TIDMRAV
RNS Number : 1138K
Raven Property Group Limited
31 August 2021
31 August 2021
Raven Property Group Limited ("Raven" or the "Company")
2021 Interim Results
Raven today announces its unaudited results for the six months
ended 30 June 2021.
Highlights
-- Portfolio occupancy stands at 96% today, up from 93% at 30
June 2021 (31 December 2020: 94%);
-- Underlying earnings of GBP17.3 million in the six months to
30 June 2021 (30 June 2020: loss of GBP10.4 million) and IFRS
profit of GBP41.2 million (30 June 2020: loss of GBP31.7
million);
-- Investment property revaluation surplus of GBP29.5 million
(30 June 2020: revaluation loss GBP12.5 million) increases
investment property carrying values to GBP1.15 billion (31 December
2020: GBP1.12 billion);
-- Net assets increase to GBP264.5 million at 30 June 2021 from
GBP233.7 million at 31 December 2020 and diluted net asset value
per share increases by 25% to 50p at 30 June 2021 (31 December
2020: 40p);
-- Cash at bank remains stable at GBP53.1 million (31 December 2020: GBP53.1 million): and
-- A successful conclusion to the purchase of Invesco Asset
Management's holdings in the Company's instruments, 9.85 million
ordinary shares purchased and cancelled by the Company, 100 million
ordinary shares and 32.5 million preference shares purchased by way
of a joint venture between the Company and its senior management
and the remaining 46.8 million ordinary shares and 31.1 million
preference shares placed in the market, all at a price of 21.6
pence per ordinary share and 90.8 pence per preference share.
Glyn Hirsch CEO said " Rouble rents are rising strongly and
property valuations are following in a very tight market. It's
pleasing to see net asset value per share rebounding to 50 pence,
especially following the placing of Invesco Asset Management's
ordinary share holdings at 21.6 pence in May. "
Enquiries
Raven Property Group Limited Tel: + 44 (0) 1481 712955
Anton Bilton
Glyn Hirsch
Novella Communications Tel: +44 (0) 203 151 7008
Tim Robertson
Fergus Young
Singer Capital Markets Tel: +44 (0) 20 7496 3000
Corporate Finance - James Maxwell
/ Alex Bond
Sales - Alan Geeves / James Waterlow
Java Capital (South African Sponsor) Tel: +27 (11) 722 3050
Jean Tyndale-Biscoe / Andrew Brooking
Renaissance Capital (Moscow) Tel: + 7 495 258 7770
David Pipia
Ravenscroft Consultancy and Listing Tel: + 44 (0) 1481 729100
Services Limited
Semelia Hamon
Financial Summary
Income Statement for the 6 months ended: 30 June 2021 30 June 2020
Net rental and related income (GBPm) 51.9 59.6
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Underlying earnings / (loss) (GBPm) 17.3 (10.4)
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Revaluation surplus / (deficit) (GBPm) 29.5 (12.5)
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IFRS profit / (loss) (GBPm) 41.2 (31.7)
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Balance Sheet at: 30 June 2021 31 December
2020
Investment Property Market Value (GBPm) 1,161 1,129
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Diluted NAV per share (pence) 50 40
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Letting Summary
Warehouse Portfolio Maturities
Warehouse '000sqm 2021 2022 2023 2024 2025-2032 Total
Maturity profile at 1 January 2021 357 204 275 262 677 1,775
------ ----- ----- ----- ---------- ------
Breaks exercised 27 (15) - (4) (8) -
------ ----- ----- ----- ---------- ------
Renegotiated and extended (48) (18) (5) (9) (8) (88)
------ ----- ----- ----- ---------- ------
Maturity profile of renegotiations - 6 1 8 73 88
------ ----- ----- ----- ---------- ------
Vacated/terminated (229) - - - - (229)
------ ----- ----- ----- ---------- ------
New lettings 22 3 1 23 160 209
------ ----- ----- ----- ---------- ------
Maturity profile at 30 June 2021 129 180 272 280 894 1,755
------ ----- ----- ----- ---------- ------
Maturity profile with breaks 161 249 394 373 578 1,755
------ ----- ----- ----- ---------- ------
Office Portfolio Maturities
2021 2022 2023 2024 2025- Total
Office '000sqm 2032
Maturity profile at 1 January 2021 2 16 2 11 17 48
----- ----- ----- ----- ------ ------
Breaks exercised - - - - - -
----- ----- ----- ----- ------ ------
Renegotiated and extended (1) - - - - (1)
----- ----- ----- ----- ------ ------
Maturity profile of renegotiations - 1 - - - 1
----- ----- ----- ----- ------ ------
Vacated/terminated - - - - - -
----- ----- ----- ----- ------ ------
New lettings - - - - - -
----- ----- ----- ----- ------ ------
Maturity profile at 30 June 2021 1 17 2 11 17 48
----- ----- ----- ----- ------ ------
Maturity profile with breaks 2 20 1 8 17 48
----- ----- ----- ----- ------ ------
Lease Currency Mix
30 June 2021 USD RUB Vacant Total
Sqm 3% 90% 7% 100%
---- ---- ------- ------
Secured debt currency profile
30 June 2021 RUB EUR Total
Debt portfolio 62% 38% 100%
---- ---- ------
Chairman's Message
I am pleased to report on a positive six months for the
Group.
The Russian warehouse market now mirrors the global trend for
our asset class, with upward pressure on market rental levels and
low vacancy rates. The larger e-commerce players, such as Ozon and
Yandex.Market, have been extremely active, securing the space that
they require for growth.
With Russia effectively closing its borders in reaction to the
pandemic, the flow of cheaper labour into the country has been cut
off. Together with a weak Rouble, this has increased inflationary
pressures and the cost of construction for logistics' development
has increased significantly, again placing upward pressure on
rental levels.
The pro inflationary impact has moved the current official rate
of inflation to 6.5% compared to the Central Bank of Russia's
("CBR") target rate of 4%. The CBR has taken a hawkish approach,
hiking its key rate by 225 basis points, from 4.25% at the
beginning of the year to 6.5% today. External influences such as
sanctions aside, the CBR expects to see a strengthening of the
Rouble in the second half of the year as a reaction to its
policy.
The spectre of the Covid pandemic has by no means subsided and
in fact, cases in Russia increased significantly in the six months
as vaccination uptake remains subdued. The Government has avoided
further lockdowns, pushing responsibility onto the regional
administrations to enforce local restrictions and policies. We
continue to follow strict protocols in our Russian offices,
encouraging working from home and operating two week shift
rotations for those wishing to use our offices, combined with
regular testing of our employees.
This has not had an impact on our trading, with full rent
recovery in the period and no material outstanding debtors or rent
deferrals.
We were relieved to finally deal with the acquisition of Invesco
Asset Management's ("Invesco") holding in the Company's listed
instruments in the period. Through a joint venture vehicle with the
Company's senior management, 100 million ordinary shares and 32.5
million preference shares were acquired from Invesco on 11 May 2021
for 21.6p and 90.8p per share respectively. The Company also
purchased 9.85 million ordinary shares directly, at the same price,
and cancelled those shares. Invesco's remaining holding of 46.8
million ordinary shares and 31.1 million preference shares were
placed with existing holders and we thank them for their support in
this transaction.
Our search for additional non executive directors is progressing
well and we have engaged with a specialist recruitment agency to
assist in our Board diversity programme. We hope to make positive
announcements before the end of the financial year.
We also continue to work with KPMG to ready ourselves for the
implementation of the task force on climate related financial
disclosure recommendations ("TCFD"). In that regard, I am also
pleased to report that the first phase of our solar farm at our
Rostov site has now been completed and has started operation and
elsewhere we continue to switch our energy requirements to RosHydro
from the traditional energy suppliers.
Whilst our second half profitability will feel the impact of
higher interest rates, it is encouraging that, in this set of
results, our improving balance sheet position is driven by positive
underlying market dynamics rather than foreign currency exchange
rate swings. This bodes well for our net asset value per share.
Sir Richard Jewson
Chairman
30 August 2021
Chief Executive's Review
The warehouse market in Russia is in a good place. Market rents
are on the increase as vacancy levels reduce and growth in the
e-commerce sector is making a significant difference to market
dynamics.
We saw strong tenant demand during the period and that is
continuing today. This has resulted in reduced vacancy in our
portfolio and in the market as a whole.
Our portfolio is 96% let today with interest in the majority of
our remaining vacant space. Our average rental rate at 30 June 2021
rose to R5,062 per sqm (30 June 2020: R4,833 per sqm).
Increasing CBR interest rates may dampen some of the good
letting news in the second half of the year's profitability but we
expect a strengthening of the Rouble to compensate, especially in
balance sheet terms, combined with a positive environment for our
asset valuations. Increasing construction cost inflation is
impacting the logistics' development market and this is restricting
new supply, contributing to the increase in market rents. If this
trend continues, we expect further positive progress in our
underlying Rouble property valuations later in the year.
As described below, the acquisition of Invesco's holding in the
Company's ordinary and preference shares in May this year has
altered our balance sheet. 9.85 million ordinary shares have been
cancelled and 49.4 million ordinary shares are now effectively held
in treasury as a result of the transaction, producing a positive
movement in net asset value per share. As a result of this
transaction, your highly focussed management team is now even more
focussed and committed.
To see our net asset value per share at 50p (31 December 2020:
40p) is particularly gratifying, as foreign exchange currency
movements had minimal impact on the figure.
Whilst the rental market and valuations are performing strongly
the profit outlook for the year is heavily dependent on interest
and exchange rates and therefore, as last year we will consider a
single, final distribution by way of tender offer share buyback at
the year end.
Property Update
With minimal vacant space available in our portfolio, we are now
in advanced negotiations to extend the larger maturities which
arise in 2022. Our focus is on reaching full occupancy by the year
end and how best to generate returns from the trapped space that
inevitably remains across the portfolio at these occupancy
levels.
Warehouse Portfolio
With the largest e-commerce players and retailers competing for
market share, our existing vacant space and additional vacancies
arising on lease maturities have let quickly, all at rents ahead of
expectation. In the first six months we completed 209,000sqm of new
lettings and 88,000sqm of lease extensions.
The largest maturity in the portfolio occurred at the beginning
of the year, Wildberries releasing their short term lets at
Krekshino and Pushkino of 29,000sqm and 44,000sqm respectively.
