Annual Report • Apr 25, 2018
Annual Report
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46 Statement by the board of directors
and general manager
47 Auditor's report
The anchor tenant in the Gasfield building vacated at 31 May 2017. The company is now facing a period of vacancy for the first time since 2009. Re-letting of the area has been somewhat slower than expected.
The group renegotiated an updated set of terms and covenants with its lender to ensure a longer financial runway. As a part of this agreement an extraordinary repayment of USD 3 mill was made. A rights issue of USD 3 mill was placed to finance the loan repayment
The group made losses of 4.2 million in 2017, predominately due to a 4.5 million reduction in valuation of the Gasfield building.
| Numbers in USD million | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 |
|---|---|---|---|---|---|---|---|
| Rental income | 11.8 | 12.6 | 12.9 | 12.7 | 10.4 | 6.2 | 3.0 |
| Net operating income from properties | 8.7 | 9.6 | 10.1 | 10.3 | 8.7 | 5.0 | 1.8 |
| Net operating income % | 74% | 76% | 78% | 82% | 83% | 81% | 60% |
| Valuation of investment property | 99.3 | 102.7 | 103.1 | 70.3 | 34.7 | 30.5 | 26.6 |
| Numbers in NOK | 2013 | 2014 | 2015 | 2016 | 2017 | Last 5 years (2) |
|---|---|---|---|---|---|---|
| Share price 01.01 | 15.10 | 17.40 | 12.50 | 10.55 | 153 | 4.61 |
| Dividend date | 14/05/13 12/05/14 | - 26/05/16 | - | multiple | ||
| Dividends | 1.00 | 1.60 | - | 3.80 | - | 6.40 |
| Share price 31.12 | 17.40 | 12.50 | 10.55 | 5.00 | 0.67 | 0.67 |
| Total Shareholder Return | -8.0% | 12.0% | -15.6% | -21.4% | -56.1% | -20.9% |
| Last 1 year -37.9% -56.1% Last 3 years (annualized) -30.5% -34.5% |
Return on equity (1) | Total Shareholder Return (2) | |
|---|---|---|---|
| Last 5 years (annualized) | -21.6% | -20.9% |
(1) Return on Equity = Total Comprehensive Income (IFRS) for the period / brought forward equity (IFRS) for start of the period, annualised.
(2) Total Shareholder Return = Movement in share price, dividend adjusted, annualised using XIRR formula.
These return rations are Alternative Performance Measures, and are presented in accordance with ESMA's "Guidelines on Alternative Performance Measures" from 2015. These are reliably measured and the company considers these relevant, because different stakeholders might consider different NAV per share in NOK and Total Shareholder Return relevant alternative performance measures.
Total Shareholder Return = Movement in share price, dividend adjusted, annualised using XIRR formula. (2): Adjusted for share issue 2017.
Return on Equity = Total Comprehensive Income (IFRS) for the period / brought forward equity (IFRS) for start of the period (1): Total, not annualised
| Numbers in USD million | 2013 | 2014 | 2015 | 2016 | 2017 | Last 5 years (1) |
|---|---|---|---|---|---|---|
| Total Comprehensive Income | 3.1 | -34.2 | -16.8 | -4.8 | -4.2 | -56.8 |
| Equity, beginning of period | 80.7 | 78.4 | 38.8 | 22.0 | 11.0 | 80.7 |
| Return on equity | 3.9% | -43.6% | -43.3% | -21.9% | -37.9 | -70.4 |
6 7
Storm Real Estate ASA is an investment company focusing on real estate. Its strategy comprises ownership and management of commercial property in Russia.
Storm Real Estate ASA was established in 2007.
The company has in the past had multiple investments across several countries, including direct ownership of real estate as well as indirect exposure via stakes in other real estate companies.
Following the earlier sale of Grifon House and shares in TK Development A/S, the company's remaining investment property is the Gasfield building in Moscow. The Gasfield property is a class B building located in the area between the Third Ring Road and the Moscow Automobile Ring Road (MKAD), close to the Gazprom headquarters. The building includes offices, a restaurant, fitness center and parking spaces. It has a gross area of 15,000 square meters and a net lettable area of 11,100 square meters. In May 2017 the anchor tenant vacated the building and the company is currently in the process of re-letting the building.
A team established locally in Moscow manages the local operations. Their work includes sourcing new tenants, credit control, property management, accounting and other administrative functions in Russia. The team ensures that the buildings are run efficiently and effectively, maintaining a high standard of customer service for the tenants.
Since November 2008 Storm Capital Management Ltd has managed the Company under an asset management agreement.
In 2016 the company realized both shares in TK Development A/S and holdings in investment fund Storm Bond Fund, and distributed large parts of the proceeds as dividends to shareholders. Since then the company has been a focused investment company with one investment in Russia.
Macro snapshot
Sources market information Russia: Cushman & Wakefield, Tradingeconomics
Storm Real Estate ASA seeks to maintain an open and inclusive shareholder information policy. Providing timely information on any matters that may affect the company's share price should help the share price better reflect the Company's underlying value.
Storm Real Estate ASA was listed on the Oslo Stock Exchange on 6 July 2010. Ticker: STORM. The shares are registered in the Norwegian Central Securities Depository, registration number (ISIN) NO0010360175. The registrar for the share is Nordea.
At 31 December 2017 Storm Real Estate ASA had 88,345,623 issued shares.
Each share has a nominal value of NOK 0.40. The Company had no treasury shares as at 31 December 2016 or 31 December 2017.
At 31 December 2017 Storm Real Estate ASA had 536 shareholders. The 20 largest shareholders held 82.7% of the shares. The Company's Board Members controlled 56.68% of the shares in the Company at the end of 2017. Morten E. Astrup is in total the largest shareholder in Storm Real Estate.
There is only one share class, and each share entitles the holder to one vote. Storm Real Estate ASA is committed to the principle of equal treatment of all shareholders. The Company's Articles of Association contain no provisions on voting rights differentiation, no restrictions on the number of votes that can be cast, and no other restrictions on shareholder rights.
There have been no material transactions between Storm Real Estate ASA and shareholders, members of the Board of Directors, members of management or close relatives of any such parties, other than those disclosed in the financial statements.
The annual general meeting is the Company's supreme authority. It is normally held in May. The Board determines the agenda for the annual general meeting and works to ensure that it becomes a forum for the shareholders. Notice of the meeting is sent out no later than 21 days in advance and will also be available on the Company's website and through the Oslo Stock Exchange notification service. Shareholders who would like to receive such information by email can register with the company's Investor Relations contact. Shareholders who are unable to attend may vote by proxy. The Company has prepared proxy forms which enable shareholders to vote on individual issues.
| 31.12.2016 | 31.12.2017 | ||||
|---|---|---|---|---|---|
| Shares | % | Shares | % | ||
| Norwegian | 9,108,809 | 49,7% | 32,918,965 | 37.3% | |
| Foreign | 9,236,814 | 50,3% | 55,426,658 | 62.7% | |
| Total | 18,345,623 | 100.0% | 88,345,623 | 100.0% |
Table: domestic and foreign shareholders
Management works continuously to ensure an open and active dialogue with investors and other participants in the financial market. There are quarterly presentations. Updated information can be found on the Company's website: www.stormrealestate. no The Investor Relations contact at Storm Real Estate ASA is Einar Pedersen ([email protected]).
The annual general meeting on 26 May 2016 authorized the Board to purchase shares in the Company for up to 10% of the share capital. The authorization is valid until 26 May 2018. The authorization has not been used.
The graph above shows Storm Real Estate ASA (dividend-adjusted) vs Oslo Stock Exchange Benchmark Index (OSEBX)
Good corporate governance is key to aligning the interests of shareholders, management, employees and other stakeholders. Storm Real Estate is committed to achieving high standards of corporate governance and long-term shareholder value creation.
The Norwegian Code of Practice for Corporate Governance is intended to support listed companies by clarifying the division of roles between shareholders, the Board of Directors and management more comprehensively than is required by the current legislation. Storm Real Estate operates in accordance with the Norwegian Code of Practice for Corporate Governance. The Code is a collection of "comply or explain" guidelines, and Storm Real Estate's governance structure is in accordance with the guidelines. The following sections detail the key aspects of Storm Real Estate's corporate governance policy.
The scope of business is trading and investing in real estate and securities relating to this, inter alia by participating in other companies involved in similar business activities through equity, loans or providing guarantees, as defined in the Company's Articles of Association. Storm Real Estate ASA is listed on the Oslo Stock Exchange. Ticker: STORM.
The Company aims to maintain a sound financial structure, reflecting the nature of its business. As at 31 December 2017 equity was USD 10.0 million and the equity ratio was 33.7%. This follows several years of negative developments particularly in Russia. Considerations on the Company's capital structure are based on the Group's targets, market outlook, strategies and risk profile.
Storm Real Estate has a long-term objective to pay dividends. When considering dividends, the Board emphasizes the company's dividend capacity, the requirements for a sound level of equity and sufficient financial resources. The Board considers buy-backs of shares to supplement dividends as a way of returning value to the shareholders.
Storm Real Estate's objective is that all shareholders are treated equally. The Company has one class of shares, and all shares have equal voting and dividend rights. All of Storm Real Estate's shareholders have equal rights in the event of share capital increases.
The Board and management shall treat all shareholders equally with regard to price-relevant information. Storm Real Estate is listed on the Oslo Stock Exchange and is thus obliged to comply with the disclosure requirements in Norwegian securities legislation. The company discloses all price relevant information to the market through Oslo Stock Exchange's news site www.newsweb.no and on Storm Real Estate's website www.stormrealestate.no.
Related-party transactions shall be carried out according to the arm's length principle and always in compliance with the Norwegian Public Limited Liability Companies Act.
The shares of Storm Real Estate are freely negotiable.
The annual general meeting is open to all shareholders and all shares have equal voting rights. There are no ownership restrictions. The notice of the annual general meeting shall be sent out to the shareholders no later than 21 days prior to the date of the meeting. The provision requiring companies to send such documents by post does not apply if the documents concerning matters to be dealt with at the general meeting have been made available on the Company's website. A shareholder may still ask to receive documents concerning matters to be dealt with at the general meeting by post. All shareholders can participate in person or by proxy.
The nomination committee submits its recommendations on the composition of the Board and remuneration of board members to the annual general meeting. The board members are directly elected by the annual general meeting. The nomination committee is elected for a period of two years. The current committee members were elected by the annual general meeting in May 2017 and consists of Christopher W. Ihlen (chairman) and Nini Nergaard.
Mr Aukner is currently on the board of several Norwegian companies, including, Agra Holding and Bama Gruppen. He has previously held senior management positions at a number of Norwegian companies. Mr Aukner has an MBA from Copenhagen Business School and is also an Authorised Financial Analyst – the Norwegian equivalent of AFA. He is a Norwegian citizen and resides in Oslo, Norway. Mr Aukner is an independent member of the Board of Directors.
