Final Results

RNS Number : 0485M

Aisi Realty Public Limited

09 August 2011

 

Aisi Realty Public Limited

("Aisi" or the "Company")

Final Results for the year ended 31 December 2010

Aisi Realty Public Limited (AIM: AISI), a property investment company focusing on development projects and related investments in Ukraine, announces its audited results for the year ended 31 December 2010.

Highlights:

Financial Summary:

o  Investment portfolio valued by DTZ  at $43.9 million (2009: $58.2 million)

o  Net asset value was $25.0 million (2009: $49.7 million)

o  Net asset value per share of $0.06 (2009: $0.12)

o  Loss before tax was $25.2 million (2009: 39.2 million)

Operational Summary:

o  Brovary warehouse is now 21% leased

o  Continuing negotiations with a number of international logistics operators

o  In May 2011 the Group signed a restructuring agreement with EBRD for the repayment of the outstanding principal amount of $15.5m to be deferred until September 2012.

Enquiries:

AISI Realty Public Ltd
Paul Ensor, Chairman	[phone]
Beso Sikharulidze	[phone]
Seymour Pierce Limited
Nandita Sahgal / David Foreman (Corporate Finance)	[phone]
Leti McManus (Corporate Broking)

REPORT OF THE BOARD OF DIRECTORS

The Board of Directors presents its report and audited consolidated financial statements of Aisi Realty Public Limited (the Company) and its subsidiaries (the Group) for the year ended 31 December 2010.

Principal activity

The principal activity of the Group, which is unchanged from last year, is the investment in real estate in major population centers in Ukraine, with a particular focus on the capital city, Kiev.

Review of current position, future development and significant risks

Whilst we have only one bank debt and numerous uncharged assets, the Group's financial position as presented in the consolidated financial statements is not considered satisfactory by the Directors, and they have been working on a number of strategic opportunities to secure adequate working capital and make the Group's operations profitable.

In May of 2011 the Group signed a restructuring agreement with EBRD for the repayment of the outstanding principal amount of US$15.5m to be deferred until September 2012. This is the only bank debt of the Group.

Whilst the restructuring of the EBRD facility is the first step in securing the ongoing financial position of the Group, given the small contracted rental income to date, the available working capital of the Group continues to be very tight. On 20 June 2011 the Group was not able to meet the interest payment due, and plans to remedy the situation once the funding explained below is concluded.

On 1 June 2011 the Company made a further announcement that it had requested that trading in the Existing Ordinary Shares on AIM be suspended until such time that it had secured all necessary funding to enable to it to carry on as a going concern.

The discussions with an independent third party investor group, namely  South East Continent Unique Real Estate (SECURE) Management ("Secure  Management"), have now been concluded and the Board is pleased to announce that the Company has entered into a Subscription Agreement with Narrowpeak Consultants Limited (the "Investor"), a member of the Secure Management group, conditional on, inter alia, the Proposed Investment Resolutions (as set out in the Notice of First EGM) being passed by the shareholders at the First EGM and completion of due diligence to the satisfaction of the Investor, following which the Investor proposes to make a substantial investment in the Company on certain terms.

The Brovary Warehouse is currently 21% leased  and we are pleased to report that we are continuing negotiations (some being at an advanced stage) with a number of international logistics operators, and expect a positive conclusion in the near future such as full coverage of  leasable area, which should provide improved visibility on the ongoing cash generation of the property.

The Board of Directors has discussed and agreed on the potential structure of the management internalisation which will be proposed to the shareholders at a General Meeting in the coming few weeks.

Considering the current market conditions, the Board of Directors has decided to focus the strategy of the Group away from speculative development to investing in income generating assets. The focus will now be on warehouses and big box retail, with well established international tenants with long term leases. We have built a strong pipeline of potential new investments. All other non-core assets will be used to generate additional equity for implementing a new strategic focus.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 31 December 2010

			2010	2009
			US$	US$
Revenue from operations
Fair value losses on investment property			(19 965 122)	(17 470 085)
Other income, net			25 292	(523)
			(19 939 830)	(17 470 608)
Expenses
Administration expenses			(5 978 087)	(5 946 723)
Finance income/(costs), net			115 527	(4 872 270)
Other income/(expenses), net			561 733	(10 882 650)
Loss before tax			(25 240 657)	(39 172 251)
Tax			-	(10)
Net loss for the year			(25 240 657)	(39 172 261)
Other comprehensive income
Translation to presentation currency			22 430	973 378
Total comprehensive income for the year			(25 218 227)	(38 198 883)
Loss attributable to:
Equity holders of the parent			(24 934 873)	(38 901 144)
Non controlling interest			(305 784)	(271 117)
			(25 240 657)	(39 172 261)
Loss and total comprehensive income
attributable to:
Equity holders of the parent			(24 933 034)	(37 879 359)
Non controlling interest			(285 193)	(319 524)
			(25 218 227))	(38 198 883)
Losses per share attributable to equity holders
of the parent (cent)			(6)	(14)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 December 2010

