No-4676B-Condensed Consolidated Interim Financial Statements for the six months ended 30 June 2018

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Rasmala plc

(“Rasmala” or the “Company”)

Condensed Consolidated Interim Financial Statements

for the six months ended 30 June 2018

Highlights

· Financial performance for the six months to 30 June 2018 was satisfactory

· Operating income of £4.6m (H1 2017: £5.1m)

· Fee income, excluding transactional real estate deals, of £3.8m is up £1.1m year on year (H1 2017: £2.7m)

· Operating expenses down 20% compared to same period last year to £5.1m (H1 2017: £6.4m)

· Operating loss of £0.6m (H1 2017: £1.2m loss)

· Assets under management (AUM) at 30 June 2018 including capital seeded by the Group increased 11% to US$1,929m (December 2017: US$1,747m)

· Strong capital and liquid balance sheet maintained

Financial results

Rasmala delivered an improved performance in the period up to 30 June 2018 from H1 2017.

Total operating income for the six months to 30 June 2018 was £4.6m (H1 2017: £5.1m). Total expenses for the six months were down 20% compared to the same period last year to £5.1m (H1 2017: £6.4m). The resulting Operating loss for the six months was £0.6m (H1 2017: £1.2m).

Our performance in the first six months is the result of continuing confidence from our investors in our diversified product offering and maintaining strong cost control.

Our balance sheet remains strong, both in terms of capital and liquidity which we use to support investments made throughout the Group.

Commentary

In the second half of 2018 there are a number of potential risks around the world including the ongoing trade war between the US and China, a strengthening US dollar which is negatively impacting emerging market economies, rising inflationary pressures in developed economies, tightening global liquidity and ongoing global and regional geopolitical uncertainties.

Regional markets

In Q2 there were two major announcements in relation to the Saudi Arabian equity market. The FTSE and MSCI decided to include Saudi Arabia as part of their Emerging Market Indices with an estimated weight of 2.7% and 2.6% respectively. This move is expected to attract total flows of approximately US$50bn into the Saudi market. In Kuwait, the implementation of the FTSE upgrade to Emerging Market Status will be completed by the end of this year and is expected to attract US$900m into the Kuwaiti market. MSCI is expected to upgrade Kuwait in June 2019. The Dubai market has been the worst performing market in the GCC in 2018. However, we expect capital to flow back into Dubai as investors book profits and unwind index related trades.

Oil price

The price of oil remains well supported by strong global demand and the recent supply disruption. OPEC has responded to this growing supply deficit and has pledged to increase production by one million barrels per day. Saudi Arabia and UAE have also announced that they are ready to utilize their idle capacity to boost production and keep markets balanced. Rising oil prices and output will benefit the fiscal positions of the petrodollar economies of the Gulf who have budgeted oil prices well below current levels. This has started to translate into higher fiscal spending by the stronger GCC governments who are large players in their respective economies.

Real Estate

International investors continue to view the UK and Europe as secure investment destinations. Logistics assets are proving to be attractive as investors move away from retail and into warehousing and distribution assets. As the UK braces for Brexit, e-commerce will remain the primary driver of growth in demand for logistics space including larger fulfilment centres and “last-mile” depots, allowing retailers to efficiently serve an expanding and more demanding customer base. While the long-term impact of Brexit on the UK logistics market is still unclear, the likely transition period should provide additional time to restructure domestic and pan-European supply chains.

US assets continue to attract Gulf investors as the region doesn’t suffer any US Dollar currency risk. Yields in the US remain relatively stable but with the higher cost of funding, total returns that are being achieved are lower in comparison to the UK and Europe, but arguably with reduced risk to currency volatility.

Investment Management

We saw significant interest during the period in our product offerings with gross inflows of US$362m leading to net inflows of US$182m. AUM as at 30 June 2018 including capital seeded by the Group increased 11% to US$1,929m.

Investment performance during the period was stable with returns from fixed income investments under pressure by rising short term interest rates in the US, and equities benefitting from strong global economic growth. Adding to positive sentiment in the region was the rally in oil prices with improving regional government fiscal positions and liquidity.

Investment Banking

In the first half of the year, our efforts were focused on post-acquisition work related to our 2017-year end acquisitions on behalf of our clients of three German-based real estate logistics assets.

During the period we evaluated several new assets and prepared three well researched bids for both commercial and logistic properties. However, we were unsuccessful in acquiring these assets as other investors were willing to pay prices well above our assessment of fair value. The competition for the type of long-income properties which have been the focus of our real estate investment strategy for the past years has intensified making the acquisition process that much more challenging.