Mr Astrup is a partner and CIO of Storm Capital Management Ltd., and has 20 years of asset management experience. He is a specialist within alternative investments, private equity and real estate. He has held board positions in several international companies and been an advisor to both private and institutional investors in Europe. Mr Astrup holds a master's degree in Business and Economics from BI Norwegian Business School/City University London. He is a Norwegian citizen and resides in London.
board member (born 1972) Ms Nergaard is currently chairperson of the board of Dønski Toppidrett AS, in addition to her work as a director of Storm Real Estate ASA. Between 1998 and 2005 she was employed as a financial analyst at Handelsbanken Capital Markets, Oslo. Ms Nergaard has a law degree from Oslo University, where she studied between 1992 and 1998. She is a Norwegian citizen and resides in Snarøya, Norway. Ms Nergaard is an independent member of the Board of Directors.
Kim Mikkelsen is an investor and member of the board of several financial and internet companies. He invests in small and medium-sized enterprises via his companies Strategic Capital, Strategic Investments and Strategic Venture Capital. Through Strategic Capital he was a majority shareholder and CIO of Nordic Asset Management, a Danish management company that he started in 2003 and that grew to manage funds of GBP 400 million before being acquired in 2009 by PFA Pension, Denmark's secondlargest pension fund. Mr Mikkelsen has held several management positions in investment banks in London and Copenhagen. He is a Danish citizen and is an alternate member of the Board of Directors.
Anna Musiej Aanensen is employed at Coface, global credit insurance company, heading its activities in Norway. From 2010 till 2017 she worked for Export Credit Norway being responsible for financing the projects within oil & gas industries. Between 1998 and 2010 she worked for Handelsbanken where she kept various positions. Mrs Aanensen has a Master of Science from Warsaw School of Economics and Executive MBA in Maritime Offshore from Norwegian Business School in Oslo. She is a Norwegian citizen and independent board member.
Storm Real Estate's Board of Directors consists of five members. The Company seeks a balanced composition of the Board, taking into account the expertise, experience and background relevant to the Company's operations. The majority of the members of the Board of Directors are independent members.
A presentation of the members of the Board of Directors follows below:
Storm Real Estate attaches importance to independence and neutrality in all relations between the Board, management and owners in general. The principles of independence, neutrality and standard business practice also apply in dealings with other stakeholder groups such as customers, suppliers, banks and other business connections.
The relationship between the Board of Directors, the Company and the operational management is regulated by the management agreement in force between Storm Real Estate and Storm Capital Management Ltd. This arrangement was initially first entered into in 2008 with a term of 5 years plus a period of notice of one year. In November 2011 the annual general meeting granted the Board the authority to make changes to the management agreement, including the term of the agreement. In 2013 the agreement was extended with a rolling notice period of 12 months with a discontinuation supplement equivalent to 12 month's fees. In 2016 the Company agreed a new management agreement with Storm Capital Management Ltd on the current terms.
The Board had 6 meetings in 2017.
Due to the limited scope of the Company's business and also its financial constraints, the Board does not have a separate audit committee. The board members currently perform the responsibilities previously assumed by the audit committee.
Due to the limited scope of the Company's business and also its financial constraints, the Board does not have a remuneration and governance committee. The board members currently perform the responsibilities previously assumed by the remuneration and governance committee.
12 13 The Group's auditor is Ernst & Young AS. The auditor participates in the board meeting at which the financial statements are approved. The auditor also participates in relevant meetings of the audit committee at least once a year. The auditor meets with the board once a year without management being present. The auditor's fees are reported each year to the annual general meeting.
The Board ensures that the Company has good internal control procedures and appropriate systems for risk management adapted to the Company's operations. The Company has drawn up an authority matrix which is included in the steering documents. The CFO is responsible for financial reporting. Control measures have been established in connection with the presentation of quarterly and annual financial statements. The board of directors undertake a preparatory review of the quarterly and annual financial statements.
The remuneration of the Board of Directors is determined annually by the Ordinary General Meeting. At the company's ordinary general meeting in 2017, the remuneration for the year since the previous ordinary general meeting was set at NOK 250,000 for the Chairperson and NOK 125,000 for Board members. Large shareholders Morten E. Astrup and Kim Mikkelsen do not charge a board fee for their duties as board members.
Storm Capital Management Ltd. receives a management fee of NOK 750,000 per quarter (NOK 3 million per annum). This amount includes salaries, travel expenses and offices outside Russia. Transactions with Storm Capital Management are described in more detail in the notes to the financial statements. There is no performance-related fee.
The Board is committed to reporting financial results and other relevant information openly and in accordance with the requirement for equal treatment of all shareholders and participants in the securities market. It is the Company's aim to ensure that the market is in possession of correct, clear and timely information about the Company's operations at all times. This is essential for the efficient pricing of the share and for the market's confidence in the Company. The Company also aims to ensure that its operations are monitored by securities analysts. The Company maintains an open investor relations policy. Key company information made public is published in both Norwegian and English, in order to make information available to both domestic and international investors.
There are no barriers to takeovers in Storm Real Estate's Articles of Association.
2017 was a challenging year for Storm Real Estate where our company was hit by lower rental income on the Gasfield building after 8 years with a stable income from our previous anchor tenant Gazprom. Gazprom vacated the premises in May 2017.
The Group's legal structure and cost base is not sustainable given that we currently own only one income-earning asset. The Board is therefore actively looking for structural opportunities and actions to reduce ongoing operational cost. The Board will recommend to the shareholders that the company is delisted to reduce costs.
Rental rates in Moscow have stabilised on a low level., but with falling vacancy, a growing population in Moscow and more job creation it is possible that rental rates will increase again over the next 12 to 24 months.
Our area has been characterized by many Gazprom companies, and the area has consequently been hit particularly hard by Gazprom's strategic decision to move a number of businesses to St. Petersburg.
As per 31.12.2017 we had re-let 34% of the vacated area and had just below 50% occupancy. Many large companies are seeing cost benefits of moving out of the central business district, and we are positioned to benefit from that.
Due to the low occupancy level and the current market situation, the future liquidity situation is uncertain.
The company therefore made an agreement with the lender in the spring of 2017 to ensure longer visibility of cash flows. The lender agreed to waive covenants and amortisations until Q4 2018, and to extend the maturity of the loan until June 2019. In return, the company agreed to make an extraordinary amortisation of USD 3 million, which was raised by means of a rights issue in June 2017.
The board sees a risk for the current waivers from the bank to be too short, and the company is currently in discussions with the lender to create a longer financial runway. Discussions are also being held with potential investors in order to raise more equity or debt.
The board considers the company's financial constraints one of liquidity rather than solidity. Valuation reports obtained from local market experts indicate that the company's assets exceed the value of its liabilities. However, in today's market environment processes can be long and it might take time to realize assets if needed. The board therefore sees a new agreement with the bank combined with an approach to the shareholders to raise more capital as the most probable outcome. The aim is to ensure sufficient time to be able to see an upturn in the rate levels, increased occupancy in the building and the possibility to carry out an orderly market sale.
The consolidated statements are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU). The accounting policies have been consistently applied in all Group entities in all periods. All figures stated in the report are in USD unless specified otherwise.
The Board is not satisfied with the Company's results for 2017. There is significant uncertainty related to future rental income.
Total comprehensive income for 2017 was USD -4.1 million (2016: USD -4.8 million).
Net operating income from investment properties in Russia was USD 1.8 million, a reduction from USD 5.0 million in 2016.
Fair value of investment property reduced by USD 4.4 million from USD 31.2 million to USD 26.8 million (2016: Down USD 7.7 million from USD 38.9 million to USD 31.2 million). The reduction in fair value given by the appraisers is mainly related to the actual and expected future effect of vacancy in the building.
Borrowing costs, including interest linked to interest rate swaps, were USD 1.9 million in 2017 (2016: USD 2.1 million). Borrowing costs are reduced following extraordinary repayments on the bank loan. In addition, a gain in the value of interest rate hedging derivatives of USD 0.5 million has been included for 2017 connected with an increasing interest rate curve (2016: +USD 0.4 million).
A negative tax expense (tax income) has been recognized, primarily resulting from reduction in the value of the investment property in Russia. Income taxes for the period are USD -0.5 million (2016: USD -1.2 million).
The value of investment property totalled USD 26.8 million (2016: USD 31.2 million). Bank deposits totalled USD 2.2 million (2016: USD 4.4 million).
The Group has financed the property in Russia via a bank loan totalling USD 18.1 million (2016: USD 21.1 million).
The Group has recognised a liability of USD 0.5 million linked to hedging derivatives (interest-rate hedging and foreign currency hedging) (2016: USD 1.5 million).
The Company was not in breach of covenants of the bank loan as at 31/12/2017, due to the agreed waivers.
Cash flow statement The Group had a cash flow before changes in working capital of USD 0.8 million (2016: USD 2.7 million).
Investment activities resulted in a net cash flow of USD +0.1 million. (2016: USD +15.4 million, primarily linked to the sale of the shares in TK Development.)
Financing activities resulted in a net cash flow of USD -1.7 million after net proceeds from rights issue of USD 3.2 million, repayment of bank debt of USD 3.0 million. (2016: USD -14.2 million after dividends of USD 8.4 million and repayment of bank debt of USD 3.6 million). Interests paid was USD 1.9 million (2016: USD 2.1 million).
The parent company loss for the year was 4.1 million compared with a loss of USD 3.5 million in 2016. The Parent Company's main source of income is dividends from investments in subsidiaries. In 2017 this income was USD 0.0 million (2016: USD 2.4 million).
The parent company made a provision for losses of USD 2.7 million on its investments in subsidiaries (2016: USD 1.7 million)
The future of the company will largely depend on the success of re-letting of the Gasfield building. Successful re-letting will not only improve profitability in itself, but also open options for refinancing and other strategic alternatives like realisation, mergers etc.
The Group's operations are considered to be associated with higher risk than traditional real estate companies. In the light of this, the Board has set a target of a return on equity of 10% per year over time. This target has not been achieved in recent years.
Certain risk factors may adversely affect Storm Real Estate, the major risks being liquidity risk, risk related to the operations of the company and market risk. If one or more of these risks or uncertainties are crystallised, the Company's business, operating profit and financial strength could be materially and adversely affected. In addition, the Company is exposed to interest rate, credit and currency risk. For more information about the group's risks please see note 4 Financial risk management to the Group's financial statements.
Company's operations. The Group recorded 44 days of sickness absence in 2017.
In accordance with the reporting requirements in section 3-3 of the Norwegian Accounting Act the Group presents a report on its work related to social responsibility.
Storm Real Estate has operations in Russia, where corruption is a greater challenge than in Norway. The Company is aware of this and has introduced procedures and routines to its daily operations to reduce the risk of corruption. The Company is conscious of its role in society related to combating corruption operates with a high level of transparency and openness, and subsidiaries have clear instructions for transparency; in particular with regards to Group management and our auditors. The Board is not aware of any cases of corruption related to the Group's operations, and will continue to focus closely on this in the future.
The Company also focuses on employee rights and social conditions, and the Board is not aware of any challenges related to employee rights or social conditions in the workplace. The Company has no specific guidelines related to human rights.
Pursuant to section 3-3a of the Norwegian Accounting Act, the Board confirms that the annual report for 2017 has been prepared based on the assumption of a going concern. Despite the company's financial constraints, the board considers it likely that the company can continue its operations for the foreseeable future. However, this assumption is at risk and does depend on the outcome of several processes including re-letting of the investment property and reduction of operating expenses. In addition, the company is likely to require additional funding sources. The board will consider multiple sources of funding, including renegotiation with the current lender, refinancing, new loan arrangements and/ or further equity issues.
