 2007 2006 2006 2006 US$ US$ US$ US$ US$ US$Lessthan 42.936 19.241 23.695 8.878 2.932 5.946oneyearBetweentwo 103.893 9.438 94.455 48.966 7.372 41.594and ----------- --------- ---------- ---------- --------- ----------fiveyears 146.829 28.679 118.150 57.844 10.304 47.540 =========== ========== =========== ========== ========== ========== All lease obligations are denominated in United States Dollars. The fair values of lease obligations approximate to their carrying amounts aspresented above. The Group's obligations under finance leases are secured by the lessors' titleto the leased assets. 17. Deferred tax Deferred tax is calculated in full on all temporary differences under theliability method using the applicable tax rates (Note 11). The applicablecorporation tax rate in the case of tax losses is 10%. The movement on the deferred taxation account is as follows: Deferred tax liability Fair value Total gains on investment property US$ US$ Balance - 1 January 2006 - -Charged / (credited) to:Income statement (Note 11) 4.433.642 4.433.642 ------------- -------------At 31 December 2006/ 1January 2007 4.433.642 4.433.642Charged / (credited) to:Income statement (Note 11) 1.989.672 1.989.672 ------------- -------------At 31 December 2007 6.423.314 6.423.314 ============= ============= 18. Trade and other payables 2007 2006 US$ US$Capital raising fees due - 338.748VAT and other taxes payable 167.775 -Audit and accounting fees due 252.840 105.000Accruals 240.571 151.001Other creditors 300.208 140.550Litigation accrual - 1.510.000Payables to related companies (Note 24) 746.645 608.824 ----------- ----------- 1.708.039 2.854.123 ============= ============= The fair values of trade and other payables due within one year approximate totheir carrying amounts as presented above. 19. Current tax liabilities 2007 2006 US$ US$Special contribution for defence 92.639 77.461 ---------- ---------- 92.639 77.461 ========== ========== 20. Related party transactions The following transactions were carried out with related parties: 20.1 Management fees 2007 2006 US$ US$Aisi Capital LLC 1.751.944 186.100 ------------- ----------- 1.751.944 186.100 ============= =========== 20.2 Payables to related parties (Note 22) 2007 2006Name Nature of transactions US$ US$------ ------------------------Aisi Capital LLC Trade 233.400 427.927Former shareholders of theacquired 513.245 116.745companiesServices outsourced to - 50.141administratorOthers - 14.011 ----- ---------- 746.645 608.824 =========== =========== 21. Contingencies The Group is a party to a litigation matter related to complaints filed by theGroup's former employee. As at 31 December 2007 there were several litigationcases which indirectly involve Aisi Realty Public Limited as a shareholder ofAisi Taurus LLC and Aisi Ukraine LLC. Since the outcome of this litigation andthe range of any possible loss cannot be estimated, no accrual has been in theGroup's financial statements. Management does not believe the results of legalproceedings will have a material effect on the Group's financial position orresults of operations. Under certain conditions, as defined in the respective purchase and saleagreement, the Group has a put option that would allow the Group to sell itsinterest back to seller at the price higher than the original purchase price.The fair value of this option is not considered to be material. The Group has an obligation to purchase the remaining minority interests in theevent that certain conditions, as defined in the relevant sale and purchaseagreement, arise. The directors have considered the likelihood of theseconditions arising and consider them to be remote. A number of the land leases are held for relatively short term and place anobligation upon the lessee to commence development prior to expiration date ofthe lease agreement. In the event that a development has not commenced upon theexpiry of a lease the City Authorities are entitled not to extend leaseagreement on the basis that the land is not used in accordance with itsdesignation. Furthermore, in order to extend lease agreement all necessarypermissions and consents for development have to be presented to theauthorities. However the management believes that the possibility of such actionis remote and was made only under limited circumstances in the past. Inundertaking the valuations reported herein, DTZ Kiev have made the assumptionthat no such circumstances will arise to permit the City to rescind the landlease or to not grant a renewal. 22. Commitments Operating lease commitments The future aggregate minimum lease payments under non-cancellable operatingleases are as follows: 2007 2006 US$ US$Within one year 310.968 144.116Between one and five years 441.185 592.878After five years 42.945 57.260 ---------- ---------- 795.098 794.254 =========== =========== 23. Post balance sheet events In December 2007 the Company entered into 2 preliminary agreements for theacquisition of 80% of the charter capital of two Ukrainian Companies, for thetotal consideration of US$4.8 million and US$3.12 million respectively. Subjectto conditions precedent the Company expects to complete those acquisitions bymid 2008. In accordance with the Annual General Meeting held on 3 March 2008, thedirectors express their plans to increase the Share Capital of the Company inthe near future. This information is provided by RNS The company news service from the London Stock Exchange