26 May 2015, Road Town, Tortola,
BVI
FINANCIAL HIGHLIGHTS
· Good
performance of rental assets which overlaps moderate FX losses and
increased finance costs.
· As a result,
NAV is higher than at 31 December 2014 (based on the real estate
valuations done as of 31 December 2014).
SIGNIFICANT FINANCIAL CHANGES FOR Q1 2015 Income
· Net Rental Income
During the first three months of 2015 our
wholly-owned rental properties generated Net Rental Income of
$17.89 million. The contribution of each property to Net Rental
Income is presented in the table below.
The Net Rental Income increased almost nine times
from $2.02 million in Q1 2014 to $17.89 million in Q1 2015. This
substantial increase is caused by the acquisition of new
income-generating properties in 2014.
· Interest Income
Interest Income decreased from $ 1.95 million in
Q1 2014 to $ 1.40 million in Q1 2015. The decrease is caused by the
fact that part of the interest income in Q1 2014 was from EPH
loans to Berlin House and Geneva House which were treated as
investments in associate and were not consolidated for that period.
Expenses
· Net
Foreign Exchange Loss
The functional currency of the Company's
subsidiaries is RUB. If the subsidiaries have assets and
liabilities which are denominated or valued in US$ the fluctuations
of the US$ / RUB exchange rate create foreign exchange gain or
loss.
All our properties are valued in US$. Therefore
the strengthening of RUB against US$ during Q1 2015 is the main
reason for Net Foreign Exchange Loss in the amount of $ 5.90
million.
· Finance
Costs
The Company recognized $8.05 million of Finance
Costs in the first three months of 2015 in comparison with $0.54
million for the same period in 2014. The main reasons for the
increase are: the interest expense on bonds issued in August and
September 2014, as well as the interest expense on third party
loans granted to Berlin House, Geneva House and Hermitage Plaza
which were acquired by EPH together with these
properties.
Assets
· Investment Properties
As of 31 March 2015 Investment Properties amount
to $ 749.77 million. All properties are valued twice a year, in the
end of June and December; therefore the current figures are based
on the appraiser's reports as of 31 December 2014.
· Loans and Receivables
EPH's Loans and Receivables increased due to both
additional lending to Arbat projects and accrual of additional
interest on existing project loans. To the extent that a borrower
is partially owned by EPH, loans are eliminated in consolidation.
This means that 60% of project financing for the Arbat Projects is
classified as investment in the projects, and 40% as lending.
Loans and Receivables increased from $75.42
million as of 31 December 2014 to $77.43 million as of 31 March
2015.
· Cash and Cash Equivalents
The Company's cash position decreased from $26.46
million as of 31 December 2014 to $21.09 million as of 31 March
2015. A net reduction of $5.37 million in the Company's cash
position in the first three months of 2015 has been primarily
caused by the bonds interest payment and the use of cash to fund
Arbat construction.
· Assets Under Development (at cost)
Assets Under Development have increased from
$66.90 million at 31 December 2014 to $69.17 million at 31 March
2015. The $2.28 million net increase is the result of increased
construction spending and slight strengthening of the RUB against
the US$. Assets Under Development are carried at cost which is
nominated in RUB. Thus, the strengthening of RUB against USD in 1Q
2015 leads to an increase in Assets Under Development presented in
US$.
Liabilities
· Borrowings (LT & ST)
EPH's debt consists of:
-
9 year bonds listed on Swiss Stock Exchange
issued in August and September 2014;
-
loan from Jilford Ltd. signed in September 2013
for the purpose of financing Arbat construction;
-
third party loans to EPH Real Estate, to
Connecta KG and to Capital Estate Group.
The nominal value of the listed bonds at reporting
date did not change since the end of 2014 and is $270 million.
The loan from Jilford is received through
Vakhtangov Place Limited, the Company's 60% joint operation
company, therefore only 60% of the loan received is reflected on
EPH's balance sheet. During the first three months of 2015 the
outstanding balance of the loan did not change and is $15.09
million.
EPH Real Estate and Connecta KG have RUB nominated
loans from a third party on their balance sheets. The outstanding
balance of the loans amounted to $65.52 million as of 31 March
2015.
Capital Estate Group has a USD nominated loan from
a third party on its balance sheet. The outstanding balance of the
loan did not change during 1Q 2015 and is $51.20 million.
· Accounts Payable and Accrued Expenses (LT & ST)
The amount of Accounts Payable decreased from
$223.38 million as of 31 December 2014 to $216.52 million at 31
March 2015 mostly due to the decrease of trade payables in the
rental properties.
The most part of the remaining accounts payable
represents the deferred parts of the purchase prices with respect
to the acquisitions of Berlin House, Geneva House, Polar Lights and
Hermitage Plaza.
Significant Q1 2015 Income and Expense Items
Net Rental Income |
31.03.2015 |
31.03.2014 |
Change YoY |
|
Berlin House |
3,945,745 |
- |
3,945,745 |
|
Geneva House |
3,978,744 |
- |
3,978,744 |
|
Polar lights |
3,771,171 |
- |
3,771,171 |
|
Hermitage Plaza |
6,050,247 |
- |
6,050,247 |
|
Magistral'naya |
139,449 |
250,787 |
(111,338) |
|
Petrovsky Fort |
- |
1,765,571 |
(1,765,571) |
|
Total |
17,885,356 |
2,016,358 |
15,868,998 |
Material YoY changes in Income/Expense Items |
31.03.2015 |
31.03.2014 |
Change YoY |
|
Interest income |
1,404,839 |
1,950,392 |
(545,553) |
|
Net foreign exchange loss |
(5,901,067) |
(5,347,630) |
(553,437) |
|
Net loss from fair value adjustment on investment
properties |
(349,615) |
(949,028) |
599,413 |
|
Finance costs |
(8,051,124) |
(536,954) |
(7,514,170) |
Significant Q1 2015 items in Financial Position
Assets |
|
31.03.2015 |
31.12.2014 |
Change |
|
Investment properties |
749,769,610 |
749,707,046 |
62,564 |
|
Goodwill |
45,621,368 |
45,621,368 |
- |
|
Investment property held for sale |
4,300,000 |
4,300,000 |
- |
|
Loans and receivables (LT & ST) |
77,428,685 |
75,423,997 |
2,004,688 |
|
Cash & cash equivalents |
21,086,523 |
26,460,024 |
(5,373,501) |
|
Assets under development |
69,174,620 |
66,896,144 |
2,278,476 |
Liabilities |
|
|
|
|
|
Borrowings (LT & ST) |
407,083,611 |
408,871,502 |
(1,787,891) |
|
Accounts payable and accrued expenses (LT &
ST) |
216,520,331 |
223,376,505 |
(6,856,174) |
|
Deferred tax liabilities |
126,606,547 |
126,364,886 |
241,661 |
Eastern Property
Holdings Ltd. is an investment company listed on SIX Swiss
Exchange which holds interest in office, residential and retail
properties. EPH is managed by Valartis International Ltd., a
wholly-owned subsidiary of Valartis Group AG.
Additional information on Eastern
Property Holdings is available by contacting Anna Bernhart
Tel: +41 44 503 5400.
EPH_First Quarter 2015 Trading
Update