The Board recommends the following distribution of the parent company's net profit for the year: • Transferred from other equity USD 4,100k.
Oslo, 16 April 2018 The Board of Directors and General Manager of Storm Real Estate ASA
Morten E. Astrup
Board member
Stein Aukner Chairperson
Nini E.H. Nergaard Board member
Einar Pedersen General Manager
Anna Muisej Aanensen Board member
Kim Mikkelsen Board member
| All numbers in 000 USD | Note | 2017 | 2016 |
|---|---|---|---|
| Continuing operations: | |||
| Rental income | 6 | 3,034 | 6,197 |
| Total income | 3,034 | 6,197 | |
| Property related expenses | 6 | -1,242 | -1,169 |
| Personnel expenses | 16 | -251 | -435 |
| Other operating expenses | 15 | -749 | -1,607 |
| Total operating expenses | -2,242 | -3,212 | |
| Operating profit before fair value adjustments | 792 | 2,985 | |
| Gain/loss from fair value adjustments on investment property | 6 | -5,398 | -10,394 |
| Total operating profit | -4,606 | -7,409 | |
| Finance revenues | 14 | 575 | 573 |
| Finance expenses | 14 | -1,999 | -2,146 |
| Currency exchange gains (losses) | 14 | 29 | -69 |
| Net financial gains (losses) | -1,395 | -1,643 | |
| Earnings before tax | -6,001 | -9,051 | |
| Income tax expense | 18 | -477 | -1,160 |
| Profit (Loss) for the Period from continuing operations | -5,524 | -7,891 | |
| Discontinued operations: | |||
| Profit (Loss) from discontiuned operations | 14.23 | 0 | -2,268 |
| Profit (loss), attributable to owners of parent | -5,524 | -10,160 | |
| Profit (loss), attributable to non-controlling interests | 0 | 0 | |
| Other comprehensive income: | |||
| Items that are reclassified from Equity to earnings in subsequent periods: | |||
| Translation differences from foreign operations | 1,370 | 5,352 | |
| Sum other income and expenses after tax, continuing operations | 1,370 | 5,352 | |
| Sum other income and expenses after tax, discontinued operations | 0 | 0 | |
| Other comprehensive income, net of tax | 1,370 | 5,352 | |
| Comprehensive income, attributable to owners of parent | -4,154 | -4,807 | |
| Comprehensive income, attributable to non-controlling interests | 0 | 0 | |
| Weighted average number of shares * | 54,208,636 18,345,623 | ||
| Basic and diluted earnings per share (USD) | 20 | -0.10 | -0.55 |
| Basic and diluted earnings per share (USD) from continuing operations | -0.10 | -0.43 | |
| Total Comprehensive Income per share (USD) | 20 | -0.08 | -0.26 |
* Weighted average calculated with issue of 70.000.000 shares on 27.06.2017
| ASSETS | |||
|---|---|---|---|
| Non-current assets | |||
| Investment property | 6 | 26,760 | 31,215 |
| Property, Plant and Equipment (PP&E) | 10 | 18 | |
| Total non-current assets | 26,770 | 31,233 | |
| Current assets | |||
| Pre-paid income tax | 18 | 352 | 72 |
| Other receivables | 13 | 265 | 401 |
| Cash and cash equivalents | 2,247 | 4,371 | |
| Total current assets | 2,865 | 4,844 | |
| TOTAL ASSETS | 29,634 | 36,078 | |
| EQUITY AND LIABILITIES | |||
| Paid-in equity | |||
| Ordinary shares | 4,575 | 1,236 | |
| Share premium | 21,036 | 21,036 | |
| Other paid-in equity | 56,605 | 56,763 | |
| Total paid-in equity | 82,216 | 79,035 | |
| Other equity | |||
| Other equity | -72,222 | -68,069 | |
| Total other equity | -72,222 | -68,069 | |
| TOTAL EQUITY | 9,994 | 10,966 | |
| Liabilities | |||
| Non-current liabilities | |||
| Loans from credit institutions | 12 | 17,836 | 18,716 |
| Deferred tax liabilities | 19 | 284 | 864 |
| Financial derivative liability | 10 | 528 | 562 |
| Other long-term liabilities | 287 | 213 | |
| Total non-current liabilities | 18,936 | 20,355 | |
| Current liabilities | |||
| Trade liabilities | 11 | 37 | 84 |
| Financial derivative liability | 10 | 0 | 973 |
| Loans from credit institutions | 12 | 300 | 2,366 |
| Other short-term liabilities | 17 | 367 | 1,334 |
| Total current liabilities | 705 | 4,756 | |
| TOTAL LIABILTIES | 19,640 | 25,111 | |
| TOTAL EQUITY AND LIABILITIES | 29,634 | 36,078 |
Morten E. Astrup
Board member
Stein Aukner Chairperson
Nini E.H. Nergaard Board member
Einar Pedersen General Manager
Anna Muisej Aanensen Board member
Kim Mikkelsen Board member
| All numbers in 000 USD | Note | 2017 | 2016 |
|---|---|---|---|
| Cash Flow from operational activities Earnings before Tax, continuing operations |
-6,001 | -9,051 | |
| Earnings before Tax, discontinued operations | 0 | -2,268 | |
| Earnings before Tax | -6,001 | -11,320 | |
| Adjusted for: | |||
| depreciations | 8 | 4 | 6 |
| value adjustment on investment property | 6 | 5,398 | 10,394 |
| finance income | 14 | -97 | 2,774 |
| finance expenses | 14 | 1,522 | 1,774 |
| net currency gains | 14 | -7 | -958 |
| Cash flow before changes in working capital | 818 | 2,670 | |
| Change in working capital: | |||
| trade receivables and other receivables | 208 | -86 | |
| trade payables and other payables | -1,005 | -49 | |
| paid taxes | -461 | -1,154 | |
| Net cash flow from operational activities | -440 | 1,381 | |
| Cash Flow from investment activities | |||
| Inflows from financial investments | 0 | 15,225 | |
| Interest received Net cash flow from investment activities |
79 79 |
151 15,376 |
|
| Cash flow from financing activities | |||
| Share issue | 22 | 3,181 | 0 |
| Repayment on loans | 12 | -3,000 | -3,637 |
| Dividends paid | 0 | -8,420 | |
| Interest paid | -1,932 | -2,113 | |
| Net cash flow from financing activities | -1,751 | -14,170 | |
| Net change in cash and cash equivalents | -2,111 | 2,587 | |
| Carried forward cash and cash equivalents | 4371 | 1,703 | |
| Currency exchange variation on cash and cash equivalents | -12 | 82 | |
| Cash and cash equivalents at end of period | 2,247 | 4,371 | |
| Of which restricted Cash and Cash Equivalents | 237 | 237 |
| CONSOLIDATED STATEMENT |
|---|
| OF CHANGES IN EQUITY |
For the period 1 January - 31 December
| Paid-in equity | Other equity | ||||||
|---|---|---|---|---|---|---|---|
| Note | Share capital | Share premium |
Other paid-in equity |
Retained earnings/ losses |
Translation differences on foreign operations |
Total equity |
|
| 1 January 2016 | 1,236 | 21,036 | 56,763 | 21,605 | -78,641 | 22,000 | |
| Profit (loss) for the period | -10,160 | -10,160 | |||||
| Other comprehensive income | 5,352 | 5,352 | |||||
| Sum | 0 | 0 | 0 | -10,160 | 5,352 | -4,807 | |
| Dividends | -8,420 | -8,420 | |||||
| Intra-group merger | 7 | 2,194 | 2,194 | ||||
| 31 December 2016 | 1,236 | 21,036 | 56,763 | 5,220 | -73,288 | 10,966 |
| 1 January 2017 | 1,236 | 21,036 | 56,763 | 5,220 | -73,288 | 10,966 | |
|---|---|---|---|---|---|---|---|
| Profit (loss) for the period | -5,524 | -5,524 | |||||
| Other comprehensive income | 1,370 | 1,370 | |||||
| Sum | 0 | 0 | 0 | -5,524 | 1,370 | -4,154 | |
| Share issue | 22 | 3,339 | -158 | 3,181 | |||
| Sum other capital changes | 3,339 | 0 | -158 | 0 | 0 | 3,181 | |
| 31 December 2017 | 4,575 | 21,036 | 56,605 | -304 | -71,918 | 9,994 |
Storm Real Estate ASA (hereafter "Storm Real Estate", the "Company" or the "Group") is a property investment company that invests in real estate in Russia.
The Company was established on 2 January 2007 and is a public limited liability company. The Company is incorporated and domiciled in Oslo with its registered office at Dronning Mauds gate 3, 0250 Oslo, Norway. In the 2016 financial year the company had investments in real estate via an office building in Moscow and shares in the Danish real estate development company TK Development A/S. The TK shares were sold in 2016.
The Company is listed on the Oslo Stock Exchange, ticker STORM.
The consolidated financial statements were approved for issue by the Board of Directors on 16 April 2018. The final financial statements will be put forward for approval by the general meeting on 15 May 2017.
.
The consolidated financial statements of Storm Real Estate ASA have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and adopted by the European Union in accordance with the Norwegian Accounting Act. The financial statements of the subsidiaries are prepared for the same reporting period as the Parent Company, using consistent accounting policies.
The consolidated financial statements have been prepared on a historical cost basis, with the exception of investment property and financial instruments which are all stated at fair value. Preparation of financial statements in conformity with IFRS requires the use of accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 5. The consolidated financial statements are presented in USD and all values are rounded to the nearest thousand (USD 000), unless otherwise indicated.
(a) New and amended standards adopted by the Group The accounting policies used in the consolidated financial statements are consistent with the previous year's statements. New and amended IFRS standards with effect from 1.1.2017 have not had an effect on the Group Amendments not mentioned here have not had an effect on the Group's annual report. Future amendments to standards and interpretations that can be relevant to the Company are described below.
IFRS 15 Revenue from Contracts with Customers IASB has issued a new, common standard for revenue recognition, IFRS 15. The standard replaces all existing standards and interpretations for revenue recognition. The standard outlines the principles an entity must apply to measure and recognise revenue. The core principle is that an entity will recognise revenue at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods or services to a customer. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2018. The Group has carried out an assessment of the effects of implementing the standard, and has not identified any significant effects for its financial position or results. Recognition of rental income from commercial real estate is not expected to be changed in any material way.
IFRS 16 Leases replaces the existing IFRS standard for leases, IAS 17 Leases. IFRS 16 lays down principles for recognising, measuring, presenting and disclosing leases for both parties in a lease, i.e. the customer (lessee) and provider (lessor). The new standard requires that the lessee recognise assets and liabilities for most leases, which is a significant change from the current principle. For the lessor IFRS 16 essentially continues the existing principles in IAS 17. In line with this, a lessor shall continue to classify their leases as operating leases or finance leases, and account for these two types of leases differently. Lessees are required to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17, but that is not expected to be material for the Group. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2019. The Group intends to implement the relevant amendments on the effective date.
20 21 Transactions in foreign currencies are initially recorded in the functional currency at the rate on the transaction date. Monetary items denominated in foreign currencies are translated using the functional currency spot rates of exchange on the reporting date. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the rate on the reporting date.