These were quickly absorbed. Home Market took 21,000sqm of space at
Krekshino, the remainder taken by smaller lets. At Pushkino, DNS
have taken 21,600sqm and Ozon, 22,700sqm.
Other lettings in the year included Yandex.Market leasing
18,000sqm at Klimovsk and 4,500sqm in Rostov; Sladkaya Zhizn
16,000sqm at Klimovsk; and Ozon taking a further 8,000sqm in
Rostov. All other new lets were for blocks of less than
10,000sqm.
The other large maturity in the period arose at Istra in May,
DSV vacating 59,000sqm. This was the largest single space available
on the Moscow market at that time, allowing us to expand our
relationship with the Russian e-commerce giant, Ozon, who have
taken 52,000sqm of the space since the period end. Beluga have made
up the difference, leasing 8,400sqm.
Portfolio occupancy at 30 June 2021 was 93%, rising to 96% today
on the re-letting of the DSV space.
In the second half of the year we have 130,000sqm of expiries,
72,000sqm of which has already been extended or re-let.
RosLogistics account for 44,000sqm of the remaining maturing leases
with their underlying clients' requirement expected to drop to
36,200sqm. Negotiations on the remaining maturities and vacant
space are at an advanced stage.
Office Portfolio
The office portfolio has performed in line with our expectations
in the period. The buildings are operating as normal and tenants
have returned to their offices although many continue to allow
employees to work from home for one or two days a week. We do not
have any large breaks or expiries during the remainder of the year
and occupancy is running at 98%.
All office tenants have paid and continue to pay their full
rental obligations.
Finance Review
Operating results in the six months have been strong in Rouble
terms, the weaker average exchange rate in the period taking some
of the shine off when converting to Sterling. The balance sheet
position at 30 June 2021 shows the benefit of the strong market
dynamics, with property values on the increase and higher interest
rates and oil prices stabilising the Rouble. This translates into a
significant increase in IFRS earnings and net asset value per
share.
Income Statement
Net Rental and Related Income
The Group generated Rouble denominated net rental income of R5.4
billion in the six months to 30 June 2021, up from R5.2 billion in
the same period in 2020. The significantly weaker Rouble/Sterling
average exchange rate in the period of 103.1 compared to 87.3 in
the six months to 30 June 2020 means our Sterling presentation
income drops to GBP51.9 million from GBP59.6 million. The step down
in income as the last of the non Rouble leases convert to market
rates was principally taken in 2020, with only 3% of our portfolio
now remaining on US Dollar leases compared to 17% of US Dollar and
Euro leases at 30 June 2020.
Administrative Expenses
Administrative expenses include transaction costs of GBP1.25
million in relation to the purchase of the Company's shares from
Invesco in the period.
Excluding this cost, both underlying and IFRS administrative
expenses have reduced compared to 2020 even with slightly higher
employment costs reflecting some bonus payments in 2021. Bonus
decisions were deferred in 2020 due to the pandemic so there is no
comparable charge.
Net Finance Costs
Our weighted average bank interest cost in the six months was
6.37% (2020: 5.48%). In 2020 we were in a low inflation, decreasing
interest rate environment in Russia, the key rate dropping to
4.25%. That situation has now been reversed, with rising inflation
forcing the CBR to enter into a programme of interest rate
increases in the first half of the year, from 4.25% at 31 December
to 6.5% today. The full effect of this will be seen in the second
half of the year if there is no easing of the policy.
This has had a positive effect on the mark to market of our
interest rate derivatives, generating a valuation gain of GBP2.2
million (30 June 2020: loss of GBP1.5 million).
The re-designation of our convertible preference shares in
September 2020 also means we no longer account for the premium on
redemption, a charge of GBP3.6 million in the same period last
year.
Together this results in a drop in net finance costs from
GBP40.4 million to GBP33.2 million for the six months.
Taxation
The underlying corporation tax charge increased in the period to
GBP4.3 million (30 June 2020: GBP3.4 million) as positive foreign
exchange gains arising in the Russian subsidiaries are taxable. The
IFRS tax charge also increases to GBP8.6 million (30 June 2020:
GBP5.1 million) as a deferred tax charge of GBP1.8 million is
applied to the positive investment property revaluation
movement.
Underlying Earnings
The Group has made underlying earnings of GBP17.3 million for
the period, (30 June 2020: loss of GBP10.4 million). The increasing
interest rate environment and relatively strong oil prices have
stabilised the Rouble recently, generating an unrealised foreign
exchange profit on our Euro debt balances of GBP8.9 million at 30
June 2021 (30 June 2020: loss of GBP23.8 million), representing the
biggest swing in underlying earnings.
The reconciliation between underlying and IFRS earnings is shown
in note 7 to the Report. The principal reconciling items are mark
to market movements, the largest of which is the unrealised profit
or loss on the revaluation of our investment properties.
IFRS Earnings
IFRS earnings for the period were GBP41.2 million (30 June 2020:
loss of GBP31.7 million), showing a significant recovery compared
to the same period in 2020. The main components are: the unrealised
foreign exchange gain described above of GBP8.9 million (30 June
2020: loss of GBP23.8 million); the unrealised profit on the
revaluation of investment properties of GBP29.5 million (30 June
2020: unrealised loss of GBP12.5 million); and the mark to market
of interest derivatives and the amortisation costs of various
instruments giving a loss of GBP0.2 million (30 June 2020: loss of
GBP6.3 million).
Earnings per Share
Unrealised foreign exchange movements and property valuation
movements account for much of the positive movement in our earnings
per share measurements. Basic underlying earnings per share for the
six months were 3.08p (30 June 2020: loss per share 2.16p) and
basic IFRS earnings per share 7.32p (30 June 2020: loss per share
6.59p).
Balance Sheet
Investment Properties
Investment property valuations have increased from R110.3
billion at 31 December 2020 to R113.7 billion at 30 June 2021. On
translation this gives a market value of GBP1.13 billion (31
December 2020: GBP1.10 billion) and a revaluation uplift of GBP29.4
million. Investment property under construction shows no
significant movement in carrying value at GBP27.1 million (31
December 2020: GBP27.0 million).
Cash and Rent Recovery
Cash balances in the six month period have remained flat, at
GBP53.1 million. Net debt drawn of GBP71.1 million includes the
EUR60 million (GBP52.2 million) facility drawn to support the
Invesco share buy back, funding the loan of GBP35.7 million to the
joint venture, the investment into the joint venture of GBP15.4
million and the acquisition of own shares of GBP2.1 million. Net
cash from operations of GBP37.2 million covered borrowing costs and
the preference share coupon of GBP32.6 million. Other net financing
draws of GBP18.9 million cover loan amortisation in the period of
GBP12.3 million and capital expenditure of GBP3.1 million. A final
tender offer in relation to 2020 of GBP5.1 million was also paid in
the period.
Tenants have met all rental obligations in the six months and
there are no material rental deferrals remaining from the outset of
the pandemic in 2020.
Debt
Borrowings total GBP673.0 million at 30 June 2021 (31 December
2020: GBP627.5 million).
As noted elsewhere, the largest new facility draw completed in
the period was a corporate loan for EUR60 million (GBP52.2 million)
to support the acquisition of ordinary and preference shares from
Invesco . Otherwise, our normal rolling refinancing programme for
our amortising loans continues with 6 facilities rolled over in the
first six months, generating a net draw of GBP18.9 million.
At the period end, 62% of our facilities are Rouble denominated
and 38% Euro denominated. The weighted average term to maturity of
the facilities is now 3.8 years (31 December 2020: 4.1 years) and
weighted average cost of debt 6.37% (31 December 2020: 5.48%).
The cost of our Rouble debt is hedged by interest rate caps at a
weighted average strike rate of 7.6% (31 December 2020: 7.8%) and a
weighted average term to maturity of 2.8 years (31 December 2020:
3.4 years). Our Euro debt is hedged by interest caps at a weighted
average strike rate of 0.9% (31 December 2020: 0.8%) and a weighted
average term to maturity of 3.7 years (31 December 2020: 3.9
years).
Joint Venture
On 19 April 2021 we issued a circular to shareholders detailing
the proposed purchase of the majority of Invesco's holding in the
Company's ordinary and preference shares. This was achieved using a
joint venture vehicle, Raven Holdings Limited ("RH"), which the
Company entered into with six of the Company's executive directors
and senior management. The Company acquired 50% of the equity in RH
for GBP15.4 million and issued a loan to RH for GBP35.7 million at
6.65% per annum.
The investment was supported by a EUR60 million loan from VTB
Bank, taken out by the Group's intermediate Cypriot holding
company, on a five year term, interest only, at a cost of 5.65%
over Euribor per annum.
RH then acquired 100 million ordinary shares and 32.5 million
preference shares of the Company from Invesco .
The results of RH are equity accounted in the Group accounts,
the share of its profits or losses shown as one line in the income
statement and the carrying value of the investment in RH adjusted
for the Group's share of its net assets and any distributions
received (see note 11 to the condensed financial statements).
At 30 June 2021, the investment in RH had a carrying value on
the balance sheet of GBP7.0 million and has generated a share of
income of GBP2.0 million. In addition, the Group balance sheet
carries the loan due from the joint venture of GBP35.7 million in
non current assets.
All income that is received by the Group by way of servicing the
joint venture loan or via ordinary share distributions must be used
to service and repay the VTB loan. Therefore, whilst the VTB loan
remains outstanding, the surplus income generated by the joint
venture is not available for distribution and is disclosed in the
"Capital and other" column of the income statement.
Net Asset Value
Our net asset value per share receives a positive boost from a
strengthening balance sheet position. This is mostly down to
underlying market dynamics rather than simply foreign currency
influences. In addition to underlying profitability, positive
unrealised currency movements of GBP11.5 million through the income
statement and reserves and a property revaluation gain of GBP27.7
million, net of deferred tax, contribute to an increased net asset
value of GBP264.5 million (31 December 2020: GBP233.7 million).
The acquisition of Invesco 's ordinary shares and the final 2020
distribution by way of tender offer also reduced the number of
shares in issue, all of this combining to increase our diluted net
asset value per share from 40p at 31 December 2020 to 50p at 30
June 2021.
Post Balance Sheet Event
We are pleased to report that, in August, we were successful in
our appeal to the Supreme Court in relation to a legal claim
included in the 2020 Annual Accounts, requiring a provision for a
potential liability of R255 million to be carried in the balance
sheet. The claim made by the receiver of a bankrupt tenant has been
dismissed and the provision will be released in the second half of
the year.
