Eastern Property Holdings Limited (EPH) : Third Quarter 2013 Trading Update
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Eastern Property Holdings Limited (EPH) /
Eastern Property Holdings Limited (EPH) : Third Quarter 2013 Trading Update
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Road Town, Tortola, BVI
FINANCIAL HIGHLIGHTS
* RUB strengthening against US$ during the 3(rd) quarter of 2013 slightly
mitigates the negative effect of exchange rate fluctuations reflected in the
Company's Interim Unaudited Financial Statement as of 30 June 2013. Though,
the overall net FX loss of $7.01 million as of 30 September 2013 has
substantial adverse effect to the Company's Net Profit and NAV.
* Nevertheless, assuming unchanged real estate values (based on the valuations
done as of 31 May 2013), strong performance of wholly-owned and minority-
held rental assets would result in NAV slightly higher than at 31 December
2012.
ASSET UPDATE
Arbat 1:
* Construction is advancing according to plan;
* Completion of commercial part of the building (i.e. excluding equipment and
fit-out of the Theatre part) is scheduled for the end of 2013;
* The apartments are already in the market; marketing strategy has been
developed and is being implemented.
* First agreement on the sale of two apartments has been signed. The payment
is expected by year-end.
Arbat 2:
* Completion of underground works and start of aboveground works is scheduled
for December 2013.
Arbat construction financing:
* External loan facility of up to $ 30 mln at 10% interest per annum has been
signed in September 2013. As of 30 September $2.85 million was drawn down.
Petrovsky Fort:
* Decreased vacancy rate (below 5% as of 30 September) led to moderate
increase of gross rent by 5% YoY.
Magistral'naya
* Gross rent has increased by 3% and net rent by 17% YoY.
Inkonika Parking:
* Income from hourly parking increased by app. 70% starting from the beginning
of the year; income from short-term and mid-term contracts with companies
and individuals also demonstrates a positive trend.
Geneva House:
* Fully leased.
Berlin House:
* Fully leased.
Significant financial events and changes for Q3 2013 are as follows:
INCOME
Rental Income
In the nine months ended 30 September 2013, our wholly-owned rental properties
generated Gross Rental Income of $5.81 million and Net Rental Income of $5.61
million.
On a Like for Like basis, due to reduced vacancies at Petrovsky Fort and annual
indexation of rent at Magistral'naya the Gross Rental Income of the Company is
up by 5% ($5.81 million vs $5.56 million in 3q 2012). In fact, until 2013 the
staff working for Petrovsky Fort was employed by Valartis and the respective
costs were covered by the management fee which was included in the Net Rent
calculation. Starting from 2013 those employees are hired by Petrovsky Fort and
the respective salary expenses are reflected as Administartive expenses and,
therefore, are not included in the Net Rent calculation. Further, the improved
operating efficiency at both Petrovsky Fort and Magistral'naya has resulted in a
32% increase in Net Rental Income ($5.61 million vs $4.25 million in the first
nine months of 2012).
Interest Income
The Company generated $5.84 million of interest income in the first nine months
of 2013 which is approximately at the same level as for the comparable period of
2012. More interest was accrued with respect to construction loans provided by
the Company to finance Arbat projects ($3.56 million vs $2.28 million in the
nine months of 2012), although interest earned on liquid bond investments
decreased due to the sale of the bond portfolio ($0.18 million vs $1.70 million
in the nine months of 2012).
Income Taxes
For the first nine months of 2013, the Company recognized an income tax credit
of $1.30 million mainly caused by forex exchange loss and intercompany loan
interest expense in Russian subsidiaries. In the first nine months of 2012 the
Company recognized $0.32 as income tax credit.
EXPENSES
Net Foreign Exchange Loss
RUB weakening against US$ during the first nine months of 2013 resulted in a
$7.01 million exchange rate loss. For the same period in 2012 the Company
recognized a $2.04 million gain.