The application of IFRS 9 may change the measurement and presentation of many financial instruments, depending on their contractual cash flows and the business model under which they are held. The impairment requirements will generally result in earlier recognition of any credit losses. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2018. The Group intends to implement the relevant amendments on the effective date. Implementation is not expected to have any material impact on the company's financial position or results.
Disclosure Initiative: The amendments require entities to provide disclosure of changes in their liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes (such as foreign exchange gains or losses). The Group has provided the information for both the current and the comparative period in Note 24.
(b) Standards, amendments to and interpretations of existing standards
The Group has not chosen early adoption of any new or amended IFRSs or IFRIC interpretations.The Group's policy is to implement the relevant amendments on the effective date where the amendments are relevant to the Group.
Subsidiaries are all companies over which the Group has control. Control exists when the Group is exposed to, or has rights to, variable returns as a result of involvement with the company and the Group is able to impact returns through its power over the company. Control is normally achieved when the Group owns – directly or indirectly – more than 50% of the voting shares in the company. The effect of any existing voting rights resulting from exercisable options is included in the assessment of control. The Group also assesses whether control exists where fewer than 50% of the voting rights are held but the Group is nevertheless in a position to control the relevant activities.
Such companies are included in the consolidated financial statements from the date on which the Group obtains control over the company. In the same way, the company is deconsolidated when control over the company ceases.
The purchase method is applied to business combinations. The consideration transferred is measured at the fair value of assets transferred, liabilities incurred and equity instruments issued. The consideration also includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Costs related to business combinations are expensed as incurred. Identifiable assets and liabilities are recognised at fair value at the acquisition date. Non-controlling interests in the acquiree are measured on a case-by-case basis either at fair value or at their share of the acquiree's net assets.
In the case of a step acquisition, equity interests from previous acquisitions are remeasured at the control date to fair value through profit and loss. Any contingent consideration is recognised at fair value at the acquisition date. In accordance with IAS 39, subsequent changes to the fair value of the contingent consideration are recognised in the income statement or as a change to other comprehensive income if the contingent consideration is classified as an asset or liability. Contingent considerations classified as equity are not remeasured, and subsequent settlement is entered against equity.
Intra-company transactions, balances, and unrealized gains and losses on transactions between Group companies are eliminated. The financial statements of subsidiaries are restated where necessary to achieve consistency with the Group's accounting policies.
The Group's functional and presentation currency is USD. Each entity in the Group determines its own functional currency, and items included in the income statement of each entity are measured using that functional currency. The functional currency is the currency within the primary economic environment in which the entity operates.
All currency translation differences are recognised in the income statement.
The assets and liabilities of foreign entities are translated into the presentation currency at the rate on the reporting date, and related income statement items are translated at average exchange rates per quarter. Currency translation differences arising on the translation are recognised as other comprehensive income. In the consolidated financial statements, currency translation differences linked to net investments in foreign operations are included in other comprehensive income until disposal of the net investment, at which point they are recognised in the income statement.
The Company has up until 2016 operated within different operating segments as per the definitions in IFRS 8. For the financial year 2017 the company has only one operating segment following the realisation of shares in real estate companies in 2016. The business areas are separate segments that follows how they are managed by the board of directors as the chief operating decision maker body (CODM). See note 23 for detailed segment information.
Investment property comprises completed property held to generate rental income or for capital appreciation or both. Property held under a lease is classified as investment property when the definition of an investment property is met. Investment property is recognised initially at cost including transaction costs. Transaction costs include transfer taxes, professional fees for legal services and initial leasing commissions to bring the property to the condition necessary for it to be capable of operating. The carrying amount also includes the cost of replacing part of an existing investment property at the time that cost is incurred if the recognition criteria are met.
Subsequent to initial recognition, investment property is carried at fair value. Gains or losses arising from changes in fair value are included in the income statement in the year in which they arise.
Investment property is derecognised when it has been disposed of or permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the withdrawal or disposal of investment property are recognised in the income statement in the year of disposal. Gains or losses on the disposal of investment property are determined as the difference between net selling price and the carrying amount of the asset at the time of sale.
Property, plant and equipment that is not directly attributed to the investment property is classified as non-current assets and measured at acquisition cost less depreciation and impairment losses. Acquisition cost includes expenditure that is directly attributable to the acquisition of the items.
Costs incurred after the asset has been taken into use are included in the asset's carrying amount or recognised as a separate asset, as appropriate, when it is probable that future economic benefits associated with the acquisition will flow to the Group and the cost can be measured reliably. The carrying amount of the replaced part is written down to zero. All other repairs and maintenance are charged to the income statement in the period in which they are incurred.
(a) Where a Group company is the lessee Leases in which a significant portion of the risks and rewards of ownership are retained by another party, the lessor, are classified as operating leases. Payments, including prepayments, made under operating leases are classified as operating expenses and charged to the income statement on a straight-line basis over the term of the lease.
(b) Where a Group company is the lessor Properties leased under operating leases are included in investment property in the Company's statement of financial position. Rental income is recognised over the term of the lease on a straight-line basis.
At the start of a lease agreement tenants pay a security deposit. This is treated as an advance payment from the tenants. The tenants then continue to pay in advance for the term of their lease, such that the level of the security deposit is maintained.
Financial assets within the scope of IAS 39 Financial Instruments are classified either (a) at fair value through profit or loss and (b) loans and receivables measured at amortized cost. The classification depends on the purpose for which the financial instrument was acquired. Management determines the classification of its financial instruments at initial recognition.
(a) Financial instruments at fair value through profit or loss Financial instruments at fair value through profit or loss are financial instruments held for trading. A financial instrument is classified in this category if acquired in principle for the purpose of selling in the short term. Instruments are also categorized as held for trading unless they are designated as hedges.
(b) Loans and receivables measured at amortized cost Loans and receivables are non-derivative financial instruments with fixed cash flows that are not quoted in an active market. They are classified as current assets unless the redemption date is more than 12 months after the reporting date, in which case they are classified as noncurrent assets. The Group's loans and receivables comprise 'trade and other receivables' and cash and cash equivalents in the statement of financial position.
Ordinary purchases and sales of financial assets are recognised on the trade date – the date on which the Group commits to purchase or sell the asset. All financial assets not carried at fair value through profit or loss are initially recognised at fair value with the addition of transaction costs. Financial assets carried at fair value through profit and loss are initially recognised at fair value. Subsequent measurement is at fair value though profit and loss.
Loans and receivables are initially recognised at fair value plus directly attributable transaction expenses. Loans and
receivables are subsequently measured at amortized cost using the effective interest method. The effective interest is the same for the entire lifetime of the instruments.
A financial instrument is derecognised when: i) the rights to receive cash flows from the instrument have expired; or
ii) the Group has transferred its rights to receive cash flows from the instrument and either (i) the Group has transferred substantially all the risks and rewards relating to the instrument, or (ii) the Group has neither transferred nor retained substantially all the risks and rewards relating to the instrument, but has transferred control of the instrument.
The Group's financial liabilities cover trade and other current payables, long-term debt and derivative financial instruments.
Financial liabilities within the scope of IAS 39 are classified either as financial liabilities at fair value through profit and loss or as other liabilities. Financial liabilities classified as financial liabilities at fair value through profit or loss comprise liabilities held for trading. Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the short term. This category includes derivative financial instruments that are not designated as hedging instruments in hedge relationships in accordance with IAS 39. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Financial liabilities that do not come into the "held for trading" category and that are not designated at fair value through profit and loss are classified as "other liabilities".
All financial liabilities are recognised initially at fair value and, in the case of other liabilities, net of directly attributable transaction costs. Financial liabilities classified at fair value through profit or loss are subsequently measured at fair value. Gains or losses are recognised in the income statement.
A financial liability is derecognised when the obligation under the liability is discharged, canceled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, this is treated as derecognition of the original liability and recognition of a new liability. The difference in the respective carrying amounts is recognised in the income statement.
Trade receivables are recognised initially in the balance sheet at fair value and subsequently measured at amortized cost using the effective interest method, less provision for bad debts. A provision for bad debts on trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the carrying amount of the assets and the estimated future cash flows from the assets.
Cash and cash equivalents include cash in hand and deposits held with banks.
Ordinary shares are classified as equity. Costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Own equity instruments which are bought back (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in the income statement on the purchase, sale, issue or cancellation of the Group's own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in other equity/ other contributed equity. Voting rights related to treasury shares are canceled and no provision is made for payment of dividends on treasury shares.
A person is considered as a related party if he or she, directly or indirectly, has the possibility to exercise control or influence over another party in connection with financial and operational decisions. Parties are also considered related if they are under control or significant influence. Transactions with related parties are based on the arm's length principle. Loans to certain subsidiaries are considered as part of the Group's net investment. Exchange rate changes related to monetary items (receivables and liabilities) which are a part of the Company's net investment in foreign entities are treated as currency translation differences, and thus entered against equity.
Deferred tax assets are recognised only to the extent that it is probable that there will be future taxable income against which the temporary differences can be utilized. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related tax asset is realized or the deferred tax liability is settled. The provision for deferred tax is based on the expected manner of realization or settlement of the carrying amounts of assets and liabilities.
Tax effects on other comprehensive income are separated and presented via other comprehensive income. These include exchange differences on net investments in foreign entities.
The Group's revenue includes rental income from the properties. This is recognised in income over the period of the lease. Revenue arising from expenses recharged to tenants is recognised in the period in which the expenses can be contractually recovered.
The tax expense for the period comprises taxes payable and change in deferred tax. However, deferred tax is not recorded if it arises on initial recognition of an asset or liability in a transaction, other than a business combination, that affects neither accounting nor taxable profit or loss on the transaction date. Earnings per share is calculated by dividing profit by the weighted average number of outstanding shares in the Group during the reporting period. Treasury shares are not included in the calculation.
Interest income is recognised in income as it is earned using the effective interest method. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, which is the estimated future cash flow discounted at the original effective interest rate of the instrument. Interest income on impaired loans is recognised using the effective interest rate.
The Group presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when it is expected to be realised or intended to sold or consumed in the normal operating cycle, held primarily for the purpose of trading, expected to be realised within twelve months after the reporting period, or cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period. All other assets are classified as non-current.
A liability is current when it is expected to be settled in the normal operating cycle, it is held primarily for the purpose of trading, it is due to be settled within twelve months after the reporting period, or there is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
The Group classifies all other liabilities as non-current. Deferred tax assets and liabilities are classified as noncurrent assets and liabilities.
The Group's activities expose it to a variety of financial risks: market, credit and liquidity risk. The Group's overall risk management focuses on the unpredictability of markets and seeks to identify and, if possible, minimise the potential adverse effects on the Group's financial performance. The Group has attempted to maintain a policy of having solid tenants, even in difficult financial times.
Management identifies and evaluates financial risk, and has policies covering specific areas such as credit risk, currency risk, use of derivative financial instruments and investment of excess liquidity.
Investments in Russia are deemed to have high market risk. The climate in the financial market and especially the price of real estate, demand for premises and general rental levels in Russia represents risk, as it will affect the Company's rental income. The Company aims to reduce some of this risk by continuing to require deposits from tenants, typically equivalent to 2-3 months' rent. The situation has also changed, from having one anchor tenant in the past to currently having several smaller tenants.