Glyn Hirsch
Chief Executive Officer
30 August 2021
Corporate Governance
Principal Risks and Uncertainties
The principal risks and uncertainties affecting the Group, how
these are mitigated or managed and our approach to risk appetite
are set out in the Risk Report on pages 48 to 52 of the Annual
Report for the year ended 31 December 2020.
Principal Risks
We believe the principal risks faced by the business remain the
same as reported in the 2020 Annual Report. Whilst the threat of
Covid in Russia has by no means diminished, market activity has not
been affected and the Group is trading ahead of expectation with no
real pandemic related impact on the business, operationally or
financially. There has been a switch in some underlying risks
however. As we move to a predominantly Rouble based trading model,
with both our leases and debt portfolio now with significantly
reduced foreign exchange risk, we increase our exposure to Russian
domestic inflationary risks. Inflationary pressures have
precipitated an increase in the CBR key rate in the six months to
30 June 2021 and an increase in the cost of our Rouble denominated
debt. The compensating effects have been upward pressure on market
rental rates, which has improved our property valuations and a
period of relatively stable Rouble exchange rates.
The signing of a corporate loan facility during the period has
also introduced an element of cross collateralisation risk across
our debt portfolio.
The Group's principal risks are grouped into five categories:
Political and Economic; Financial; Property Investment; Russian
Domestic; and Personnel. We have illustrated in the table below how
we believe that these risks have changed in the six months to 30
June 2021.
Risk Change Since Commentary
the Year End
Political No change This has been a relatively benign period for domestic
and Economic and international political risks affecting the business.
The summit between Presidents Putin and Biden was
notable as there has been no negative fall out as
a result. The market still expects additional sanctions
to be introduced by the US Government on various matters
and this continues to prevent any significant strengthening
in the Rouble exchange rate. Domestic focus economically
is on controlling rising inflation. This is a double
edged sword as increasing interest rates are a downside
(see the financial section below) but upward pressure
on market rental levels is translating into improving
property valuations.
-------------- -------------------------------------------------------------
Financial Increased The inflationary driven increase in the CBR key rate,
from 4.25% to 6.5% has increased the cost of debt
on our Rouble denominated finance facilities. This
is mitigated by the interest rate caps we hold, putting
a ceiling on the impact on our profitability. We also
expect some compensating effect on foreign currency
exchange rates the longer interest rates are held
at these higher levels.
The signing of a corporate loan facility during the
period has introduced an element of cross collateralisation
risk across our debt portfolio. Covenant headroom
on the facility is high and as with the majority of
our underlying facilities, we have the ability to
deposit funds temporarily to cure any breaches in
the facility.
-------------- -------------------------------------------------------------
Property Decreased Minimal vacancy in the market and increasing market
Investment rents are having a positive impact on property valuations.
-------------- -------------------------------------------------------------
Russian No change There have been no significant events in the period
Domestic that change this risk other than inflationary risks
covered above.
-------------- -------------------------------------------------------------
Personnel No change The Covid virus risk in Russia has not diminished
in the period and the population has been slow in
the take up of vaccinations. We continue to run appropriate
protocols for our staffs' welfare.
-------------- -------------------------------------------------------------
Going Concern
The Board's approach to going concern is described in note 1 to
the Condensed Financial Statements.
Directors' Responsibility Statement
The Board confirms to the best of its knowledge:
The condensed financial statements have been prepared in
accordance with IAS 34 as adopted by the European Union, and that
the half year report includes a fair review of the information
required by DTR 4.2.7R and DTR 4.2.8R.
The names and functions of the Directors of Raven Property Group
Limited are disclosed in the 2020 Annual Report of the Group.
This responsibility statement was approved by the Board of
Directors on the 30 August 2021 and is signed on its behalf by
Mark Sinclair Colin Smith
Chief Financial Officer Chief Operating Officer
INDEPENT REVIEW REPORT TO RAVEN PROPERTY GROUP LIMITED
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2021 which comprises the Condensed
Unaudited Group Income Statement, the Condensed Unaudited Group
Statement of Comprehensive Income, the Condensed Unaudited Group
Balance Sheet, the Condensed Unaudited Group Statement of Changes
in Equity, the Condensed Unaudited Group Cash Flow Statement and
the related notes 1 to 23 . We have read the other information
contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of
financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2021 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 "Interim Financial
Reporting" as adopted by the European Union and the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK and Ireland) "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim
Financial Reporting" as adopted by the European Union.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly financial report, we are
responsible for expressing to the Company a conclusion on the
condensed set of financial statements in the half-yearly financial
report. Our conclusion is based on procedures that are less
extensive than audit procedures, as described in the Basis for
Conclusion paragraph of this report.
Use of our report
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK and Ireland) "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the
Auditing Practices Board. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
30 August 2021
Condensed Unaudited Group Income Statement
For the six months ended
30 June 2021
Six months
Six months ended
ended 30 30 June
June 2021 2020
Underlying Capital Underlying Capital
Notes earnings & other Total earnings & other Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------ ----------- ----------- --------- ----------- ----------- ---------
Gross revenue 3 70,629 - 70,629 80,627 - 80,627
Property operating expenditure
and cost of sales (18,714) - (18,714) (21,008) - (21,008)
----------- --------- ----------- ---------
Net rental and related income 3 51,915 - 51,915 59,619 - 59,619
----------- ----------- --------- ----------- ----------- ---------
Administrative expenses 4 (9,410) (1,842) (11,252) (9,996) (889) (10,885)
Share-based payments and
other long term incentives 19 (538) (1,353) (1,891) - - -
Foreign currency profit
/ (loss) 8,875 - 8,875 (23,769) - (23,769)
----------- ----------- --------- ----------- ----------- ---------
Operating expenditure (1,073) (3,195) (4,268) (33,765) (889) (34,654)
----------- ----------- --------- ----------- ----------- ---------
Share of (losses) / profits
of joint ventures 11 (72) 2,061 1,989 (77) - (77)
Profit on disposal of joint
venture 11 - 167 167 - - -
Operating profit / (loss)
before profits and losses
on investment property 50,770 (967) 49,803 25,777 (889) 24,888
Unrealised profit / (loss)
on revaluation of investment
property 8 - 29,438 29,438 - (12,103) (12,103)
Unrealised profit / (loss)
on revaluation of investment
property under construction 9 - 80 80 - (360) (360)
----------- ----------- --------- ----------- ----------- ---------
Operating profit / (loss) 3 50,770 28,551 79,321 25,777 (13,352) 12,425
Finance income 5 699 2,912 3,611 1,201 153 1,354
Finance expense 5 (29,882) (3,283) (33,165) (33,941) (6,495) (40,436)
Profit / (loss) before tax 21,587 28,180 49,767 (6,963) (19,694) (26,657)
Tax 6 (4,299) (4,302) (8,601) (3,413) (1,638) (5,051)
-----------
Profit / (loss) for the
period 17,288 23,878 41,166 (10,376) (21,332) (31,708)
=========== =========== ========= =========== =========== =========
Earnings per share: 7
Basic (pence) 7.32 (6.59)
Diluted (pence) 7.26 (6.59)
Underlying earnings per
share: 7
Basic (pence) 3.08 (2.16)
Diluted (pence) 3.05 (2.16)
The total column of this statement represents the Group's Income Statement,
prepared in accordance with IFRS as adopted by the EU. The "underlying
earnings" and "capital and other" columns are both supplied as supplementary
information. Further details of the allocation of items between the
supplementary columns are given in note 7.
All items in the above statement derive from continuing operations.
All income is attributable to the equity holders of the parent
company. There are no non-controlling interests.
The accompanying notes are an integral part of this statement.
Condensed Unaudited Group Statement Of Comprehensive
Income
For the six months ended 30 June 2021
Six months
Six months ended ended
30 June 2021 30 June 2020
GBP'000 GBP'000
Profit / (loss) for the period 41,166 (31,708)
Other comprehensive income, net of
tax
Items to be reclassified to profit or loss in subsequent
periods:
Foreign currency translation on consolidation 2,632 (54,783)
Total comprehensive income for the period,
net of tax 43,798 (86,491)
================= =============
All income is attributable to the equity holders of the parent company. There
are no non-controlling interests.
The accompanying notes are an integral part of this
statement.
Condensed Unaudited Group Balance Sheet
As at 30 June 2021
30 June 31 December
2021 2020 *
Notes GBP'000 GBP'000
Non-current assets
Investment property 8 1,121,516 1,089,768
Investment property under construction 9 27,116 26,952
Plant and equipment 4,809 4,673
Investment in joint ventures 11 6,976 36
Other receivables 12 50,048 14,440
Derivative financial instruments 6,169 2,541
Deferred tax assets 17,654 17,675
1,234,288 1,156,085
----------- ------------
Current assets
Inventory 665 532
Trade and other receivables 18,371 19,381
Derivative financial instruments 16 -
Cash and short term deposits 53,082 53,122
72,134 73,035
----------- ------------
Total assets 1,306,422 1,229,120
----------- ------------
Current liabilities
Trade and other payables 35,130 39,189
Interest bearing loans and borrowings 13 25,973 29,609
61,103 68,798
----------- ------------
Non-current liabilities
Interest bearing loans and borrowings 13 647,024 597,843
Preference shares 14 252,349 251,506
Other payables 14,019 15,255
Deferred tax liabilities 67,430 62,028
980,822 926,632
----------- ------------
Total liabilities 1,041,925 995,430
----------- ------------
Net assets 264,497 233,690
=========== ============
Equity
Share capital 16 5,665 5,914
Share premium 71,725 79,520
Own shares held 17 (10,846) (6,351)
Capital reserve (165,189) (193,042)
Translation reserve (115,847) (118,479)
Retained earnings 478,989 466,128
Total equity 264,497 233,690
=========== ============
Net asset value per share (pence): 18
Basic 51 41
Diluted 50 40
* Restated to reflect a reallocation of balances between non-current assets
and current assets (see note 1)
The accompanying notes are an integral part of this statement.