Treasury and Principal Investments

Our investment in Red Apartments Limited is making progress in driving organic growth whilst capturing cost efficiencies. We are currently exploring the possibility of launching a fund to acquire new properties primarily in London and the South East.

Our balance sheet remains strong, both in terms of capital and liquidity which we use to support investments made throughout the Group.

Outlook

We remain optimistic as we continue to work closely with our clients to identify and deliver on investment opportunities.

Enquiries:

Rasmala plc

Tel: +44 (0)20 7847 9900

Zak Hydari, CEO

Stockdale Securities

Tel: +44 (0)20 7601 6100

Antonio Bossi, David Coaten

Rasmala plc

Condensed consolidated statement of income

                                                For the six months ended 30 June 2018 (unaudited)                                              

 

6 months to 30-Jun-18

6 months to 30-Jun-17

Year to

31-Dec-17

£’000

£’000

£’000

Income

Income from financing and investing activities

45

559

 558

Finance costs

(220)

(178)

(335)

Net margin

(175)

381

223

Fees and commission income

3,800

4,189

9,272

Net gain from financial assets measured at fair value through profit or loss

257

380

1,138

Gain/(loss) on private equity investments designated at fair value through profit or loss

(17)

(59)

315

Other operating income

710

245

1,141

Total operating income

4,575

5,136

12,089

Expenses

Staff costs

 

(3,000)

 

(3,488)

 

(8,065)

Depreciation and amortisation

(81)

(59)

(116)

Other operating expenses

(2,060)

(2,818)

(5,326)

Total expenses

(5,141)

(6,365)

(13,507)

Operating profit before tax

(566)

(1,229)

(1,418)

Income tax

(114)

(51)

(186)

Deferred tax

(2)

Loss from continuing operations

(680)

(1,282)

(1,604)

Loss after tax from discontinuing operations

(28)

(31)

(60)

Loss for the year

(708)

(1,313)

(1,664)

Loss attributable to:

   Owner of the parent

(664)

(1,133)

(1,550)

   Non-controlling interest

(44)

(180)

(114)

(708)

(1,313)

(1,664)

Earnings per share from continuing operations to the owners of the parent

–   Basic

(4.29p)

(3.63p)

(5.11p)

–   Diluted

(4.29p)

(3.63p)

(5.11p)

Earnings per share from discontinuing operations attributable to the owners of the parent

–   Basic

(0.19p)

(0.08p)

(0.21p)

–   Diluted

(0.19p)

(0.08p)

(0.21p)

 

Earnings per share from total profit or loss attributable to the owners of the parent

–   Basic

(4.48p)

(3.72p)

(5.32p)

–   Diluted

(4.48p)

(3.72p)

(5.32p)

 Rasmala plc

 Condensed consolidated statement of comprehensive income

 For the six months ended 30 June 2018 (unaudited)                                              

6 months to 30-Jun-18

6 months to 30-Jun-17

Year to

31-Dec-17

£’000

£’000

£’000

Loss for the year

(708)

(1,313)

(1,664)

Items that may be reclassified subsequently to profit or loss:

Gain on fair value of available-for-sale securities

(31)

221

Loss on fair value of available-for-sale securities

252

Exchange loss on net investment in foreign operations

657

(606)

(1,791)

Total comprehensive loss for the year

(51)

(1,698)

(3,234)

Total comprehensive loss attributable to:

    Owners of the parent

(7)

(1,953)

(3,116)

    Non-controlling interest

(44)

255

(118)

(51)

(1,698)

(3,234)

Rasmala plc

Condensed consolidated statement of financial position

 As at 30 June 2018 (unaudited)     

 

 

6 months to 30-Jun-18

6 months to 30-Jun-17

Year to

31-Dec-17

£’000

£’000

£’000

Assets

Cash and cash equivalents

9,173

3,555

6,778

Financial assets measured at fair value through profit or loss

38,841

68,305

33,540

Financial assets measured at amortised cost

1,500

1,621

1,745

Other assets

5,761

8,117

12,005

Investment property

5,375

5,375

5,375

Property and equipment

321

248

273

Intangible assets

9

33

Goodwill

15,043

15,440

14,755

76,014

102,670

75,504

Assets classified as held for sale

43

48

42

Total assets

76,057

102,718

75,546

Liabilities

Financial liabilities measured at fair value through profit or loss

Financial liabilities measured at amortised cost

9,673

10,705

6,359

Income tax payable

117

49

180

Deferred tax payable

315

317

313

Other liabilities

6,468

4,764

8,081

16,573

15,835

14,933

Liabilities associated with asset held for sale

11

12

12

Total liabilities

16,584

15,847

14,944

Net assets

59,473

86,871

59,602

Capital and reserves

Share capital

7,907

15,721

7,907

Other reserves

82,967

100,483

82,967

Fair value reserve on available-for-sale securities

Foreign exchange reserve

(5,325)