Storm Real Estate is a Norwegian group with its main focus on rental properties in Russia. This exposes the Group to currency risk arising from various currency exposures, primarily with respect to NOK, USD and RUB. Currency risk arises when future commercial transactions or recognised assets and liabilities are denominated in a currency that is not the entity's functional currency.
The rental lease contracts are exposed to the risks of changes in RUB/USD exchange rates. Up to around 2014- 2015 rental agreements were in US dollar. Following the recession and geo-political situation with sanctions against Russia, there has been a "de-dollarization" of the Russian real estate market and currently most lease agreements are denominated in Russian roubles. As such the building is a Russian rouble asset, and the bank loan is in US Dollar. A hedge between RUB and USD has been considered, however hedging the Russian rouble comes at a significant cost, and the Company has to date not considered it sufficiently attractive.
A sensitivity analysis of the stated factors for the Group's presentation currency and the Parent Company's functional currency (USD) is shown below. If the value of the USD changes relative to other currencies, this will have the following effects on the consolidated financial statements:
In 2014 and 2015 the Russian Ruble fell considerably against the USD. Indirect effects resulting from this are that it becomes difficult for tenants in the market to pay their rent in USD. This has an effect on rents and as a result on valuations of investment property. Such effects are indirect and impossible to quantify. The sensitivity analysis above does not contain such indirect effects of a weaker exchange rate, but the effect of exchange rate changes on the market for investment property can be significant.
The Group is exposed to risk concerning property prices and property rental, and the Group has geographically concentrated its activity in Russia. The Group has further indirect exposure to price risk as a result of developments in the financial markets, since these affect the tenants' ability to pay.
(iii) Interest rate risk on cash flows and fair value
The Company has financed properties with bank loans totalling USD 18.1 million. To reduce the interest rate risk, the Company has entered into interest rate swaps totalling USD 26.5 million whereby a variable interest rate equivalent to USD 3 month LIBOR is swapped with a fixed interest rate of a weighted average of 2.82% for 3.2 years from 31 December 2017. The table below illustrates the net effect of a change in interest rates of one percentage point.
The fair value of interest rate swaps is measured at the present value of future cash flows in the statement of financial position, and the change in fair values are brought over the income statement. The table below shows the effect a change of one percentage point would have had on the Consolidated statement of total comprehensive income.
The group operations across multiple jurisdictions with corresponding tax risks. Transactions and financing arrangements between related parties have inherent risks related to treatment in local tax jurisdictions with regards to, inter alia, compliance with transfer pricing regulations, corporate tax deductibility, value added tax etc.
Credit risk arises on cash and cash equivalents and deposits with banks and financial institutions, as well as outstanding receivables and liabilities. For banks and financial institutions, the Group aims to use parties with a good credit rating. All new contracts with tenants require a deposit and the rent is partly invoiced in advance. If rent is not paid on time, the Company immediately begins the search for a new tenant.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial asset.
The Group has over time aimed to keep liquidity sufficient to meet its foreseeable obligations as well as securing a reasonable capacity to meet unforeseen obligations. Management continuously monitors forecasts of the Group's liquidity reserves.
The company's liquidity risk is high. The situation in Russia is demanding. Vacancy in the group's building as well as vacancy in the market could lead to a shortfall on future cash flow, and the company's ability to meet future liabilities is at risk. Following the termination from the anchor tenant in the Gasfield building in 2017, future cash flow and ability to meet future liabilities is dependent on sourcing new tenants and / or refinancing or restructuring of borrowing terms.
| 000 USD | Effect attributable to profit for 2017 |
|---|---|
| 1% rent increase | +30 |
| 1% rent decrease | -30 |
The effect is deemed to be linear, so that a 5% change is five times larger than a change of 1%. Price changes can also affect the valuation of the buildings.
The effect is deemed to be linear, so that a 5% change is five times larger than a change of 1%. A reasonable range for exchange rates in a normal situation would be 0-20%. Exchange rate fluctuations related to the Russian Ruble have also been higher.
| 000 USD | Effect attributable to net income |
Effect attributable to equity (other comprehensive income) |
Net effect on the Company's equity |
|---|---|---|---|
| 1% appre ciation in USD |
+179 | -436 | -257 |
| 1% depre ciation in USD |
-179 | +436 | +257 |
| 000 USD | Effect on interest | Effect on interest | Net effect per |
|---|---|---|---|
| paid (loans) | received (swaps) | year | |
| 1% increase in interest rate |
-195 | +265 | +70 |
| 000 USD | Effect on interest expenses |
Change in PV of interest rate swaps |
Effect on equity |
|---|---|---|---|
| 1% increase in floating interest rate |
+70 | +794 | +864 |
The Group has agreed covenant waivers until and including Q3 2018, and an updated set of covenants with the lender starting from Q4 2018, adjusted to the current market situation in Russia. Covenants including loan-to-value, equity covenants, liquidity covenants and service ratio. The Group has small margins to these covenants.
The company is working on various solutions to address the liquidity constraints; including cost reductions.
The table below analyses the Group's financial liabilities (borrowing), broken down by maturity (all figures in USD 000).
* Nominal (actual) value , not amortised cost (accounting value).
Due to the company's liquidity situation, below are the major financial liabilities broken down into 3-month periods:
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an appropriate capital structure. In order to maintain or adjust the capital structure, the Group may adjust the level of the dividend paid to shareholders, issue new shares or
sell assets to reduce debt. The Group's capital comprises capital invested through investments in investment property and securities, as well as cash and cash equivalents.
The Group has an acceptable equity ratio. The equity ratio was 33.7% at 31 December 2017 (2016: 30.4%). The equity covenant at 20% was waived as of the reporting date, but the company would not have been in breach of this covenant.
The Group is a challenging financial situation. Although the value of assets exceeds the value of liabilities, the liquidity constraints continue to be a challenge. Despite the company's financial constraints, the board considers it likely that the company can continue its operations for the foreseeable future. However, this assumption is at risk and does depend on the outcome of several processes including re-letting of the investment property and reduction of operating expenses. In addition, the company is likely to require additional funding sources. The board will consider multiple sources of funding, including renegotiation with the current lender, refinancing, new loan arrangements and/ or further equity issues.
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable in the present circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the final outcome. The estimates and assumptions that represent a significant risk of material adjustments to the carrying amounts of assets and liabilities within the next financial year are addressed below.
| As at 31 December 2017 | 0-1 yr. 1-5 yrs. >5 yrs. | Total | ||
|---|---|---|---|---|
| Repayments of | ||||
| interest-bearing debt * | 300 | 17,843 | 0 18,143 | |
| Advance payments from tenants | 183 | 0 | 0 | 183 |
| Interest rate swaps | ||||
| (undiscounted) | 266 | 265 | 0 | 531 |
| Trade payables and other | ||||
| short-term debt | 222 | 0 | 0 | 222 |
| Interest on loans | 1,389 | 679 | 0 | 2,067 |
| Total | 2,360 | 18,787 | 0 | 21,146 |
The board and management acknowledge that uncertainty remains over the ability of the Group to meet its liabilities timely, and to refinance or repay its banking facilities as they fall due. However, the board and management has a reasonable expectation that the Group will be able to secure adequate resources to continue in operational existence for the foreseeable future. If for any reason the Group is unable to continue as a going concern, it could have an impact on the Group's ability to realise assets at their recognised values and to extinguish liabilities in the normal course of business at the amounts stated in the consolidated financial statements.
Fair value of investment property (estimate) Investment property is recognised at fair value. A separate valuation is carried out by an independent expert in which the property is assessed using updated macro assumptions (market-based rent rates, discount rates, inflation expectations, economic growth, etc.) The Company bases the fair value of investment property on external valuations by independent appraisers. There are multiple methods for assessing the fair value of investment property. The Group has to date used the discounted cash flow method, which is the present value of estimated future
| As at 31 December 2016 | 0-1 yr. 1-5 yrs. >5 yrs. | Total | ||
|---|---|---|---|---|
| Repayments of | ||||
| interest-bearing debt * | 2,366 18,777 | 0 21,143 | ||
| Advance payments from tenants | 840 | 0 | 0 | 840 |
| Interest rate swaps | ||||
| (undiscounted) | 444 | 623 | 0 | 1,067 |
| Trade payables and other | ||||
| short-term debt | 880 | 0 | 0 | 880 |
| Interest on loans | 1,433 | 2,082 | 0 | 3,515 |
| Total | 5,962 | 21,482 | 0 27,444 |
| As at 31 December 2017 | 0-3 m. 3-6 m. 6-9 m. 9-12 m. Sum | ||||
|---|---|---|---|---|---|
| Repayments of | |||||
| interest-bearing debt | 0 | 0 | 0 | 300 | 300 |
| Interest on loans | 344 | 348 | 348 | 348 1,398 | |
| Interest rate swaps | |||||
| (undiscounted) | 88 | 71 | 58 | 49 | 266 |
| Sum first year loan and swaps 432 | 419 | 406 | 697 1,955 |
| GROUP | ||
|---|---|---|
| Value as valued by an independent valuer: | 2017 | 2016 |
| As at 1 January | 30,500 | 34,700 |
| Value Adjustment Investment Property * | -3,920 | -4,200 |
| Value per Closing date | 26,580 | 30,500 |
| Other assets recognised as part of Investment Property: | ||
| As at 1 January | 715 | 4,250 |
| Changes in carrying value of land plot lease agreements ** | -6 | 32 |
| Changes in carrying value of embedded derivatives contract *** | -529 | -3,567 |
| Value per Closing date | 180 | 715 |
| Carrying value of Investment Property IFRS 01.01 | 31,215 | 38,950 |
| Carrying value of Investment Property IFRS 31.12 | 26,760 | 31,215 |
* The functional currency of the Russian subsidiaries including the buildings in Russian Rouble. The fair value changes has two elements:
| GROUP | ||
|---|---|---|
| 2017 | 2016 | |
| Change in RUB over income statement | -5,398 | -10,394 |
| Translation Differences over comprehensive Income | 943 | 6,194 |
| Net movement in fair value | -4,455 | -4,200 |
** The Company has capitalised land plot leaseagreements in accordance with IAS 40 Investment Property and IAS 17 Leases. *** In 2015 The Company signed an agreement on a lease reduction with the anchor tenant in Moscow. Reduction is in practice done by agreeing a ceiling on exchange rate USD/RUB = 45. This arrangement shall in accordance with IFRS be treated as a financial derivative.This derivative is related to the investment property. Following the termination from said anchor tenants, the embedded derivative was de-recognised on 31 May 2017. On the closing date, the group did not have any such embedded derivative (see liabilities in note 10).
The valuation of investment property as 31 December 2016 and 2017 has been performed by an independent expert valuer, Cushman & Wakefield in Moscow. The variables used for valuation are both company specific and marked derived. Company specific variables include contractual rental income and expenses. Market derived variables include, inter alia, market rent rates, market discount rates and market capitalisation rates. Also see note 5 for critical accounting estimates and assumptions.
cash flows, using known contractual parameters, as well as expectations for market development. This method is the most widely recognised method for valuation of real estate. A valuation is only an estimate, the outcome of which depends on the assumptions adopted by the valuer. Such assumptions may account for the potential of a property in a complex market environment in different ways. See note 6 for more information about the investment property.