Condensed Unaudited Group Statement Of Changes
In Equity
For the six months ended 30 June
2021
Share Share Own Shares Convertible Capital Translation Retained
Preference
Capital Premium Held Shares Reserve Reserve Earnings Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2020 4,898 51,463 (4,582) 11,212 (234,519) 28,188 509,138 365,798
Loss for the
period - - - - - - (31,708) (31,708)
Other
comprehensive
income - - - - - (54,783) - (54,783)
Total
comprehensive
income for
the
period - - - - - (54,783) (31,708) (86,491)
-------- -------- ----------- ------------ ---------- ------------ --------- ---------
Transfer in
respect
of capital
losses - - - - (10,335) - 10,335 -
At 30 June
2020 4,898 51,463 (4,582) 11,212 (244,854) (26,595) 487,765 279,307
======== ======== =========== ============ ========== ============ ========= =========
At 1 January
2021 5,914 79,520 (6,351) - (193,042) (118,479) 466,128 233,690
Profit for the
period - - - - - - 41,166 41,166
Other
comprehensive
income - - - - - 2,632 - 2,632
Total
comprehensive
income for
the
period - - - - - 2,632 41,166 43,798
-------- -------- ----------- ------------ ---------- ------------ --------- ---------
Ordinary 16
shares /
cancelled 17 (249) (7,795) 1,134 - - - (6,910)
Group's share
of
own shares
purchased
by joint
venture 17 - - (10,800) - - - - (10,800)
Own shares
allocated 17 - - 5,171 - - - (1,805) 3,366
Share-based
payments 19 - - - - - - 1,353 1,353
Transfer in
respect
of capital
profits - - - - 27,853 - (27,853) -
At 30 June
2021 5,665 71,725 (10,846) - (165,189) (115,847) 478,989 264,497
======== ======== =========== ============ ========== ============ ========= =========
The accompanying notes are an integral part
of this statement.
Condensed Unaudited Group Cash Flow
Statement
For the six months ended 30 June
2021
Six months Six months
ended ended
30 June 2021 30 June 2020
Notes GBP'000 GBP'000
Cash flows from operating activities
Profit / (loss) before tax 49,767 (26,657)
Adjustments for:
Depreciation 4 789 550
Bad debts 4 - (2)
Share of (profits) / losses of joint
ventures 11 (1,989) 77
Profit on disposal of joint venture 11 (167) -
Profit on disposal of plant and equipment 4 (87) -
Finance income 5 (3,611) (1,354)
Finance expense 5 33,165 40,436
Transaction costs incurred 2 / 4 1,254 -
(Profit) / loss on revaluation of
investment property 8 (29,438) 12,103
(Profit) / loss on revaluation of investment
property under construction 9 (80) 360
Foreign exchange (profit) / loss (8,875) 23,769
Non-cash element of share-based payments and
other long term incentives 19 1,593 -
------------- -------------
42,321 49,282
Changes in operating working capital
(Increase) / decrease in operating
receivables (202) 4,047
Increase in other operating current
assets (133) (106)
Decrease in operating payables (1,553) (6,028)
------------- -------------
40,433 47,195
Tax paid (3,252) (5,843)
Net cash generated from operating
activities 37,181 41,352
============= =============
Cash flows from investing activities
Payments for property improvements (3,085) (4,719)
Purchase of plant and equipment (861) (205)
Proceeds on disposal of plant and
equipment 153
Investment in joint ventures 11 (15,379) -
Proceeds on disposal of joint venture 11 126 -
11 /
Loan advanced to joint venture 12 (35,731) -
Loans repaid 350 -
Interest received 692 1,185
Net cash used in investing activities (53,735) (3,739)
============= =============
Cash flows from financing activities
Proceeds from long term borrowings 151,558 45,232
Repayment of long term borrowings (80,457) (8,544)
Loan amortisation (12,332) (16,150)
Bank borrowing costs paid (19,908) (24,136)
16 /
Ordinary shares purchased 17 (7,247) -
Transaction costs incurred 2 / 4 (1,144) -
Dividends paid on preference shares (12,738) (5,807)
Dividends paid on convertible preference
shares - (6,364)
Proceeds from disposal of derivative
financial instruments - 131
Premium paid for derivative financial
instruments (1,354) (2,203)
Net cash generated from / (used in) financing
activities 16,378 (17,841)
============= =============
Net (decrease) / increase in cash and cash
equivalents (176) 19,772
Opening cash and cash equivalents 53,122 68,138
Effect of foreign exchange rate changes 136 (2,927)
Closing cash and cash equivalents 53,082 84,983
============= =============
The accompanying notes are an integral part
of this statement.
Notes to the Condensed Unaudited Group Financial Statements
For the six months ended 30 June 2021
1. Basis of accounting
Basis of preparation
The condensed unaudited financial statements have been prepared using accounting
policies consistent with International Financial Reporting Standards adopted
for use in the European Union ("IFRS") and have been prepared in accordance
with International Accounting Standard 34 Interim Financial Reporting.
The condensed financial statements do not include all the information and
disclosures required in annual financial statements and should be read in
conjunction with the Group's financial statements for the year ended 31
December 2020. The annual financial statements of the Group are prepared
in accordance with IFRS.
Significant accounting policies
The accounting policies adopted in the preparation of the condensed financial
statements are consistent with those followed in the preparation of the
Group's financial statements for the year ended 31 December 2020, except
for the adoption of new standards that became effective as of 1 January
2021. The Group has not adopted early any standard, interpretation or amendment
that has been issued but is not yet effective.
Several amendments and interpretations apply for the first time in 2021,
but do not have an impact on the condensed financial statements of the Group.
Going concern
The financial position of the Group, its cash flows, liquidity position,
borrowings and the impact of Covid-19 are described in the Chief Executive's
Review, the Corporate Governance section of this Interim Report and the
notes to these condensed financial statements. Further disclosures regarding
borrowings are provided in note 13 to the condensed financial statements.
In assessing the Group's ability to continue to operate as a going concern,
the Board has examined the latest working capital report from the date of
signing this Interim Report through to 31 December 2022.
Portfolio occupancy is increasing and stands at 96% today. Market rents
are also increasing, supporting higher property valuations. There have been
no rent defaults throughout the period since the beginning of Covid-19,
with minimal rental deferrals required at the outset of the pandemic in
the second quarter of 2020. All tenant rental obligations have been met
in the six months to 30 June 2021 and this is expected to continue in the
period of going concern assessment. The Board has examined the position
of leases which require renegotiation during the period of the going concern
assessment, noting that the lease maturity profile in that period is not
significant.
The Group has seventeen asset secured finance facilities. These are of varying
maturity dates with limited cross collateralisation between the facilities.
The normal term of these facilities is for five years with an amortisation
period of between fifteen to thirty years. The Group's business model incorporates
a revolving programme of refinancing of this debt portfolio, generating
additional annual funds equating to, at least, the annual debt amortisation
cost. Facilities are refinanced every four years on average. The Group also
has the ability to deposit funds to cure breaches in the facilities.
The Group entered into a corporate facility for EUR60 million in April to
finance the acquisition of the Company's listed instruments from its largest
ordinary shareholder. This facility increases the cross collateralisation
risk for the Group and this has been taken into account in the Board's assessment.
At 30 June 2021, the Group's balance sheet has strengthened with investment
property valuations increasing to GBP1,121.5 million (31 December 2020:
GBP1,089.8 million) and net assets to GBP264.5 million (31 December 2020:
GBP233.7 million). Cash and short term deposits of GBP53.1 million are held
(31 December 2020: GBP53.1 million). The secured loan to investment property
valuation ratio at the period end is 58% (31 December 2020: 56%), as compared
to loan to value covenants which average 70% across the debt portfolio.
The loan facilities are being constantly amortised, supporting ongoing covenant
compliance and preventing total loan balances increasing significantly as
a result of the revolving refinancing programme.
In carrying out its assessment the Board considered plausible downsides
to cash flow assumptions for the period reviewed, including consideration
of any significant facility maturities arising during the going concern
assessment period, noting no such instances in the period to 31 December
2022.
The Board has also considered the potential impact of a continuing increase
in CBR key rates in an environment where Rouble exchange rates remain weak
as a result of additional sanction fears and the potential effect these
have on cash flows and banking covenants.
Cash flows, supported by high occupancy and the revolving refinancing programme,
ensure the Group's continuing liquidity in all modelled scenarios and the
Group's interest rate caps mitigate a substantial amount of negative impact
on debt service covenants of existing secured bank facilities.
Further, the board has evaluated the impact of controllable mitigations
such as reduction of capital expenditure and altering the timing of cash
outflows which would further reduce any adverse impact on the Group's forecast
cash flows.
Having made appropriate enquiries and examining the latest working capital
report, including consideration of the principal risks facing the business
and their potential impact on the Group's liquidity, the Board believes
it is appropriate to prepare the condensed financial statements on a going
concern basis.
Foreign currency
The results and financial position of all the Group entities that a have
functional currency different from the Group's presentation currency (Sterling)
are translated into the presentation currency using the following rates:
30 June 31 December
2021 2020
Balance Sheet
- Roubles 100.1994 100.0425
- Euro 1.1624 1.1032
30 June 30 June
2021 2020
Income Statement *
- Roubles 103.1110 87.3027
- Euro 1.1516 1.1441
* These are the average rates for the six months ended 30 June 2020 and
2021, which are used unless this does not approximate the rates ruling at
the dates of the relevant transactions in which case the item of income
or expenditure is translated at the transaction date rate.
Prior period amounts
Comparative amounts at 31 December 2020 have been restated to reflect a
reallocation to reduce current assets, trade and other receivables, by GBP11.6
million and increase non-current assets, other receivables, by the same
amount, reflecting the allocation of lease receivables calculated in accordance
with IFRS 16 Leases. There is no impact on the loss (or loss per share)
for the prior period.
2. Purchase, and placing, of ordinary shares and preference shares from
Invesco Asset Management, related financing and joint venture arrangements
On 11 May 2021 the agreements reached with Invesco Asset Management ("Invesco")
for the sale by Invesco of their holding in the Company's ordinary shares
and preference shares completed. The sale was made of various constituent
parts:
* the purchase by Raven Holdings Limited, a newly
formed joint venture, of 100,000,000 ordinary shares
and 32,500,000 preference shares and the related
joint venture arrangements;
* the purchase by the Company of 9,850,350 ordinary
shares;
* the placing by Singer Capital Markets, on behalf of
the Company, of the remaining 46,824,074 ordinary
shares and 31,071,616 preference shares held by
Invesco with existing and new investors in the
Company; and
* the related financing of the purchase by the Company
and its investment in Raven Holdings Limited by VTB
Bank ("VTB").
