Eph European Property Holdings Plc · SIX:EPH.EUR
Eph European Property — Eastern Property Holdings — H1 2011 Earnings Presentation
30 slides from Eph European Property's earnings presentation, Sep 13, 2011
Slide 1: Interim Unaudited Results for the Six Months Ended 30 June 2011
INTERIM UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2011 ANALYST CALL, 13 SEPTEMBER 2011
Slide 2: H1 2011 Results Call
H1 2011 RESULTS CALL 13 SEPTEMBER 2011 Terry Olin: Management Committee Managing Director Eastern Property Holdings Valartis Group Alexander Nikolaev: Management Committee Managing Director Russia & CIS Valartis Group Yulia Makhinova: Management Committee Finance Director Russia & CIS Valartis Group
Slide 3: Highlights
HIGHLIGHTS FOR THE SIX MONTHS ENDED 30 JUNE 2011 Sold 80% of central Moscow assets Berlin House and Geneva House at strong prices. (Further 10% sold in August 2011). New appraiser reduced valuation of assets - fair values are now very robust. Income statement negatively affected by strong RUB/
Slide 4: Investment Properties
INVESTMENT PROPERTIES WHAT CHANGED? MARKET WIDE More comparable transactions for Scandinavia Modest yield compression and rent increases Petrovsky Fort primarily affected by improved market ASSET SPECIFIC Updated Arbat design documentation reallocates space between Investment Properties and Asse
Slide 5: Investment in Associates
INVESTMENT IN ASSOCIATES H1 2011 Results Page 5
Slide 6: Loans and Receivables
LOANS AND RECEIVABLES WHAT CHANGED? New loans were provided to finance construction of Arbat Complexes (50% is eliminated in consolidation) and completion of Inkonika’s Turgenevskaya parking garage H1 2011 Results Page 6
Slide 7: Deferred Tax Assets
DEFERRED TAX ASSETS WHAT CHANGED? Tax losses accumulated in EPH RE with respect to Geneva House construction were written-off as they are not expected to be utilised in the foreseeable future H1 2011 Results Page 7
Slide 8: Assets Under Development
ASSETS UNDER DEVELOPMENT WHAT CHANGED? MARKET WIDE Slightly higher rent/sale/occupancy expectations ASSET SPECIFIC This category is entirely Arbat Apartment Areas Updated Arbat design documentation reallocates space between Investment Properties and Assets under Development H1 2011 Results Pag
Slide 9: Investments in Associates Held for Sale
INVESTMENTS IN ASSOC HELD FOR SALE WHAT CHANGED? 10% of EPH RE and Connecta KG committed for sale is recognized as ‘Investments in Associate held for sale’ H1 2011 Results Page 9
Slide 10: Accounts Receivable
ACCOUNTS RECEIVABLE WHAT CHANGED? Consideration for the sale of Berlin House was received in July 2011, after the transfer of shares had been registered H1 2011 Results Page 10
Slide 11: Loans and Receivables
LOANS AND RECEIVABLES WHAT CHANGED? Loans to EPH RE and Connecta KG are not eliminated as intercompany loans, since after sale of 80% of Berlin and Geneva Houses the underlying investments become Investments in Associates and, thus, are not consolidated. The Group transferred 80% of principal am
Slide 12: Prepaid Taxes
PREPAID TAXES WHAT CHANGED? Unutilized part of Russian VAT related to construction of Geneva House was written-off , since it will not be recovered as related to VAT exempt income (leases to representative offices of foreign companies) H1 2011 Results Page 12
Slide 13: Cash and Cash Equivalents
CASH AND CASH EQUIVALENTS WHAT CHANGED? MAIN INFLOWS Proceeds from Geneva House refinancing (Nomos Bank loan) Proceeds from sale of 80% of Berlin and Geneva Houses MAIN OUTFLOWS Repayment of debt to Vincennes for the purchase of 50% of EPH RE in 2010 Repayment of Valartis bank loan Constru
Slide 14: Debt
DEBT WHAT CHANGED? As Connecta KG was disposed on 29 June 2011 , all its liabilities including Aareal bank loan are no longer on the balance sheet. Unicredit bank loan was decreased by the amount of loan amortization paid in 1hy 2011 H1 2011 Results Page 14
Slide 15: Provisions for LT Liabilities and Charges
PROVISIONS FOR LT LIABILITIES AND CHARGES WHAT CHANGED? Accrued performance fees liabilities reduced due to decrease in valuation of assets H1 2011 Results Page 15
Slide 16: Debt
DEBT WHAT CHANGED? Valartis loan was fully repaid The current portion of Unicredit bank loan was decreased based on loan amortization schedule As Connecta KG was disposed on29 June 2011 , all its liabilities including Aareal bank loan are no longer on the balance sheet The RUB-nominated loan