Fair value of derivatives and other financial instruments (estimate)
The fair value of financial instruments traded in active markets is based on quoted market prices at the transfer date. The quoted market price used for financial assets held by the Group is the current bid price. The Group has instruments for which valuation techniques must be applied to determine fair value. The fair value of embedded derivatives is estimated based on currency forecasts and then calculated using the Black & Scholes model. The fair value of interest rate swaps and forward contracts is calculated by the issuing financial institution as the present value of future estimated cash flows. The carrying amount of trade receivables (face value minus provision for bad debts) and trade payables is not considered to deviate significantly from fair value.
| Group company | Location | Formed/ Acquired Ownership | |
|---|---|---|---|
| OOO Martex | Russia | 2007 | 100% |
| Tiberton Yard Holding 2 Ltd | Cyprus | 2008 | 100% |
| Gasor Consulting Ltd | Cyprus | 2008 | 100% |
| Storm Real Estate Ltd | Cyprus | 2009 | 100% |
| Computers and telephony |
Sum | Computers and telephony |
Sum | |
|---|---|---|---|---|
| Historic cost | 2017 | 2017 | 2016 | 2016 |
| At 1 January | 156 | 156 | 138 | 138 |
| Additions | 0 | 0 | 18 | 18 |
| Disposals | 0 | 0 | 0 | 0 |
| At 31 December | 156 | 156 | 156 | 156 |
| Depreciation and impairment | ||||
| At 1 January | -138 | -138 | -118 | -118 |
| Depreciations this period | -4 | -4 | -6 | -6 |
| Translation differences of depreciations | ||||
| and write-downs | -4 | -4 | -14 | -14 |
| At 31 December | -146 | -146 | -138 | -138 |
| Net book value 31 December | 10 | 10 | 18 | 18 |
Storm Real Estate ASA has in 2016 carried out a cross-border merger with subsidiary Tiberton Yard Finance Ltd (Cyprus). See note 2 to the parent company's accounts for information about the merger.
In the Gasfield building in Moscow, the anchor tenant until 31 May 2017 was LLC Gazprom Tsentrremont who rented approx 78% of the area. As at 31 December 2017 the group had rented out 5,220 sq.m. across 44 different tenants.
| Independent valuer's valuation parameters | 31.12.2017 | 31.12.2016 |
|---|---|---|
| Discount rates | 14.5 % | 12.5 % |
| Capitalisation rates | 10.5 % | 11.5 % |
| Market rates, RUB/sq.m (net of VAT and op.ex), main office areas | 18,000 | 18,000 |
| Sensitivity analysis at 31 December 2017, million USD | 31.12.2017 | 31.12.2016 |
| Effect of an increase in discount rates of 1% | -1.0 | -1.0 |
| Effect of an increase in capitalisation rates of 1% | -1.7 | -1.7 |
| Specification of tenants representing more than 10% of the group's income | 2017 | 2016 |
|---|---|---|
| LLC Gazprom Tsentrremont | 2,180 | 5,577 |
There are no fixed assets in the parent company. Exchange differences have been included in disposals and depreciations. PP&E are recognised at historic cost. Computers & telephony is computers and telephony equiment, depreciated straight line over the lifespan of the assets (3 years for computers and 7 years for telephone equipment).
| GROUP | ||
|---|---|---|
| Future minimum rents receivable under non-cancellable contracts are as follows: | 31.12.2017 | 31.12.2016 |
| Within 1 year | 1,109 | 2,557 |
| Between 1 and 5 years | 822 | 478 |
| Over 5 years | 6 | 0 |
| Sum | 1,938 | 3,035 |
| Derivative liabilities not designated as hedges | 31.12.2017 | 31.12.2016 |
|---|---|---|
| Interest rate swaps | -528 | -1,006 |
| Embedded derivatives | 0 | -529 |
| Land plot leases | -180 | -186 |
| Sum derivative liabilities not designated as hedges | -708 | -1,721 |
| Total other financial liabilties | -708 | -1,721 |
| Interest bearing loans | 31.12.2017 | 31.12.2016 |
|---|---|---|
| Interest bearing loans | 18,136 | 21,081 |
| Total interest bearing loans | 18,136 | 21,081 |
Embedded financial derivatives occur as a result of currency fluctuations between RUB and USD. Previously, many tenancy lease agreements were in USD, and included a clause with a minimum and maximum exchange rate for the conversion and payment in RUB. In 2015 an agreement was signed with the achor tenant on a maximum exchange rate of USD/RUB = 45. Roubles had depreciated by the reporting date 31.12.2016, hence a negative value was recognized on the embedded derivatives on that date. As at 31.12.2017, the group did not have any such embedded derivative. The grossed-up presentation of this currency derivative has not had an effect on the company's equity. Also see note 6 regarding the recognition of an identical amount associated with investment property.
The parent company has entered into interest swap agreements. Fair values of the interest swaps are calculated based on expectations on future cash flows with today's interest rates and the yield curve over the remaining fixed period.
The below table shows an analysis of fair values of assets and liabilities in the group, grouped by level in the fair value hierarchy, which either are measured at fair value or where information about the fair value is provided.
Level 1 - Quoted prices in active markets that the entity can access at the measurement date. Level 2 – Use of a model with inputs other than level 1 that are directly or indirectly observable market data. Level 3 - Use of a model with inputs that are not based on observable market data.
| Sum | |||
|---|---|---|---|
| 26,760 | |||
| 0 | 0 | 26,760 | 26,760 |
| Level 1 0 |
Level 2 0 |
Level 3 26,760 |
| Financial liabilties measured at fair value | ||||
|---|---|---|---|---|
| / where fair value must be presented | Level 1 | Level 2 | Level 3 | Sum |
| Interest bearing loans | 0 | 18,136 | 0 | 18,136 |
| Land plot leases | 0 | 180 | 0 | 180 |
| Interest rate swaps | 0 | 528 | 0 | 528 |
| Sum | 0 | 18,844 | 0 | 18,844 |
(*) See Note 6 for information regarding fair value of investment properties
Set out below is a comparison by class of the carrying amounts and fair value of the Group's financial instruments that are carried in the financial statement.
| Carrying amount | Fair value | |||
|---|---|---|---|---|
| 31.12.2017 | 31.12.2016 | 31.12.2017 | 31.12.2016 | |
| Financial assets | ||||
| Trade receivables | 37 | 3 | 37 | 3 |
| Other receivables | 228 | 470 | 228 | 470 |
| Derivative financial assets at fair value through profit or loss | 0 | 0 | 0 | 0 |
| Held-for-trading financial investments | 0 | 0 | 0 | 0 |
| Cash and short-term deposits | 2,247 | 4,371 | 2,247 | 4,371 |
| Sum | 2,512 | 4,884 | 2,512 | 4,844 |
| Financial liabilities | ||||
| Interest-bearing loans and borrowings | 18,136 | 21,081 | 18,143 | 21,143 |
| Trade liabilities | 37 | 84 | 37 | 84 |
| Other short-term liabilities | 367 | 1,250 | 367 | 1,250 |
| Land plot leases | 180 | 186 | 180 | 186 |
| Derivative financial liabilities at fair value through profit or loss | 0 | 1,535 | 0 | 1,535 |
| Sum | 18,721 | 24,136 | 18727 | 24,198 |
Cash and cash equivalents include restricted cash of 238 (2016: 238).
| GROUP | ||||
|---|---|---|---|---|
| Interest bearing borrowings at amortised cost | Interest | Maturity | 31.12.2017 | 31.12.2016 |
| Secured bank loan | LIBOR + margin | June 2019 | 18,136 | 21,081 |
| Sum interest bearing borrowings at amortised cost | 18,136 | 21,081 | ||
The nominal value of the bank loan as of 31 December 2016 was 21,143 and as of 31 December 2017 was 18,143. No fair value adjustment to the bank debt has been made as the value of the investment property exceeds the loan value.
The investment property Gasfield in Moscow is pledged as security for the bank loan, book value 26,580.
The interest on the loan is calculated based on 3 month USD LIBOR plus the following margins:
| For loan to value up to 50% | 4.50% |
|---|---|
| For loan to value up to 55% | 4.75% |
| For loan to value up to 60% | 5.00% |
| For loan to value up to 65% | 5.50% |
| For loan to value up to 70% | 6.00% |
| For loan to value over 70% | 8.00% |
In 2017 the company's agreed amended terms to the loan agreement.
The amended terms include
postponement of the maturity date to June 2019
no amortisation up to and including Q3 2018
waiving of covenants up to and including Q3 2018
adjusted covenants for the period Q4 2018 to maturity, adapted to the changed market conditions in Russia.
The covenants from Q4 2018 include an Interest Service Ratio on Russia level of 1.1x, and quarterly amortisations at USD 0.3 million. LTV and equity ratio covenants remain at 70% and 20%, respectively. Liquidity covenant of USD 0.7 million.
These amendments were subject to that the company obtained new capital of at least USD 3 million, to be paid to the bank as an extraordinary amortisation. The company did raise USD 3 million in June 2017 and repaid this the required extraordinary amortisation in July 2017.
| Other receivables | 31.12.2017 | 31.12.2016 |
|---|---|---|
| Taxes receivable * | 50 | 218 |
| Other receivables | 215 | 256 |
| Sum other receivables | 265 | 473 |
No trade receivables were overdue as of 31 December 2016 or 31 December 2017.
*) The Russian entities have income tax and VAT receivable related to previous years.
| GROUP | ||
|---|---|---|
| Finance income | 2017 | 2016 |
| Interest income | 76 | 178 |
| Changes in fair value, held-for-trading financial investments | 0 | 0 |
| Changes in fair value, financial derivatives over profit and loss | 478 | 395 |
| Other finance income | 0 | 0 |
| Sum finance income | 575 | 573 |
| Finance costs | 2017 | 2016 |
| Interest costs from loans measured at amortised cost | -1,942 | -2,075 |
| Sale of subsidiary | 0 | 0 |
| Changes in fair value, financial derivatives over profit and loss | 0 | 0 |
| Changes in fair value, held-for-trading financial investments | 0 | 23 |
| Other finance costs | -57 | -93 |
| Sum finance costs | -1,999 | -2,146 |
| Foreign exchange gains and losses | 2017 | 2016 |
| Foreign exchange gains | 645 | 46 |
| Foreign exchange losses | -617 | -115 |
| Sum foreign exchange gains and losses | 29 | -69 |
| Net finance gains (losses), continuing operations | -1,395 | -1,643 |
| Other operating expenses | 2017 | 2016 |
|---|---|---|
| Management fees (*) | 364 | 1,012 |
| Legal, agency and consultancy fees | 111 | 138 |
| Auditors | 118 | 239 |
| Other operating expenses | 153 | 212 |
| Depreciation | 4 | 6 |
| Sum other operating expenses | 749 | 1,607 |
(*) see further details about management fees in notes 16 and 21.
| Auditor fees | (auditor fees are quoted excl. vat) | 2017 | 2016 |
|---|---|---|---|
| Audit fees | 71 | 94 | |
| Other services | 47 | 146 | |
| Sum auditor expenses | 118 | 239 |
| Finance income and costs from discontinued operations: | 2017 | 2016 |
|---|---|---|
| Net Currency Gain (Loss) | 0 | 706 |
| Fair Value Adjustment, Financial Investments | 0 | -2,975 |
| Sum other operating expenses | 0 | -2,268 |
| Personnel costs | 2017 | 2016 |
|---|---|---|
| Salaries and bonuses | 162 | 289 |
| Board fees | 48 | 75 |
| Social security taxes | 41 | 71 |
| Sum personnel costs | 251 | 435 |
| Number of employees | 5 | 5 |
| Average number of employees | 5 | 5 |
There are no pension schemes in the group. There are no employees in the Norwegian parent company, and therefore no obligation for the Norwegian mandatory pension scheme (OTP). The company does not have employed management, but is managed by Storm Capital Management Ltd on a asset management contract. For this the company has paid a management fee. See note 21 Related Party transactions. Also see note 8 to the parent company's accounts for a list of board fees.