The sale prices for the ordinary shares and preference shares was in each
case 21.6p per share and 90.8p per share, respectively.
(a) Purchase by Raven Holdings Limited and related joint venture arrangements
On 19 April 2021 the Company entered into a new 50 : 50 joint venture, Raven
Holdings Limited (see note 11), with a company owned by the Company's executive
directors and certain senior managers ("Manco"). The joint venture was established
solely to effect the purchase of 100,000,000 ordinary shares and 32,500,000
preference shares from Invesco, for an aggregate consideration of GBP51.1
million. The Company made a cash investment of GBP15.4 million into the
joint venture and the Company's executive directors and Manco contributed
53,030,301 ordinary shares in Raven Property Group in exchange for their
50% interest in the joint venture. The balance of the purchase consideration
due to Invesco was lent to Raven Holdings Limited by a wholly owned subsidiary
of the Company. Details of the loan receivable from Raven Holdings Limited
are provided in note 12. The joint venture is for an initial term of 5 years
with an option for the Company and Manco to agree to extend the term.
In accordance with the joint venture agreement, whilst the loan between
the Group and Raven Holdings Limited remains outstanding all income arising
in the joint venture from the ordinary shares and preference shares purchased
from Invesco will be applied for the benefit of the Group and used to pay
interest due on the loan, make repayments of the loan or to be distributed
to the Company. Whereas all income derived from the ordinary shares contributed
by Manco will be for the benefit of Manco and distributed to Manco.
Raven Holdings Limited is a related party of the Company. See note 11 for
further details of charges made by the Group to Raven Holdings Limited and
the Group's other joint venture.
In applying the Group's accounting policies to its investment in Raven Holdings
Limited, management had to exercise judgement in assessing whether the Group
controlled Raven Holdings Limited, and thus it was considered a subsidiary
of the Group, or whether it was a joint venture or associate of the Group.
In accordance with IFRS 10 Consolidated Financial Statements, management
considered whether the Group had power over Raven Holdings Limited, is exposed
to variable returns from its involvement in Raven Holdings Limited and was
able to use its power to influence those returns.
Having considered the terms of the joint venture arrangements and in particular
the provisions of the joint venture agreement and the terms of the loan
agreement it was concluded that the Company and Manco have joint control
of Raven Holdings Limited and it is thus a joint venture of the Group.
(b) Purchase of ordinary shares by the Company
The Company purchased 9,850,350 ordinary shares for a total consideration
of GBP2.1 million. All of the ordinary shares purchased were cancelled.
See note 16.
(c) Financing arrangements with VTB
The investment by the Company in Raven Holdings Limited, together with the
related loan financing provided to Raven Holdings Limited, and the Company's
purchase of ordinary shares from Invesco was financed by a EUR60 million
debt facility provided by VTB to one of the Company's wholly owned subsidiaries.
The loan was drawn down in full on 29 April 2021. It is for a five year
term and bears interest at 5.65% over EURIBOR.
In accordance with the VTB facility documents, VTB has been granted security
over certain assets of the Group and Raven Holdings Limited. This includes
secondary security over assets already financed by VTB, where it holds primary
mortgage security, a charge over the ordinary shares and preference shares
purchased by Raven Holdings Limited from Invesco (see note 11) and a right
of assignment of the loan provided by the Group to Raven Holdings Limited
(see note 12).
The amount due to VTB is included within interest bearing loans and borrowings
as set out in note 13.
3. Segmental information
The Group has three reportable segments, which are managed and report independently
to the Board of Directors.
These comprise:
Property investment - acquire, develop and lease commercial property in Russia;
Roslogistics - provision of warehousing, transport, customs brokerage and
related services in Russia; and
Raven Mount - sale of residential property in the UK.
Central comprises the costs related to the corporate headquarters, IT infrastructure
and other activities that are not allocated to any of the Group's reporting
segments and, following the formation of the Raven Holdings Limited joint
venture (see notes 2 and 11), includes the Group's share of profits or losses
of Raven Holdings Limited. During the period management reassessed the allocation
of certain costs between the property investment reporting segment and central
and the comparative financial information has been restated accordingly.
(a) Segmental information for the six months
ended and as at 30 June 2021
For the six months
ended
30 June 2021 Property Raven Segment
Investment Roslogistics Mount Total Central Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gross revenue 64,896 5,702 31 70,629 - 70,629
Operating costs / cost
of
sales (15,377) (3,354) 17 (18,714) - (18,714)
Net rental and related
income 49,519 2,348 48 51,915 - 51,915
----------- ------------- -------------- ------------- -------------- ------------
Administrative
expenses
Running general and
administration
expenses (4,690) (752) (142) (5,584) (3,625) (9,209)
Transaction costs - - - - (1,254) (1,254)
Depreciation (519) (175) - (694) (95) (789)
Share-based payments
and
other long term
incentives (563) - - (563) (1,328) (1,891)
Foreign currency
profits
/ (losses) 8,877 1 (3) 8,875 - 8,875
----------- ------------- -------------- ------------- -------------- ------------
52,624 1,422 (97) 53,949 (6,302) 47,647
Unrealised profit on
revaluation
of investment
property 29,438 - - 29,438 - 29,438
Unrealised profit on
revaluation
of investment
property under
construction 80 - - 80 - 80
Share of (losses) /
profits
of joint ventures - (72) - (72) 2,061 1,989
Profit on disposal of
joint
venture - 167 - 167 - 167
----------- -------------- --------------
Segment profit /
(loss) 82,142 1,517 (97) 83,562 (4,241) 79,321
=========== ============= ============== ============= ============== ============
Finance income 3,611
Finance expense (33,165)
Profit before tax 49,767
============
As at 30 June 2021 Property Raven
Investment Roslogistics Mount Total
GBP'000 GBP'000 GBP'000 GBP'000
Assets
Investment property 1,121,516 - - 1,121,516
Investment property under construction 27,116 - - 27,116
Inventory - - 665 665
Cash and short term
deposits 51,022 1,087 973 53,082
-------------- ------------- --------------
Segment assets 1,199,654 1,087 1,638 1,202,379
============== ============= ============== ============
Other non-current
assets 85,656
Other current assets 18,387
Total assets 1,306,422
============
Segment liabilities
Interest bearing loans
and
borrowings 672,997 - - 672,997
============== ============= ============== ============
Capital expenditure
Payments for property
improvements 3,085 - - 3,085
3,085 - - 3,085
============== ============= ============== ============
(b) Segmental information for the six months
ended and as at 30 June 2020
Property Raven Segment
Investment Roslogistics Mount Total Central Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gross revenue 73,542 7,084 1 80,627 - 80,627
Operating costs / cost
of
sales (16,740) (4,268) - (21,008) - (21,008)
Net rental and related
income 56,802 2,816 1 59,619 - 59,619
----------- ------------- -------------- ------------- -------------- ------------
Administrative
expenses
Running general and
administration
expenses (4,657) (861) (126) (5,644) (4,352) (9,996)
Abortive project costs - - - - (339) (339)
Depreciation (383) (167) - (550) - (550)
Foreign currency
losses (23,767) (2) - (23,769) - (23,769)
----------- ------------- -------------- ------------- -------------- ------------
27,995 1,786 (125) 29,656 (4,691) 24,965
Unrealised loss on
revaluation
of investment
property (12,103) - - (12,103) - (12,103)
Unrealised loss on
revaluation
of investment
property under
construction (360) - - (360) - (360)
Share of losses of
joint
ventures - (77) - (77) - (77)
Segment profit /
(loss) 15,532 1,709 (125) 17,116 (4,691) 12,425
=========== ============= ============== ============= ============== ============
Finance income 1,354
Finance expense (40,436)
Loss before tax (26,657)
============
For the six months ended 30 June
2020 Property Raven
Investment Roslogistics Mount Total
GBP'000 GBP'000 GBP'000 GBP'000
Capital expenditure
Payments for property improvements 4,719 - - 4,719
4,719 - - 4,719
============== ============= ============== ============
(c) Segmental information as at
31 December 2020
Property Raven
Investment Roslogistics Mount Total
GBP'000 GBP'000 GBP'000 GBP'000
Assets
Investment property 1,089,768 - - 1,089,768
Investment property under
construction 26,952 - - 26,952
Investment in joint
ventures - 36 - 36
Inventory - - 532 532
Cash and short term
deposits 51,323 622 1,177 53,122
Segment assets 1,168,043 658 1,709 1,170,410
============== ============= ============== ============
Other non-current
assets 27,763
Other current assets 30,947
Total assets 1,229,120
============
Segment liabilities
Interest bearing loans
and
borrowings 627,452 - - 627,452
============== ============= ============== ============
Capital expenditure
Property improvements 14,257 - - 14,257
14,257 - - 14,257
============== ============= ============== ============
4. Administrative
expenses Six months Six months
ended ended
30 June 30 June
2021 2020
GBP'000 GBP'000
Employment costs 5,518 5,255
Directors' remuneration 1,256 1,247
Bad debts - (2)
Office costs 456 718
IT and communications 662 660
Insurance 128 97
Travel costs 44 404
Auditors' remuneration 352 575
Legal and professional 574 662
Profit on disposal of plant and
equipment (87) -
Broker, PR and analyst costs 191 226
Transaction costs incurred re Invesco transaction and Raven
Holdings arrangements (see notes 2 and 11) 1,254 -
Aborted project costs - 339
Depreciation 789 550
Other administrative
expenses 115 154
11,252 10,885
============== ============
5. Finance income and
expense
Six months Six months
ended ended
30 June 30 June
2021 2020
Finance income GBP'000 GBP'000
Total interest income on financial assets
not at fair value through profit or loss
Income from cash and short term
deposits 692 1,186
Interest receivable
from
joint ventures 414 15
Other finance income
Change in fair value of open interest rate
derivative financial instruments 2,505 153
Finance income 3,611 1,354
============== ============
Finance expense
Interest expense on loans and borrowings
measured at amortised cost 20,074 23,224
Interest expense on preference
shares 13,101 6,192
Interest expense on convertible
preference shares - 9,987
Other interest expense
* (316) (642)
-------------- ------------
Total interest expense on financial liabilities
not at fair value through profit or loss 32,859 38,761
Change in fair value of open interest rate
derivative financial instruments 306 1,675
Finance expense 33,165 40,436
============== ============
* comparative restated to align presentation of finance income and finance
expense with 2020 Annual Report
6. Taxation Six months Six months
ended ended
30 June 30 June
2021 2020
GBP'000 GBP'000
The tax expense for the period
comprises:
Current taxation 3,200 2,930
Deferred taxation
On the origination and reversal of temporary
differences 5,621 1,391
On unrealised foreign exchange movements
in loans (220) 730
Tax charge 8,601 5,051
-------------- ------------
The tax charge for the period can be reconciled
to the profit per the Income Statement as follows:
Six months Six months
ended ended
30 June 30 June
2021 2020
GBP'000 GBP'000
Profit / (loss) before
tax 49,767 (26,657)
-------------- ------------
Tax at the Russian corporate tax
rate of 20% 9,953 (5,331)
Tax effect of financing
arrangements 1,781 1,548
Tax effect of fair value movement on open interest
rate derivative financial instruments (228) 143
Tax effect of non deductible
preference
share interest 2,620 3,236
Tax effect of foreign exchange
movements (1,396) 3,689
Movement in provision for uncertain tax
positions (864) (1,779)
Tax effect of other income not subject to
tax and non-deductible expenses 1,016 546
Tax effect of property depreciation
on revaluations (4,148) 1,021
Tax on dividends and other inter
company gains 687 1,105
Net movement in unprovided deferred tax
assets (820) 873
8,601 5,051
============== ============
The tax effect of financing arrangements reflects the impact of intra group
funding in each jurisdiction. Foreign exchange movements on intra group financing
are taxable or tax deductible in Russia but not in other jurisdictions. In
accordance with its accounting policy, the Group is required to estimate its
provision for uncertain tax positions and the movement in the provision is
reflected above. Other income and expenditure not subject to tax arises in
Guernsey.
