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.