000 USD
| 2017 | 2016 | |
|---|---|---|
| Taxes payable | 56 | 314 |
| Advance rents received | 183 | 840 |
| Other current liabilities | 128 | 180 |
| Sum other current liabilities | 367 | 1,334 |
000 USD
| Tax recognised over consolidated income statement | 2017 | 2016 |
|---|---|---|
| Current income tax | 142 | 918 |
| Movement in deferred tax | -619 | -2,078 |
| Sum income tax | -477 | -1,160 |
| The tax on the group's profit before tax differs from the theoretical amount as follows | 2017 | 2016 |
|---|---|---|
| Profits before tax | -8,775 | 1,946 |
| Tax at domestic tax rates applicable to respective countries | -1,866 | 527 |
| Tax effects of: | ||
|---|---|---|
| FX variations between functional currency and tax currency | 399 | 241 |
| Income not subject to tax | -558 | -2,543 |
| Expenses not deductible for tax purposes | 796 | 803 |
| Withholding tax from foreign entities at different tax rate | 30 | 187 |
| Tax losses for current year not recognised | 258 | -519 |
| Recognition of earlier years' non-recognised deferred tax expense | 463 | 0 |
| Recognition of earlier years' non-recognised deferred tax assets | 0 | 0 |
| Changes in deferred tax due to changed tax rate | 0 | 143 |
| Effect of tax merger | 0 | 0 |
| Sum income tax | -477 | -1,160 |
| NOTE 19 Deferred tax | 000 USD | |
|---|---|---|
| Deferred tax reversal | 2017 | 2016 |
| Deferred tax liabilities reversed in less than 12 months | 0 | 0 |
| Deferred tax liabilities reversed after more than 12 months | 284 | 864 |
| Net deferred tax liability | 284 | 864 |
| Deferred tax expense | 2017 | 2016 |
| Per 1 January | 864 | 4,513 |
| Charged over income statement in the period | -1,082 | -2,078 |
| Use of non-recognised deferred tax | 0 | 0 |
| Charged over comprehensive income in the period | 39 | 624 |
| Recognition of earlier years' non-recognised deferred tax | 463 | 0 |
Effect of intra-group merger 0 -5,646 Current year tax losses not recognised 0 3,451 Deferred tax liability as per 31 December 284 864
| Ordinary earnings per share | 2017 | 2016 |
|---|---|---|
| Net profit attributable to ordinary equity holders of parent company (000 USD) | -5,524 | -10,160 |
| Weighted average number of shares | 54,208,637 | 18,345,623 |
| Net profit per share attributable to ordinary equity holders (1 USD) | -0,10 | -0,55 |
| Total comprehensive income per share | 2017 | 2016 |
|---|---|---|
| Total comprehensive income (000 USD) | -4,154 | -4,807 |
| Weighted number of shares | 54,208,637 | 18,345,623 |
| Total comprehensive income per share (1 USD) | -0,08 | -0,26 |
| Deferred tax assets | C/forward losses | Receivables | Non current assets | Other | Sum |
|---|---|---|---|---|---|
| 31 December 2015 | 1,288 | 0 | 0 | 358 | 1,646 |
| Period movement | 0 | 0 | 0 | -18 | -18 |
| Period movement (non-recognised) | -1,288 | 0 | 0 | -340 | -1,628 |
| 31 December 2016 | 0 | 0 | 0 | 0 | 0 |
| Period movement (recognised) | 0 | 0 | 0 | 0 | 0 |
| Period movement (non-recognised) | 0 | 0 | 0 | 0 | 0 |
| 31 December 2017 | 0 | 0 | 0 | -0 | -0 |
| Deferred tax | |||||
| 31 December 2015 | 0 | -2,569 | -2,354 | -1,238 | -6,161 |
| Period movement Period movement (non-recognised) |
0 0 |
0 0 |
1,472 2 |
0 3,824 |
1,472 3,826 |
| 31 December 2016 | 0 | -2,569 | -880 | 2,586 | -864 |
| Period movement | 0 | 0 | 580 | 0 | 580 |
| Period movement (non-recognised) | 0 | 0 | 0 | 0 | 0 |
| 31 December 2017 | 0 | -2,569 | -300 | 2,586 | -284 |
| Net deferred tax liabilities 2016 | 0 | -2,569 | -880 | 2,586 | -864 |
| Net deferred tax liabilities 2017 | 0 | -2,569 | -300 | 2,586 | -284 |
The Group has an asset management agreement with Storm Capital Management Ltd. on Asset Management services. Board member Morten E. Astrup is sole shareholder of Storm Capital Management Ltd.
In December 2015 the Company received a notice of termination of the management agreement from Storm Capital Management Ltd. The agreement expired 21 December 2016, with a termination fee payable. The parties entered into a new management agreement from 21 December 2016 at NOK 750k per quarter.
| Transactions with related parties | 2017 | 2016 |
|---|---|---|
| Storm Capital Management Ltd. - management fee | 364 | 324 |
| Storm Capital Management Ltd. - termination fee | 0 | 688 |
| Storm Capital Management Ltd. - accounting services | 30 | 66 |
| Total related party transactions | 393 | 1,078 |
The balance againts related parties other than group companies were nil as of 31 December 2015 and 31 December 2016.
Information regarding this aspect is included in the note regarding the parent company. See note 12 in the financial statement of Storm Real Estate ASA.
The segment investment property in Russia contains elements from several group companies, e.g. borrowing costs and hedging derivatives which are from the parent company.
| 000 USD | ||||
|---|---|---|---|---|
| Real estate | Property | |||
| Segment profits 2017 | shares | Russia | Other | Sum |
| Operating income | 0 | 3,034 | 0 | 3,034 |
| Direct propery related expenses | 0 | -1,246 | 4 | -1,242 |
| Indirect administration costs | 0 | -266 | -734 | -1,000 |
| Value change investment property measured | ||||
| in local currency RUB | 0 | -5,398 | 0 | -5,398 |
| Operating profit | 0 | -3,876 | -730 | -4,606 |
| Finance income | 0 | 68 | 507 | 575 |
| Finance costs | 0 | -1,921 | -79 | -1,999 |
| Net currency income / costs | 0 | -18 | 47 | 29 |
| Earnings before tax | 0 | -5,747 | -254 | -6,001 |
| Tax | 0 | 249 | 228 | 477 |
| Annual profit | 0 | -5,497 | -27 | -5,524 |
| Other comprehensive income | 0 | 1,370 | 0 | 1,370 |
| Total Comprehensive Income | 0 | -4,127 | -27 | -4,154 |
| Real estate | Property | |||
|---|---|---|---|---|
| Assets and Liabilities | shares | Russia | Other | Sum |
| Assets | 0 | 27,831 | 1,804 | 29,635 |
| Liabilities | 0 | 19,225 | 415 | 19,640 |
| Net asset values | 0 | 8,606 | 1,389 | 9,994 |
The Company has in 2016 sold their entire investment in TK Development, which entirely constituted the reporting segment "real estate shares". In accordance with IFRS 5 this is presented as "discontinued operations".
| Net profit from discontinued operations: | 2017 | 2016 |
|---|---|---|
| Value change | 0 | -2,975 |
| Currency fluctuations (*) | 0 | 706 |
| Result before tax | 0 | -2,268 |
| Tax cost | 0 | 0 |
| Net profit | 0 | -2,268 |
| Other Revenues and Costs | 0 | 0 |
| Net profit, discontinued operations | 0 | -2,268 |
| Shares | 0 | 18,345,623 |
| Earnings per share, discontinued operations. | 0,00 | -0.12 |
(*) The investment in TK Development A/S (DKK) were not hedged.
| 000 USD | ||||
|---|---|---|---|---|
| Real estate | Property | |||
| Segment profits 2016 | shares | Russia | Other | Sum |
| Operating income | 0 | 6,197 | 0 | 6,197 |
| Direct propery related expenses | 0 | -1,175 | 6 | -1,169 |
| Indirect administration costs | 0 | -415 | -1,628 | -2,043 |
| Value change investment property measured | ||||
| in local currency RUB | 0 | -10,394 | 0 | -10,394 |
| Operating profit | 0 | -5,787 | -1,622 | -7,409 |
| Finance income | -2,973 | 24 | 549 | 573 |
| Finance costs | 0 | -1,947 | -201 | -5,121 |
| Net currency income / costs | 704 | -51 | -16 | 637 |
| Earnings before tax | -2,269 | -7,761 | -1,290 | -11,320 |
| Tax | 0 | 652 | 508 | 1,160 |
| Annual profit | -2,269 | -7,109 | -782 | -10,160 |
| Other comprehensive income | 0 | 5,352 | 0 | 5,352 |
| Total Comprehensive Income | -2,269 | -1,756 | -782 | -4,807 |
| Real estate | Property | |||
| Assets and Liabilities | shares | Russia | Other | Sum |
| Assets | 0 | 31,873 | 4,204 | 36,077 |
| Liabilities | 0 | 24,448 | 664 | 25,111 |
| Net asset values | 0 | 7,425 | 3,540 | 10,966 |
| Cash flows from discontinued operations | 2017 | 2016 |
|---|---|---|
| Net Cash Flow From Operating Activities | 0 | 0 |
| Net Cash Flow From Investment Activities | 0 | 10,372 |
| Net Cash flow From Financing Activities | 0 | 0 |
| Net Cash flows from discontinued operations | 0 | 10,372 |
Pursuant to amendments to IAS 7, the group is from 2017 required to disclose changes in liabilities arising from financing activities.
| 31.12.2016 | Cash flows | Other | 31.12.2017 | |
|---|---|---|---|---|
| Interest bearing loans - non-current | 18,716 | -3,000 | 2,120 | 17,836 |
| Interest bearing loans - current | 2,366 | 0 | -2,066 | 300 |
| Accrued interest | 78 | -78 | 51 | 51 |
| Total liabilities from financing activities | 21,159 | -3,078 | 105 | 18,186 |
| 31.12.2015 | Cash flows | Other | 31.12.2016 | |
| Interest bearing loans - non-current | 0 | -3,637 | 22,353 | 18,716 |
| Interest bearing loans - current | 24,707 | 0 | -22,342 | 2,366 |
| Accrued interest | 91 | -91 | 78 | 78 |
| Total liabilities from financing activities | 24,798 | -3,729 | 90 | 21,159 |
The 'Other' column includes the effect of reclassification of non-current portion of interest-bearing loans and borrowings. including the effect of accrued but not yet paid interest on interest-bearing loans and borrowings, and the effect of non-cash flow amortisation of borrowing costs.