7. Earnings measures
In addition to reporting IFRS earnings the Group also reports its own underlying
earnings measure. The Directors consider underlying earnings to be a key performance
measure, as this is the measure used by Management to assess the return on
holding investment assets for the long term and the Group's ability to declare
covered distributions. As a consequence the underlying earnings measure excludes
investment property revaluations, gains or losses on the disposal of investment
property, gains and losses on derivative financial instruments, share-based
payments and other long term incentives (to the extent not settled in cash),
the accretion of premiums payable on redemption of preference shares and convertible
preference shares, depreciation, profits and losses of the Raven Holdings
Limited joint venture including related interest income received and financing
costs, and amortisation of loan origination costs (as these represent non-cash
expenses that do not affect the ability to declare covered distributions);
and material non-recurring items, together with any related tax.
The Group is also required to report Headline earnings per share as required
by the listing requirements of the Johannesburg Stock Exchange.
Six months Six months
ended ended
30 June 30 June
The calculation of basic and diluted earnings
per share is based on the following data: 2021 2020
GBP'000 GBP'000 GBP'000 GBP'000
Earnings
Net profit / (loss) for the period
prepared under IFRS 41,166 (31,708)
Adjustments to arrive at underlying
earnings:
Administrative
expenses
Depreciation 789 550
Less depreciation related to office
leases (201) -
Aborted project costs - 339
Transaction costs
incurred 1,254 -
-------------- --------------
1,842 889
Share-based payments and other long term
incentives 1,353 -
Share of profits of joint ventures (2,061) -
Profit on disposal of joint venture (167) -
Unrealised (profit) / loss on revaluation
of investment property (29,438) 12,103
Unrealised (profit) / loss on revaluation
of investment property under construction (80) 360
Finance income
Interest receivable from Raven Holdings
Limited (407) -
Change in fair value of open interest rate
derivative financial instruments (2,505) (153)
-------------- --------------
(2,912) (153)
Finance expense
Change in fair value of open interest rate
derivative financial instruments 306 1,675
Premium on redemption of preference shares
and amortisation of issue costs 203 181
Premium on redemption of convertible preference
shares and amortisation of issue costs - 3,622
Interest expense on loan related to Invesco
/ Raven Holdings arrangements 547 -
Amortisation of loan origination
costs 2,227 1,017
-------------- --------------
3,283 6,495
Tax
Movement on deferred tax arising on depreciation
and revaluation of investment property 4,364 856
Movement on deferred tax arising on open
interest rate derivative financial instruments 211 -
Tax on unrealised foreign exchange
movements in loans (273) 782
-------------- --------------
4,302 1,638
Underlying earnings 17,288 (10,376)
============= ============
Six months Six months
ended ended
30 June 30 June
2021 2020
Calculation of Headline earnings GBP'000 GBP'000
Net profit / (loss) for the period
prepared under IFRS 41,166 (31,708)
Adjustments to arrive at Headline
earnings:
Unrealised (profit) / loss on revaluation
of investment property (29,438) 12,103
Unrealised (profit) / loss on revaluation
of investment property under construction (80) 360
Movement on deferred tax arising on revaluation
of investment property 1,832 (2,128)
Headline earnings 13,480 (21,373)
------------- ------------
30 June 30 June
2021 2020
Weighted Weighted
average average
Earnings shares EPS Earnings shares EPS
IFRS GBP'000 No. '000 Pence GBP'000 No. '000 Pence
Basic 41,166 562,051 7.32 (31,708) 480,828 (6.59)
Effect of dilutive
potential
ordinary shares:
Five Year Performance
Plan
(note 19) - 5,046 - -
Convertible preference
shares
(note 15) - - - -
Diluted 41,166 567,097 7.26 (31,708) 480,828 (6.59)
----------- ------------- ------------- --------------
30 June 30 June
2021 2020
Weighted Weighted
average average
Earnings shares EPS Earnings shares EPS
Underlying earnings GBP'000 No. '000 Pence GBP'000 No. '000 Pence
Basic 17,288 562,051 3.08 (10,376) 480,828 (2.16)
Effect of dilutive
potential
ordinary shares:
Five Year Performance
Plan
(note 19) - 5,046 - -
Convertible preference
shares
(note 15) - - - -
Diluted 17,289 567,097 3.05 (10,376) 480,828 (2.16)
----------- ------------- ------------- --------------
30 June 30 June
2021 2020
Weighted Weighted
average average
Earnings shares EPS Earnings shares EPS
Headline earnings GBP'000 No. '000 Pence GBP'000 No. '000 Pence
Basic 13,480 562,051 2.40 (21,373) 480,828 (4.45)
Effect of dilutive
potential
ordinary shares
Five Year Performance
Plan
(note 19) - 5,046 - -
Convertible preference
shares
(note 15) - - - -
Diluted 13,480 567,097 2.38 (21,373) 480,828 (4.45)
----------- ------------- ------------- --------------
8. Investment
property
Asset class Logistics Logistics Logistics Office 30 June
Location Moscow St Petersburg Regions St Petersburg 2021
Level Level
Fair value hierarchy * 3 Level 3 3 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Market value at 1 January 2021 763,298 142,943 140,428 55,849 1,102,518
Property improvements 2,920 15 675 219 3,829
Unrealised profit / (loss) on
revaluation 22,986 5,804 2,244 (1,316) 29,718
On translation to presentation
currency (1,116) (224) (199) (82) (1,621)
------------- -------------- ------------- -------------- ------------
Market value at 30 June 2021 788,088 148,538 143,148 54,670 1,134,444
Tenant incentives and contracted
rent uplift balances (9,389) (2,691) (597) (1,146) (13,823)
Head lease obligations 895 - - - 895
-------------
Carrying value at 30
June
2021 779,594 145,847 142,551 53,524 1,121,516
------------- -------------- ------------- -------------- ------------
Revaluation movement in the period
ended 30 June 2021
Gross revaluation 22,986 5,804 2,244 (1,316) 29,718
Movements of tenant incentives and
contracted rent uplift balances (526) 373 1 (20) (172)
Impact of translation to
presentation
currency (46) (59) (1) (2) (108)
------------- -------------- ------------- --------------
Revaluation reported in the
Income
Statement 22,414 6,118 2,244 (1,338) 29,438
------------- -------------- ------------- -------------- ------------
Asset class Logistics Logistics Logistics Office 31 December
Location Moscow St Petersburg Regions St Petersburg 2020
Level Level
Fair value hierarchy * 3 Level 3 3 Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Market value at 1 January 2020 945,326 171,990 171,360 65,786 1,354,462
Property improvements 10,717 (17) 914 615 12,229
Unrealised (loss) / profit on
revaluation (13,416) 3,460 596 1,923 (7,437)
On translation to
presentation
currency (179,329) (32,490) (32,442) (12,475) (256,736)
------------- -------------- -------------
Market value at 31 December 2020 763,298 142,943 140,428 55,849 1,102,518
Tenant incentives and contracted
rent uplift balances (8,863) (3,064) (598) (1,126) (13,651)
Head lease obligations 901 - - - 901
Carrying value at 31 December 2020 755,336 139,879 139,830 54,723 1,089,768
------------- -------------- ------------- -------------- ------------
Revaluation movement in the year
ended 31 December 2020
Gross revaluation (13,416) 3,460 596 1,923 (7,437)
Movements of tenant incentives and
contracted rent uplift balances 3,168 728 569 (115) 4,350
Impact of translation to
presentation
currency (1,360) (194) (211) (191) (1,956)
Revaluation reported in the Income
Statement (11,608) 3,994 954 1,617 (5,043)
------------- -------------- ------------- -------------- ------------
*Classified in accordance with the fair value hierarchy. There were no transfers
between fair value hierarchy in 2020 or 2021.
At 30 June 2021 the Group has pledged investment property with a value of
GBP1,134 million (31 December 2020: GBP1,103 million) to secure banking facilities
granted to the Group (note 13).