Slide 17: Accounts Payable and Accrued Expenses
ACCOUNTS PAYABLE AND ACCRUED EXPENSES WHAT CHANGED? US$ 10 million payable to Vincennes was fully repaid Arrears to Valartis US$ 9.3 million was paid H1 2011 Results Page 17
Slide 18: Financial Liabilities at Fair Value Thru' PL
FINANCIAL LIABILITIES AT FAIR VALUE THRU’ PL WHAT CHANGED? As Connecta KG was disposed on 29 June 2011, all its liabilities including SWAP on Aareal bank loan are no longer on the balance sheet H1 2011 Results Page 18
Slide 19: Gross Rental Income
GROSS RENTAL INCOME Gross rental income 30.06.2011 30.06.2010 Petrovsky Fort 2 787 724 2 430 353 Berlin House 3 977 068 3 716 355 Geneva House 3 013 919 - Magistral'naya 444 765 - 10 223 477 6 146 708 WHAT CHANGED? Geneva House started generating income in the beginning of 2011 Since 1 February
Slide 20: Performance Fees
PERFORMANCE FEES WHAT CHANGED? Earlier accrued performance fees were reduced due to decrease in valuation of assets H1 2011 Results Page 20
Slide 21: Interest Income
INTEREST INCOME WHAT CHANGED? In H1 2010 EPH owned 50% of EPH RE and consolidated it by integration of 50% of its balance sheet. Accordingly, 50% of interest accrued on Geneva House construction loans were eliminated in consolidation and remaining 50% was recognized in P&L. In July 2010, EPH p
Slide 22: Other Operating Expenses
OTHER OPERATING EXPENSES WHAT CHANGED? In H1 2010 receivables on Magistralnaya lease to Mossib were written-off as uncollectable In H1 2011 unutilized part of Russian VAT related to construction of Geneva House was written-off, since it will not be recovered as related to VAT exempt income (leas
Slide 23: Net Gain (Loss) from FX Translation
NET GAIN (LOSS) FROM FX TRANSLATION WHAT CHANGED? EPH subsidiaries have RUB as their functional currency. Accordingly, US$-denominated assets and liabilities are converted in RUB as of the end of each reporting period. Decrease in US$/RUB ex-rate and substantial US$-denominated assets (investmen
Slide 24: Net Gain (Loss) from Fair Value Adjustment on Financial Investments
NET GAIN (LOSS) FROM FAIR VALUE ADJUSTMENT ON FINANCIAL INVESTMENTS Net gain/ (loss) from fair value adjustment on financial investments 30.06.2011 30.06.2010 Aareal SWAP revaluation 850 378 -261 972 Unicredit SWAP revaluation -112 951 -1 139 432 Sarnatus FV revaluation - -30 000 Other - 131 372 737
Slide 25: Net Gain (Loss) from Fair Value Adjustment on Investment Properties
NET GAIN (LOSS) FROM FAIR VALUE ADJUSTMENT ON INVESTMENT PROPERTIES Net (loss)/ gain from fair value adjustment on investment properties 30.06.2011 30.06.2010 Berlin House - 9,317,096 Petrovsky Fort 1,534,455 1,232,011 Magistral'naya (409,646) (22,024) Geneva House (2,709,320) 513,860 Arbat Complexe
Slide 26: Development Property Impairment
DEVELOPMENT PROPERTY IMPAIRMENT Note: this is entirely Arbat Development property impairment. WHAT CHANGED? Slight decrease (considering cost additions) in the valuations of Arbat development property. H1 2011 Results Page 26
Slide 27: Share of Associates' Loss
SHARE OF ASSOCIATES’ LOSS Share of associates' loss 30.06.2011 30.06.2010 Investments in Vestive -24 297 807 -9 356 381 Investments in EPH RE -101 851 - Investments in Connecta KG -260 888 - Investments in HCI - -132 618 -24 660 546 -9 488 999 WHAT CHANGED? NAV of Vestive group decreased to zero d
Slide 28: Corporate Governance
CORPORATE GOVERNANCE SIGNIFICANT IMPROVEMENTS MADE; REMAINS A PRIORITY Appointed two highly experienced and respected independent non-executive Directors Board of Directors is now majority independent of management Introduced quarterly reporting and conference call, starting in Q1 2011 Intro
Slide 29: Outlook and Strategy
OUTLOOK AND STRATEGY Real Estate market expected to continue recovery in Moscow and St Petersburg EPH in strong position with development assets and cash for investment Focus on commercialization of Turgenevskaya Parking and completion of Arbat development projects Seek quality assets for ne
Slide 30: H1 2011 Results Call
H1 2011 RESULTS CALL 13 SEPTEMBER 2011 Terry Olin: Management Committee Managing Director Eastern Property Holdings Valartis Group Alexander Nikolaev: Management Committee Managing Director Russia & CIS Valartis Group Yulia Makhinova: Management Committee Finance Director Russia & CIS Valartis Group
Eastern Property Holdings — H1 2011 Earnings Presentation on 6ix