(5,236)

(5,982)

Accumulated losses

(26,929)

(25,797)

(26,186)

Equity attributable to owners of parent

58,620

85,171

58,706

Non-controlling interest 

853

1,700

896

Total equity

59,473

86,871

59,602

 Rasmala plc

Condensed consolidated Cash flow statement

 For the six months ended 30 June 2018 (unaudited)                                               

6 months to 30-Jun-18

6 months to 30-Jun-17

Year to

31-Dec-17

£’000

£’000

£’000

Cash flows from operating activities

Operating (loss)/profit for the period

(566)

(1,229)

(1,418)

Operating loss on discontinued operations

(28)

(31)

(60)

Adjusted for:

Unrealised loss from financial assets measured at fair value through profit or loss

(400)

(134)

(543)

Unrealised gain on private equity investments designated at fair value through profit or loss

 

17

 

41

 

(58)

Exchange differences on financial assets measured at fair value through profit and loss

(199)

256

Depreciation and amortisation

81

58

116

Available-for-sale securities

25,180

25,180

Other assets

7,220

4,097

785

Financial liabilities measured at fair value through profit or loss

(1,447)

Other liabilities

(2,546)

(574)

2,696

Assets classified as held for sale

(4)

Liabilities associated with asset held for sale

31

Distribution made by a subsidiary

(82)

Cash used in operating activities

3,579

25,906

26,954

Tax paid

(178)

(109)

(116)

Net cash generated by/ (used in) operating activities

 3,401

 25,797

 26,838

Cash flow from investing activities

Payment on acquisition of a subsidiary net of cash acquired

(4,994)

(7,497)

Financial assets measured at amortised cost

241

3,387

2,731

Financial liabilities measured at amortised cost

668

Investment property

Sale proceeds on disposal of investments

2,471

25,629

Purchase of investments

(7,114)

(40,901)

(33,017)

Disposal of a subsidiary net of cash disposed of

150

Acquisition of non-controlling interests

Purchase of property and equipment

(89)

(18)

(123)

Net cash (used in)/ generated from investing activities

(4,491)

(41,858)

(12,127)

Cash flow from financing activity

Tender Offer

(23,443)

Proceeds from debt financing

6,755

5,425

5,411

Repayment of debt financing

(3,415)

(4,252)

Foreign exchange difference on financing activity

(25)

Net cash used in investing activity

3,315

5,425

(22,284)

Net increase/(decrease) in cash and cash equivalents

2,225

(10,636)

(7,573)

Cash and cash equivalents at the beginning of year

6,778

14,319

14,319

Foreign exchange difference on cash and cash equivalents

170

(128)

32

Cash and cash equivalents at the end of the year

9,173

3,555

6,778

Net Debt Reconciliation

6 months to 30-Jun-18

Year to

31-Dec-17

£’000

£’000

Cash and cash equivalents

9,173

6,778

Liquid investments (i)

13,743

8,414

Borrow repayable within 1 year

(6,812)

(3,437)

Borrow repayable after 1 year

(2,861)

(2,922)

Net Debt

13,243

8,833

Cash and liquid investments

22,916

15,192

Gross debt – fixed interest rates

(9,673)

(6,359)

Net Debt

13,243

8,833

 

Group

Liquid investments

Borrow less than 1 year

Borrow after 1 year

Cash

Total

£’000

£’000

£’000

£’000

£’000

Net Debt as at 31 December 2017

6,778

8,414

(3,437)

(2,922)

8,833

Cashflows

2,395

5,280

(3,401)

61

4,335

Foreign exchange

49

26

75

Net Debt as at 30 June 2018

9,173

13,743

(6,812)

(2,861)

13,243

(i)      Liquid investments comprise investments that are traded in an active market, held within financial assets measured at fair value through profit or loss

 Notes to the condensed consolidated interim financial statements (unaudited)

At 30 June 2018

1. Principal activities and authorisation of the financial statements

Rasmala plc (‘Company’) is an investment holding company incorporated in England on 11 January 2005.

The interim condensed consolidated financial statements of the Company and its subsidiaries (the ‘Group’) for the six months ended 30 June 2018 were authorised by the Board of Directors for issue on 21 September 2018.

The condensed consolidated financial statements of the Group as at and for the period ended 30 June 2018 are available at www.rasmala.com

2. Accounting policies

The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the year ended 31 December 2017.

3. Subsequent events

There are no subsequent events to report.