9. Investment property under
construction
Asset class Assets under construction Land Bank 30 June
Location Moscow Regions Regions 2021
Level
Fair value hierarchy * 3 Level 3 Sub-total Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Market value at 1
January
2021 16,976 7,477 24,453 2,202 26,655
Costs incurred - 1 1 - 1
On translation to presentation
currency (27) (12) (39) (3) (42)
Unrealised profit on
revaluation 43 37 80 - 80
------------- -------------- ------------- --------------
Market value at 30 June 2021 16,992 7,503 24,495 2,199 26,694
Head lease
obligations 422 - 422 - 422
------------- -------------- ------------- --------------
Carrying value at 30
June
2021 17,414 7,503 24,917 2,199 27,116
------------- -------------- ------------- -------------- ------------
Asset class Assets under construction Land Bank 31 December
Location Moscow Regions Regions 2020
Level
Fair value hierarchy * 3 Level 3 Sub-total Level 3 Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Market value at 1 January 2020 21,625 9,146 30,771 2,714 33,485
Costs incurred 4 - 4 - 4
On translation to presentation
currency (4,084) (1,727) (5,811) (512) (6,323)
Unrealised (loss) / profit on
revaluation (569) 58 (511) - (511)
Market value at 31 December 2020 16,976 7,477 24,453 2,202 26,655
Head lease
obligations 297 - 297 - 297
Carrying value at 31 December 2020 17,273 7,477 24,750 2,202 26,952
------------- -------------- ------------- -------------- ------------
*Classified in accordance with the fair value hierarchy. There were no transfers
between fair value hierarchy in 2020 or 2021.
No borrowing costs were capitalised in the period (31 December 2020: GBPnil).
At 30 June 2021 the Group has pledged investment property under construction
with a value of GBP24.5 million (31 December 2020: GBP24.5 million) to secure
banking facilities granted to the Group (note 13).
10. Valuation assumptions and key inputs
In preparing their valuations at 30 June 2021, JLL have specifically referred
to the uncertainty caused in the Russian real estate market by Covid-19.
JLL comment that there is some ongoing uncertainty over future economic performance
due to the unclear path of the pandemic. Activity is robust in both the occupational
and investment markets. However, the future uncertainty does mean that market
values can change frequently in current conditions.
Carrying amount Range
30 June 31 December Valuation 30 June 31 December
2021 2020 technique Input 2021 2020
GBP'000 GBP'000
Completed investment property
Moscow - Discounted Rub 4,100 to Rub 3,700 to
Logistics 779,594 755,336 cash flow ERV per sqm Rub 5,400 Rub 5,200
ERV growth 5% to 6% 5% to 6%
Discount 8.5% to 8.5% to
rate 11.6% 11.7%
Exit cap
rate 10% to 11% 10% to 11%
Vacancy rate 0% to 33% 0% to 25%
Passing rent
per sqm $103 to $165 $103 to $165
Passing rent Rub 3,569 to Rub 3,308 to
per sqm Rub 9,880 Rub 9,538
Passing rent
per sqm - EUR 131
St Petersburg Rub 4,000 to
- Logistics 145,847 139,879 Discounted ERV per sqm Rub 4,400 Rub 4,150
cash flow ERV growth 5% 5% to 6%
Discount 12.3% to 12.2% to
rate 12.5% 12.3%
Exit cap
rate 11.25% 11.25%
Vacancy rate 0% to 15% 0% to 15%
Passing rent
per sqm $130 to $145 $126 to $141
Passing rent Rub 3,623 to Rub 3,555 to
per sqm Rub 5,001 Rub 5,333
Regional - Rub 4,000 to Rub 3,800 to
Logistics 142,551 139,830 Discounted ERV per sqm Rub 4,250 Rub 4,200
cash flow ERV growth 5% 5% to 6%
Discount 10.75% to 10.75% to
rate 12.20% 12.20%
Exit cap
rate 11.25% 11.25%
Vacancy rate 0% to 5% 0% to 4%
Passing rent Rub 3,000 to Rub 3,000 to
per sqm Rub 21,153 Rub 21,433
Rub 12,000 Rub 12,000
St Petersburg to to
- Office 53,524 54,723 Discounted ERV per sqm Rub 12,500 Rub 12,500
cash flow ERV growth 2% 2% to 4%
Discount 11.75% to 11.75% to
rate 12.00% 12.00%
Exit cap 10.75% to 10.75% to
rate 11.75% 11.75%
Vacancy rate 0% to 5% 0% to 5%
Passing rent Rub 9,091 to Rub 8,340 to
per sqm Rub 24,155 Rub 24,155
Range
Other key
information Description 30 June 31 December
2021 2020
Moscow -
Logistics Land plot ratio 34% - 65% 34% - 65%
3 to 16 3 to 16
Age of building years years
Outstanding costs
(GBP'000) 2,963 2,333
St Petersburg
- Logistics Land plot ratio 48% - 57% 48% - 57%
6 to 13 6 to 12
Age of building years years
Outstanding costs
(GBP'000) 13 12
Regional -
Logistics Land plot ratio 48% - 61% 48% - 61%
Age of building 11 years 11 years
Outstanding costs
(GBP'000) 748 455
St Petersburg
- Office Land plot ratio 148% to 496% 148% to 496%
12 to 15 12 to 14
Age of building years years
Outstanding costs
(GBP'000) 214 55
Carrying amount Range
Investment 30 June 31 December
property under 2021 2020 Valuation 30 June 31 December
construction GBP'000 GBP'000 technique Inputs 2021 2020
Rub 30m - Rub 30.1m -
Moscow - Value per Rub Rub
Logistics 17,414 17,273 Comparable ha 34.1m 33.8m
Rub 10.2m - Rub 10.3m -
Regional - Value per Rub Rub
Logistics 7,503 7,477 Comparable ha 20.8m 20.6m
11. Investment in joint
ventures
The Group had two joint ventures in the period: the Ruconnect logistics
joint venture, which it sold in the period; and the newly formed
Raven Holdings joint venture.
On 19 April 2021 the Company entered into a new joint venture, Raven Holdings
Limited, with a company owned by the Company's executive directors and certain
senior managers. Raven Holdings Limited is incorporated in Guernsey. Further
details relating to the activities of the Raven Holdings joint venture are
provided in note 2(a).
The Group's interest in each joint venture has been accounted for using the
equity method.
Summarised aggregated financial information of the joint ventures, prepared
under IFRS, and a reconciliation with the carrying amount of the investments
in the consolidated financial statements are set out below:
30 June 31 December
2021 2020
Summarised Balance Sheet GBP'000 GBP'000
Non-current assets
Investment in Raven Property
Group preference shares 37,941 -
Investment in Raven Property Group ordinary
shares 20,925 -
Receivable for ordinary shares
contributed 9,262 -
Other non-current assets - 247
Cash and short term deposits 1,916 17
Other current assets 987 256
Current liabilities (421) (2)
Non-current liabilities (35,731) (926)
Net assets / (liabilities) attributable to the
joint venturers 34,879 (408)
----------------- -------------
30 June 31 December
2021 2020
GBP'000 GBP'000
Investment in joint ventures
Goodwill on acquisition - 211
Share of net assets / (liabilities) 17,438 (175)
Allocation of reciprocal interest in Raven Property Group
ordinary shares to own shares (see note 17) (10,462) -
Carrying value 6,976 36
----------------- -------------
30 June 31 December
2021 2020
GBP'000 GBP'000 GBP'000
Carrying value at 1 January 36 189
Investment in the period 15,379 -
Allocation to own shares on purchase (10,800) -
Add: Share of Raven Holdings participation
in tender offer 338 -
----------
Net allocation to own shares (see note
17) (10,462) -
Share of total comprehensive income / (expense)
for the period 1,989 (127)
Proceeds on disposal of joint venture (126) -
Profit on disposal of joint venture 167 -
On translation to presentation currency (7) (26)
Carrying value at 30 June / 31
December 6,976 36
----------------- -------------
Six months Six months
ended ended
30 June 30 June
2021 2020
Summarised Statement of Comprehensive
Income GBP'000 GBP'000
Gross revenue 557 433
Cost of sales (673) (522)
Administrative expenses (43) (63)
Finance income 2,224 -
Finance expense (434) (39)
Change in fair value of preference shares 8,431 -
Discount on ordinary shares contributed (6,117) -
----------------- -------------
Profit / (loss) before tax 3,945 (191)
Tax (2) (3)
Profit / (loss) for the period 3,943 (194)
----------------- -------------
Other comprehensive income - 2
Total comprehensive income / (expense) 3,943 (192)
----------------- -------------
Group's share of total comprehensive income
/ (expense) for the period 1,989 (77)
----------------- -------------
The Group's joint ventures had no contingent liabilities or capital commitments
as at 30 June 2021 and 31 December 2020. The Group's joint ventures cannot
distribute their profits until they obtain the consent from the joint venture
partners.
The Group charged its joint ventures GBP13k (2020: GBP17k) for services rendered
to them during the period and advanced funds to cover operating costs, of which
GBP42k (2020: GBP38k) was included in receivables at the balance sheet date.
The Group has also advanced loans to its joint ventures of GBP35.7 million
(2020: GBP275k) generating interest income of GBP414k. During the period the
Group disposed of its' interest in Ruconnect and the loan of GBP275k was repaid
in full.
12. Other receivables 30 June 31 December
2021 2020
GBP'000 GBP'000
Loan receivable from joint venture 35,731 -
Trade receivables 12,018 11,567
Restricted cash 76 76
VAT recoverable 2,065 2,583
Prepayments and other receivables 158 214
50,048 14,440
----------------- -------------
The loan receivable from joint venture was advanced in the period to Raven
Holdings Limited, see notes 2(a) and 11. The loan bears interest at a fixed
interest rate of 6.65% per annum and is repayable on or before 29 October 2026.
13. Interest bearing loans and
borrowings 30 June 31 December
2021 2020
Bank loans GBP'000 GBP'000
Loans due for settlement within 12 months 25,973 29,609
Loans due for settlement after 12 months 647,024 597,843
----------------- -------------
672,997 627,452
================= =============
The Group's borrowings have the following
maturity profile:
On demand or within one year 25,973 29,609
In the second year 22,095 23,462
In the third to fifth years 564,086 520,540
After five years 60,843 53,841
-------------
672,997 627,452
================= =============
The amounts above include unamortised loan origination costs of GBP6.1 million
(31 December 2020: GBP5.6 million) and interest accruals of GBP0.9 million
(31 December 2020: GBP0.8 million).
The Group's interest bearing loans and borrowings have a weighted average interest
rate of 6.37% (2020: 5.48%) and a weighted average term to maturity of 3.8
years (2020: 4.1 years).
