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Eastern Property Holdings Limited (EPH): Eastern Property Holdings Limited (EPH) expecting a significant loss in the Company's financial result and a signific

Eastern Property Holdings Limited (EPH) / Eastern Property Holdings Limited
(EPH) expecting a significant loss in theCompany's financial result and a
significant decrease of its net asset value . Processed and transmitted by
NASDAQ OMX Corporate Solutions.The issuer is solely responsible for the
content of this announcement.
04 April 2014, Road Town, Tortola, BVI

Eastern Property Holdings ("EPH" or the "Company") would like to announce that
it is expected that the consolidated financial result of the Company for the
financial year 2013 will deteriorate significantly. The Company expects a net
loss of approx. US$ 34 million, compared to a net profit of US$ 11.9 million
for the same period a year earlier. The net asset value ("NAV") of the
Company is expected to decrease by approx. US$ 34 million to a value of about
US$ 255 million. The NAV per share is expected to amount to approx. USD 60
(-12% compared to a value of USD 67.77 as per 31 December 2012).

The above stated figures are still subject to auditor's confirmation.

The expected decrease in the financial result and in the NAV is primarily
attributable to three factors: fair value adjustments on Scandinavia Land,
loan impairments and foreign currency effects.

Fair Value Adjustment
The main impact on the financial result and, accordingly, on the NAV of the
Company in terms of fair value adjustments arises from the significant
decrease in the valuation of Scandinavia Land.

As stated in our previous financial statements, valuation of real estate
assets, especially in the case of development projects, involves a
significant number of assumptions and judgment calls by the Company and the
valuers. These variables include, but are not limited to: future rent and
sale price levels, amount of time needed to rent or sell space, time needed
to deliver new construction, construction costs, best and highest use of an
asset or space in an asset, and exchange rates. Varying any of these factors
can have a material impact on valuations, and variations in a number of these
factors at once can have a dramatic effect.

Scandinavia Land (103 hectare land site near St Petersburg)
The fair value of the land plots was determined to be US$ 39.1 million as of
31 December 2012 based on an independent valuation prepared by Jones Lang
LaSalle. As the land was held for undetermined use, the valuation was based
on the highest and best use approach where the valuer assumed that the land
will be sold as individual plots with utilities for owners to develop. The
valuation was based on assumptions like the sales price per square meter, the
time required to sell all of the land strips and the level of profit required
by an investor as rewards for his risk. However, the land market in
St-Petersburg changed since 2012 - it became non-transparent and shows that
there is almost no demand for land plots such as Scandinavia Land, especially
taking into account its particular location, size and the fact that the land
is undeveloped. Further, the real estate market is also influenced by the
recent geopolitical issues and changes in the Russian economy.

Based on the above, the assumptions previously used by the valuer were
re-considered. The final valuation is still subject to confirmation of the
valuer and the auditors. Anyhow, a depreciation of Scandinavia Land is

Impairment of Loans:
As of 31 December 2013 the Company impairs its loans to Vestive, the 50% owned
joint venture owning Turgenevskaya Parking projects in Moscow, down to the
amount recoverable by Vestive's assets. It is expected that the impairment of
these loans will amount to approximately US$ 8 million.

Although occupancy rates in Turgenevskaya parking are steadily increasing
which also has a positive effect on rents, the valuation was decreased due to
more conservative assumptions used by the valuer with respect to the dynamics
of the rental income. Further, the Company considers the development of
Khokhlovskaya parking to be economically not reasonable as the expected
profitability of this project based on the parameters approved by the Moscow
City is questionable.

Currency Effect
Between January and December 2013, the Russian ruble ("RUB") weakened
approximately 8% against the US dollar ("US$"). The functional currency of
the Company's asset-owning subsidiaries is the RUB, so if the RUB weakens
against US$, the US$ denominated assets create a gain and the US$ denominated
liabilities create a loss simply due to the fact that the profit or loss of
these subsidiaries is calculated on a RUB basis.

The total net foreign exchange loss amounts to approximately US$ 9 million in
2013 compared to a net foreign exchange gain of approximately US$ 4 million
in 2012.

Eastern Property Holdings Ltd.
is an SIX Swiss Exchange-listed real estate development and investment company
focusing on Russia. The company holds interests in office, residential,
retail and parking properties and developments, principally in Moscow and St.
Petersburg. EPH is managed by Valartis International Ltd. a wholly-owned
subsidiary of Valartis Group AG.

Additional information on Eastern Property Holdings is available by contacting
Anna Bernhart Tel: +41 43 336 8111.

EPH expecting a significant loss in the Company’s financial result


This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Eastern Property Holdings Limited (EPH) via Globenewswire


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