			2010	2009
			US$	US$
ASSETS
Non current assets
Property, plant and equipment			54 783	72 764
Investment property under construction			10 300 000	35 319 000
Investment property			33 631 000	22 873 000
Advances for investments			6 000 000	9 297 945
VAT non-current			2 926 939	3 213 709
			52 912 722	70 776 418
Current assets
Accounts receivable			3 487 598	1 776 063
Cash and cash equivalents			291 053	5 020 657
			3 778 651	6 796 720
Total assets			56 691 373	77 573 138
EQUITY AND LIABILITIES
Equity and reserves attributable to owners of the parent
Share capital			5 431 918	5 431 918
Share premium			94 523 283	94 523 283
Accumulated losses			(74 217 972)	(49 283 099)
Advances from shareholders			223 118	-
Other reserves			68 390	68 390
Translation reserve			(1 068 153)	(1 069 992)
			24 960 584	49 670 500
Non-controlling interest			1 030 793	1 315 986
Total equity			25 991 377	50 986 486
Non current liabilities
Long - term borrowings			15 529 412	15 529 412
Obligations under finance leases			591 245	589 249
Accounts payable			673 078	766 365
			16 793 735	16 885 026
Current liabilities
Short - term borrowings			41 237	508 555
Accounts payable			13 234 905	8 534 465
Obligations under finance leases			44 969	73 675
Current tax liabilities			510 240	510 240
Provision for litigation claims			74 910	74 691
			13 906 261	9 701 626
Total liabilities			30 699 996	26 586 652
Total equity and liabilities			56 691 373	77 573 138

On 8 August 2011 the Board of Directors of Aisi Realty Public Limited authorised these financial statements for issue.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2010

	Share capital	Share premium	Accumulated loss		Other reserves (Note 10)	Advances for issue of shares		Translation reserve	Total	Non-controlling interest	Total
	US$	US$	US$		US$	US$		US$	US$	US$	US$
Balance as at 1 January 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 for the year	-	-	(38 901 144)		-	-		-	(38 901 144)	(271 117)	(39 172 261)
Increase of share capital	3 148 619	1 839 353	-		-	-		-	4 987972	-	4 987972
Translation to presentation currency	-	-	-		-	-		1 021 785	1 021785	(48 407)	973 378
Directors' options	-	-	-		21 680	-		-	21 680	-	21 680
Balance as at 31 December 2009 / 1 January 2010	5 431 918	94 523 283	(49 283 099)		68 390	-		(1 069 992)	49 670 500	1 315 986	50 986 486
Total comprehensive income for the year	-	-	(24 934 873)		-	-		-	(24 934 873)	(305 784)	(25 240 657)
Advances from shareholders	-	-	-		-	223 118		-	223 118	-	223 118
Translation to presentation currency	-	-	-		-	-		1 839	1 839	20 591	22 430
Balance as at 31 December 2010	5 431 918	94 523 283	(74 217 972)		68 390	223 118		(1 068 153)	24 960 584	1 030 793	25 991 377

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended 31 December 2010

	2010		2009
		US$	US$
Operating activities
Profit/(loss) before tax		(25 240 657)	(39 172 251)
Adjustments for:
Depreciation of property, plant and equipment		81 183	60 881
Advances for investments impairment (reversal) / loss		(780 267)	6 128 205
Foreign exchange losses/(gain)		(263 388)	2 301 804
Loss on revaluation of investment property		19 965 122	17 470 085
Loss/(gain) from discounting VAT		(1 050 843)	2 398 890
Other non-cash changes in investment property		(3 541 458)
Receivables impairment loss		111 899	1 253 167
Property, plant and equipment impairment loss		-	95 772
Other expenses		-	141 218
Interest income		(84 694)	(15 553)
Interest expense		1 150 869	7 209
Operating loss before working capital changes		(9 652 234)	(9 330 573)
Increase in advances to related parties		(4)	(1 252)
(Increase)/Decrease in prepayments and other
current assets		(1 311 786)	(314 523)
Increase in trade and other payables		1 110 659	2 515 095
Increase in payables due to related parties		3 652 706	2 752 894
Cash flows used in operating activities		(6 200 659)	(4 378 359)
Investing activities
Decrease in prepayments under development contracts		-	2 511 292
Decrease/(Increase) in advances for investments		4 640 494	68 244
(Decrease)/Increase in payables to constructors		(156 212)	(196 767)
Additions to investment property		(1 946 719)	(13 106 851)
Changes of property, plant and equipment		(2 498)	(20 883)
Increase in VAT receivable		(871 735)	(2 055 671)
Increase/(Decrease) in financial lease liabilities		(26 710)	576 941
Interest received		84 694	15 553
Cash flows used in investing activities		1 721 314	(12 208 142)
Financing activities
Proceeds from shareholders advances / proceed		223 118	4 987 972
from issue of share capital
Proceeds from bank loan		(470 588)	16 000 000
Proceeds from other borrowings		12	4 321
Net cash (used in) / from financing activities		(247 458)	20 992 293
Effect of foreign exchange rates on cash and cash equivalents		(2 801)	579 132
Net (decrease) /  increase in cash and cash equivalents		(4 729 604)	4 984 924
Cash and cash equivalents:
At beginning of the year		5 020 657	35 733
At end of the year		291 053	5 020 657

NOTES TO THE ACCOUNTS

Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap.113. The consolidated financial statements are presented in United States Dollars (US$). The consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of investment property and investment property under construction to fair value.

The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting estimates and requires management to exercise its judgement in the process of applying the Group's accounting policies. It also requires the use of assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of current events and actions, actual results may ultimately differ from those estimates.

The Company's Annual Report and Accounts for the year ended 31 December 2010 have been posted to shareholders and copies are available on the Company's website: www.aisicap.com.

 

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