BALANCE SHEET
ASSETS
Loans and Receivables
EPH's loans and receivables increased due to both, additional lending to its
joint venture projects
and accrual of 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 amounted to $87.79 million as of 30 September 2013, of
which $69.27 million is principal, and $18.52 million is accrued interest. As of
31 December 2012, loans and receivables amounted to $76.79 million.
Almost all 2013 lending has been for construction of the Arbat Projects.
Liquid Assets
In 2011-2012 the Company invested funds into individual corporate bonds of high
rating and short to medium duration.
For the purpose of the trading updates, cash and traded bonds have been combined
and classified
as Liquid Assets.
As of 30 September 2013 all bonds were matured or sold by the Company to finance
Arbat construction, therefore, liquid assets fully consist of cash in the amount
of US$ 4.17 million. As of 31 December 2012, the Company held $29.52 million of
liquid assets, including $19.64 million of bonds.
The $25.36 million reduction in the Company's liquid assets in the first nine
months 2013 has been
primarily due to use of cash to fund Arbat construction, payment of the
management fees and a part of the accrued performance fees to Valartis and
payments under the loan from UniCredit Bank Austria.
Assets Under Development (at cost)
Assets under development have increased from $95.18 million at 31 December 2012
to $101.81 million at 30 September 2013. The $6.63 million increase is the
result of increased construction spending and weakening of the RUB against the
US$.
LIABILITIES
Loans from Banks and Others (LT & ST)
EPH's third party debt consists of a loan from UniCredit Bank Austria secured by
Petrovsky Fort mortgage and a loan from Jilford Ltd. signed in September 2013
for the purpose of financing of Arbat construction.
The outstanding balance of the loan from UniCredit Bank Austria at reporting
date was $33.10 million, down $1.35 million from $34.45 million at 31 December
2012. The reduction is due to amortization during the first nine months of 2013.
The loan from Jilford is received through VPL, the Company's 60% joint-venture,
therefore only 60% of the loan received is reflected on EPH's balance sheet. As
of 30 September 2013 the outstanding loan balance due to Jilford in the
Company's balance sheet is US$ 1.71 million.
Significant Q3 2013 Income and Expense Items
Gross Rental Income 30.09.2013 30.09.2012 Change YoY Percent Change
YoY
-------------------------------------------------------------------------------
Petrovsky Fort 5,083,777 4,854,615 229,162 5%
Magistral'naya 727,459 705,824 21,635 3%
------------------------------------
Total 5,811,235 5,560,439 250,797 5%
------------------------------------
Net Rental Income Change YoY Percent Change
YoY
-------------------------------------------------------------------------------
Petrovsky Fort 4,891,562 3,644,901 1,246,661 34%
Magistral'naya 714,666 609,252 105,414 17%
------------------------------------
Total 5,606,228 4,254,153 1,352,075 32%
------------------------------------
Material YoY changes in 30.09.2013 30.09.2012 Change YoY
Income/Expense Items
---------------------------------------------------------------
Interest income 5,841,181 5,859,634 (18,453)
Net foreign exchange (7,009,730) 2,038,042 (9,047,772)
(loss)/ gain
Development property
reverse of impairment/ 503,159 (702,980) 1,206,139
(impairment)
Income taxes 1,299,488 324,014 975,474
Significant Q3 2013 Changes in Financial Position
Assets 30.09.2013 31.12.2012 Change
-------------------------------------------------------------------------------
Loans and receivables (LT & 87,790,186 76,790,296 10,999,890
ST)
Liquid assets (Cash and bonds) 4,169,529 29,524,768 (25,355,239)
Assets under development 101,809,927 95,179,891 6,630,036
Liabilities
-------------------------------------------------------------------------------
Loans from banks and others 34,810,000 34,450,000 360,000
(LT & ST)
EPH Q3 Trading Update:
http://hugin.info/139905/R/1742230/585630.pdf
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originality of the information contained therein.
Source: Eastern Property Holdings Limited (EPH) via Thomson Reuters ONE
[HUG#1742230]
Unternehmensinformation / Kurzprofil:
Datum: 12.11.2013 - 07:00 Uhr
Sprache: Deutsch
News-ID 315119
Anzahl Zeichen: 11311
contact information:
Town:
Geneva
Kategorie:
Business News
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