14. Preference shares
30 June 31 December
2021 2020
GBP'000 GBP'000
Issued share capital:
At 1 January 251,506 110,324
Reissued in the period 480 -
Premium on redemption of preference shares and
amortisation of issue costs 203 373
Scrip dividends 160 386
Movement on accrual for preference dividends - 39
Issued on re-designation of convertible
preference shares - 140,384
At 30 June / 31 December 252,349 251,506
================= =============
30 June 31 December
2021 2020
Number Number
Issued share capital:
At 1 January 214,955,406 100,068,218
Reissued in the period 412,016 -
Scrip dividends 117,969 287,976
Issued on re-designation of convertible
preference shares - 114,599,212
At 30 June / 31 December 215,485,391 214,955,406
================= =============
Shares in issue 216,444,641 216,326,672
Held by the Company's Employee
Benefit Trusts (959,250) (1,371,266)
At 30 June / 31 December 215,485,391 214,955,406
================= =============
15. Convertible preference shares
On 31 July 2020 the Company's shareholders approved the re-designation of the
convertible preference share capital into new ordinary shares and new preference
shares. Under the re-designation holders of convertible preference shares received
0.6108 new ordinary shares and 0.5849 new preference shares for each convertible
preference share held. The re-designation was effective 30 September 2020.
16. Share capital 30 June 31 December
2021 2020
GBP'000 GBP'000
Issued share capital:
At 1 January 5,914 4,898
Repurchased and cancelled in the period / year
by tender offer (128) (194)
Repurchased and cancelled in the period / year
from Invesco (see note 2(b)) (99) -
Issued on re-designation of convertible
preference shares - 1,210
Own shares cancelled (see note
17) (22) -
At 30 June / 31 December 5,665 5,914
================= =============
30 June 31 December
2021 2020
Number Number
Issued share capital:
At 1 January 591,353,766 489,746,016
Repurchased and cancelled in the period / year
by tender offer (12,797,072) (19,438,653)
Repurchased and cancelled in the period / year
from Invesco (see note 2(b)) (9,850,350) -
Issued on re-designation of convertible
preference shares - 121,046,403
Own shares cancelled (see note
17) (2,212,974) -
At 30 June / 31 December 566,493,370 591,353,766
================= =============
Details of own shares held are given
in note 17.
17. Own shares held 30 June 31 December
2021 2020
GBP'000 GBP'000
At 1 January (6,351) (4,582)
Acquired under a tender offer - (2,160)
Issued on re-designation of convertible preference shares - (409)
Group's share of ordinary shares acquired by Raven Holdings
Limited from Invesco (see notes 2(a) and 11) (10,800) -
Share of ordinary shares held by Raven Holdings Limited
cancelled under a tender offer (see note 11) 338 -
Allocation to satisfy Annual Performance Incentive / other
staff bonuses (note 19) 5,171 800
Cancelled 796 -
At 30 June / 31 December (10,846) (6,351)
================= =============
30 June 31 December
2021 2020
Number Number
At 1 January 14,682,576 8,918,186
Acquired under a tender offer - 6,000,000
Issued on re-designation of convertible preference shares - 1,372,602
Group's share of ordinary shares acquired by Raven Holdings
Limited from Invesco (see notes 2(a) and 11) 50,000,000 -
Share of ordinary shares held by Raven Holdings Limited
cancelled under a tender offer (see note 11) (11,488,987) (1,608,212)
Allocation to satisfy Annual Performance Incentive
/ other staff bonuses (note 19) (1,562,500) -
Cancelled (2,212,974) -
At 30 June / 31 December 49,418,115 14,682,576
================= =============
18. Net asset value per
share
30 June 31 December
2021 2020
Number Number
Number of ordinary shares
(note 16) 566,493,370 591,353,766
Less own shares held
(note 17) (49,418,115) (14,682,576)
517,075,255 576,671,190
============= =================
30 June 31 December
2021 Net asset 2020 Net asset
value
Net asset Ordinary per Net asset Ordinary value per
value shares share value shares share
GBP'000 No. '000 Pence GBP'000 No. '000 Pence
Net asset value per share 264,497 517,075 51 233,690 576,671 41
Effect of dilutive
potential
ordinary shares:
Five Year Performance
Plan - 10,904 - 6,375
Fully diluted net asset
value per share 264,497 527,979 50 233,690 583,046 40
========== ============= ========== =================
The number of potential ordinary shares is the total number of ordinary shares
assuming the exercise of all potential ordinary shares less those not expected
to vest.
19. Share-based payments and other long
term incentives
Six months Six months
ended ended
Income Statement charge 30 June
for the period 30 June 2021 2020
GBP'000 GBP'000
Annual Performance Incentive
2019 169 -
Annual Performance Incentive
2020 600 -
Other staff bonuses (231)
Five Year Performance
Plan 1,353 -
1,891 -
================= =============
To be satisfied by allocation
of:
Ordinary shares 1,113 -
Preference shares 480 -
Cash* 298 -
1,891 -
================= =============
*Monetary amount of shares withheld from awards to certain executives to settle
tax obligations arising on the awards.
On 25 May 2021 the Company settled the outstanding amounts due under the 2019
and 2020 Annual Performance Incentives. In respect of the 2020 Annual Performance
Incentive, certain executives agreed to preference shares rather than cash,
and as consequence the expense has been reflected as a share-based payment
with a corresponding adjustment to directors' remuneration in the period. At
30 June 2021 there is no outstanding creditor in respect of the Group's IFRS
2 expense (31 December 2020: GBP3.6 million).
20. Ordinary dividends
The Company did not declare a final dividend for the year ended 31 December
2020 (2019: none) and instead implemented a tender offer buy back for ordinary
shares on 18 June 2021 on the basis of 1 in every 32 ordinary shares held and
a tender price of 40 pence per share, the equivalent of a final dividend of
1.25 pence per share (2019: 1 in every 16 shares at 36p per share the equivalent
of 2.25p per share).
21. Fair value measurement
Set out below is a comparison of the carrying amounts and fair value
of the Group's financial instruments as at the balance sheet date:
30 June 2021 31 December 2020
Carrying Fair Carrying Fair
Value Value Value Value
GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Trade receivables 12,018 9,940 11,567 9,876
Loan receivable from
joint venture 35,731 35,731 - -
Other non current
receivables - - 24 23
Restricted cash 76 71 76 71
Derivative financial instruments 6,169 6,169 2,541 2,541
Current assets
Trade receivables 10,607 10.607 9,830 9,830
Other current receivables 1,088 1,088 2,078 2,078
Derivative financial instruments 16 16 - -
Cash and short term
deposits 53,082 53,082 53,122 53,122
Non-current liabilities
Interest bearing loans and borrowings 647,024 650,906 597,843 603,440
Preference shares 252,349 251,040 251,506 236,451
Rent deposits 11,805 9,183 13,119 9,907
Other payables 2,214 2,214 2,135 2,135
Current liabilities
Interest bearing loans and borrowings 25,973 25,973 29,609 29,609
Rent deposits 4,665 4,665 4,041 4,041
Other payables 4,821 4,821 3,827 3,827
Fair value
hierarchy
The following table provides the fair value measurement hierarchy*
of the Group's assets and liabilities.
Total Fair
Level Level 2 Level 3 Value
1
As at 30 June 2021 GBP'000 GBP'000 GBP'000 GBP'000
Assets measured at fair value
Investment property - - 1,121,516 1,121,516
Investment property under construction - - 27,116 27,116
Derivative financial
instruments - 6,169 - 6,169
As at 31 December 2020
Assets measured at fair value
Investment property - - 1,089,768 1,089,768
Investment property under construction - - 26,952 26,952
Derivative financial
instruments - 2,541 - 2,541
* Explanation of the fair value hierarchy:
Level 1 - Quoted prices in active markets for identical assets or liabilities
that can be accessed at the balance sheet date.
Level 2 - Use of a model with inputs that are directly or indirectly observable
market data.
Level 3 - Use of a model with inputs that are not based on observable market
data.
The Group's interest rate derivative financial instruments comprise interest
rate caps. These contracts are valued using a discounted cash flow model and
consideration is given to the Group's own credit risk.
22. Reconciliation of liabilities arising
from financing activities
Non-cash changes
Foreign
For the six months ended 2020 Cash flows Fair value exchange Other 2021
30 June 2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing loans
and borrowings 627,452 56,911 - (12,734) 1,368 672,997
Preference shares 251,506 - - - 843 252,349
Derivative financial
instruments (2,541) (1,354) (2,199) (91) - (6,185)
876,417 55,557 (2,199) (12,825) 2,211 919,161
---------- ------------- ----------- ---------- ----------------- -------------
Non-cash changes
Foreign
For the six months ended 2019 Cash flows Fair value exchange Other 2020
30 June 2020 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Interest bearing loans
and borrowings 683,341 17,618 - (4,692) 1,095 697,362
Preference shares 110,324 - - - 385 110,709
Convertible preference
shares 217,482 - - - 3,622 221,104
Derivative financial
instruments (2,621) (2,072) 1,522 188 - (2,983)
1,008,526 15,546 1,522 (4,504) 5,102 1,026,192
---------- ------------- ----------- ---------- ----------------- -------------
Cash flows relating to interest
bearing loans and borrowings 30 June 2021 30 June 2020
comprise: GBP'000 GBP'000
Proceeds from long term
borrowings 151,558 45,232
Repayment of long term
borrowings (80,457) (8,544)
Add: payments to restricted
cash - (1,454)
------------- ----------
(80,457) (9,998)
Loan amortisation (12,332) (16,150)
Bank borrowing costs
paid (19,908) (24,136)
Add: Interest paid 18,050 22,670
------------- ----------
Loan origination costs
incurred (1,858) (1,466)
56,911 17,618
----------- -----------------
Other non-cash changes include amortisation of origination costs, movements
in interest accruals, scrip dividends on preference shares, accretion of premiums
payable on redemption of preference and convertible preference shares and the
reissue of preference shares in the period to settle share-based payments.
23. Post balance sheet
events
In the year to 31 December 2020 the Group made a provision for a legal claim
of Rub 255 million in respect of a vexatious claim brought against one of the
Group's Russian subsidiaries by the receiver of a tenant who declared bankruptcy
in 2018. The Group pursued all possible remedies and on 12 August 2021 the
claim was dismissed by the Supreme Court of Russia. The claimant has the right
to appeal to the Supreme Court Presidium within 3 months of the Supreme Court
decision.
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END
IR FFFVLTEIIVIL
(END) Dow Jones Newswires
August 31, 2021 02:00 ET (06:00 GMT)
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