| Note | 2017 | 2016 |
|---|---|---|
| 0 | ||
| 0 | ||
| -84 | ||
| -1,491 | ||
| -1,545 | ||
| -646 | -1,575 | |
| 3,532 | ||
| -6,784 | ||
| 1,338 | ||
| -1,915 | ||
| -3,490 | ||
| 41 | ||
| -3,531 | ||
| 0 | ||
| 0 | ||
| 8 7 6 6 6 10 |
0 0 -56 -590 -646 1,089 -4,797 283 -3,425 -4,070 30 -4,100 0 0 |
Translation differences from foreign operations 0 0
| 0 | |
|---|---|
| -4,100 | -3,531 |
| 0 |
All numbers in 000 USD Note 31.12.2017 31.12.2016 ASSETS Non-current assets Investment in subsidiaries 2 24,444 27,147 Loans to subsidiaries 13 4,566 4,480 Total non-current assets 29,010 31,627 Current assets Receivables from group companies 13 360 144 Other receivables 5 91 87 Cash and cash equivalents 1,891 4,117 Total current assets 2,343 4,348 TOTAL ASSETS 31,353 35,976 EQUITY AND LIABILITIES Paid-in equity Ordinary shares 12 4,575 1,236 Share premium 21,036 21,036 Other paid-in equity 56,605 56,763 Total paid-in equity 82,216 79,035 Other equity Other equity -72,177 -68,077 Total other equity -72,177 -68,077 TOTAL EQUITY 10,039 10,958 Liabilities Non-current liabilities Loans from credit institutions 4 17,836 18,716 Financial derivatives 3 528 562 per 31 December
| All numbers in 000 USD | Note | 31.12.2017 31.12.2016 | |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Investment in subsidiaries | 2 | 24,444 | 27,147 |
| Loans to subsidiaries | 13 | 4,566 | 4,480 |
| Total non-current assets | 29,010 | 31,627 | |
| Current assets | |||
| Receivables from group companies | 13 | 360 | 144 |
| Other receivables | 5 | 91 | 87 |
| Cash and cash equivalents | 1,891 | 4,117 | |
| Total current assets | 2,343 | 4,348 | |
| TOTAL ASSETS | 31,353 | 35,976 | |
| EQUITY AND LIABILITIES | |||
| Paid-in equity | |||
| Ordinary shares | 12 | 4,575 | 1,236 |
| Share premium | 21,036 | 21,036 | |
| Other paid-in equity | 56,605 | 56,763 | |
| Total paid-in equity | 82,216 | 79,035 | |
| Other equity | |||
| Other equity | -72,177 | -68,077 | |
| Total other equity | -72,177 | -68,077 | |
| TOTAL EQUITY | 10,039 | 10,958 | |
| Liabilities | |||
| Non-current liabilities | |||
| Loans from credit institutions | 4 | 17,836 | 18,716 |
| Financial derivatives | 3 | 528 | 562 |
| Total non-current liabilities | 18,364 | 19,278 | |
| Current liabilities | |||
| Trade liabilities | 4 | 40 | |
| Corporate tax payable | 10 | 0 | 0 |
| Loans from credit institutions | 4 | 300 | 2,366 |
| Financial derivatives | 0 | 444 | |
| Payables to group companies | 2,542 | 2,752 | |
| Other short-term liabilities | 9 | 103 | 138 |
| Total current liabilities | 2,950 | 5,740 | |
| TOTAL LIABILTIES | 21,314 | 25,018 | |
| TOTAL EQUITY AND LIABILITIES | 31,353 | 35,976 |
The Board of Directors and General Manager of Storm Real Estate ASA
Oslo, 16 April 2018
Morten E. Astrup Board member
Stein Aukner
Nini E.H. Nergaard Board member
Einar Pedersen General Manager
Chairperson
Kim Mikkelsen Board member
Anna Muisej Aanensen Board member
| All numbers in 000 USD | Note | 2017 | 2016 |
|---|---|---|---|
| Cash Flow from operational activities | |||
| Earnings before tax | -4,070 | -3,490 | |
| adjusted for : | |||
| finance income | 6 | -1,089 | -3,532 |
| finance expenses | 6 | 4,797 | 6,784 |
| net currency gains | -261 | -1,659 | |
| Cash Flow before changes in working capital | -624 | -1,896 | |
| Change in working capital: | |||
| trade receivables and other receivables | -4 | -75 | |
| trade payables and other payables | -137 | -114 | |
| paid taxes | 0 | -192 | |
| Net cash flow from operational activities | -765 | -2,277 | |
| Net cash flow from investment activities | |||
| Net payments in/out from intra-group loans | 0 | 1,625 | |
| Payments in for financial investments | 0 | 15,225 | |
| Dividends received | 0 | 2,375 | |
| Interest received | 280 | 574 | |
| Net cash flow from investment activities | 280 | 19,799 | |
| Cash flow from financing activities | |||
| Share issue | 3,181 | 0 | |
| Repayment of loans | 4 | -3,000 | -3,637 |
| Dividends paid | 0 | -8,420 | |
| Interest paid | -1,932 | -2,095 | |
| Net cash flow from financing activities | -1,751 | -14,152 | |
| Net change in cash and cash equivalents | -2,236 | 3,370 | |
| Carried forward cash and cash equivalents | 4,117 | 1,021 | |
| Currency exchange variation on cash and cash equivalents | 11 | -273 | |
| Cash and cash equivalents at end of period | 1,891 | 4,117 | |
| Including restricted cash and deposits | 237 | 237 |
| Paid-in equity | Other equity | |||||
|---|---|---|---|---|---|---|
| Share capital |
Share premium |
Other paid-in equity |
Retained earnings |
Total equity |
||
| Note | ||||||
| 1 January 2016 | 1,236 | 21,036 | 56,761 | -58,148 | 20,887 | |
| Profit (loss) for the period | -3,531 | -3,531 | ||||
| Dividends paid Merger with subsidiary |
2 | -8,420 2,021 |
-8,420 2,021 |
|||
| Sum | 0 | 0 | 0 | -9,929 | -9,929 | |
| 31 December 2016 | 1,236 | 21,036 | 56,761 | -68,077 | 10,958 | |
| 1 January 2017 | 1,236 | 21,036 | 56,761 | -68,077 | 10,958 | |
| Profit (loss) for the period | -4,100 | -4,100 | ||||
| Capoital increase | 12 | 3,339 | -158 | 3,181 | ||
| Sum | 3,339 | 0 | -158 | -4,100 | -919 | |
| 31 December 2017 | 4,575 | 21,036 | 56,603 | -72,177 | 10,039 |
for the period 1 January - 31 December
Storm Real Estate ASA is a public limited liability company registered in Norway. Its head office is at Dronning Mauds gate 3, Oslo. Storm Real Estate ASA uses a simplified version of IFRS as accounting principle. There are no material effects in comparison with ordinary IFRS principles used in the Group. Also see note 3 to the consolidated accounts for further information on accounting principles.
Subsidiaries and investments in related companies are recognised as cost. Investments are recognised at cost for investments in subsidiaries unless there have been impairment of the values. A write-down to fair value will be done if the impairment is not considered temporary and impairment is considered required by IFRS. Write-downs will be reversed if the requirement for impairment is no longer present.
Income is recognised when it is probable that transactions will generate future economic benefits in favour of the company, and the amount can be reliably estimated. Sales revenues are presented net of value added tax and discounts. Revenues from sale of services are recognised in line with the provision of the services.
| NOTE 2 Investment in subsidiaries | 000 USD |
|---|---|
| ----------------------------------- | --------- |
| SRE ASA investment in subsidiaries | Formed/ | Location acquired Ownership | Equity 31.12.2017 |
Book value SRE ASA 2017 |
Book value SRE ASA 2016 |
|
|---|---|---|---|---|---|---|
| Gasor Consulting Ltd * | Cyprus | 2015 | 100% | 2,642 | 24,444 | 27,144 |
| Tiberton Yard Holding 2 Ltd | Cyprus | 2015 | 100% | -11 | 0 | 2 |
| Storm Real Estate Ltd | Cyprus | 2009 | 100% | 1 | 0 | 1 |
| Sum | 2,632 | 24,444 | 27,147 |
The parent company has in 2017 made an impairment provision due to the reduced value of the underlying investment property.
| 000 USD | |
|---|---|
| 31.12.2016 | |
| 1,006 | |
| 528 | 1,006 |
| 528 | 1,006 |
| 31.12.2017 528 |
| Interest bearing loans | 31.12.2017 | 31.12.2016 |
|---|---|---|
| Interest bearing loans | 18,136 | 21,081 |
| Total interest bearing loans | 18,136 | 21,081 |
The parent company has entered into interest swap agreements which fixes the interest on parts of the loan. Fair values of the interest swaps are calculated based on expectations on future cash flows with today's interest rates and the yield curve over the remaining fixed period. The company does not use hedge accounting.
The below table shows an analysis of fair values of assets and liabilities in the parent company, grouped by level in the fair value hierarchy, which either are measured at fair value or where information about the fair value is provided.
Level 1 - Quoted prices in active markets that the entity can access at the measurement date. Level 2 - Use of a model with inputs other than level 1 that are directly or indirectly observable market data. Level 3 - Use of a model with inputs that are not based on observable market data.
000 USD
| Financial liabilties measured at fair value | ||||
|---|---|---|---|---|
| / where fair value must be presented | Level 1 | Level 2 | Level 3 | Sum |
| Interest bearing borrowings | 0 | 18,136 | 0 | 18,136 |
| Interest rate swaps | 0 | 528 | 0 | 528 |
| Sum | 0 | 18,664 | 0 | 18,664 |
| Interest bearing borrowings at amortised cost | Interest | Maturity | 31.12.2017 | 31.12.2016 |
|---|---|---|---|---|
| Secured bank loan | LIBOR + margin | June 2019 | 18,136 | 21,081 |
| Sum interest bearing borrowings at amortised cost | 18,136 | 21,081 |
The nominal value of the bank loan as of 31 December 2016 was 21,143 and as of 31 December 2017 was 18,143.
The investment property Gasfield in Moscow is pledged as security for the bank loan, book value 26,580.
The interest on the loan is calculated based on 3 month USD LIBOR plus the following margins:
| For loan to value up to 50% | 4,50% |
|---|---|
| For loan to value up to 55% | 4,75% |
| For loan to value up to 60% | 5,00% |
| For loan to value up to 65% | 5,50% |
| For loan to value up to 70% | 6,00% |
| For loan to value over 70% | 8,00% |
In 2017 the company's agreed amended terms to the loan agreement.
The amended terms include
postponement of the maturity date to June 2019
no amortisation up to and including Q3 2018
waiving of covenants up to and including Q3 2018
adjusted covenants for the period Q4 2018 to maturity, adapted to the changed market conditions in Russia
The covenants from Q4 2018 include an Interest Service Ratio on Russia level of 1.1x, and quarterly amortisations at USD 0.3 million. LTV and equity ratio covenants remain at 70% and 20%, respectively. Liquidity covenant of USD 0.7 million.
These amendments were subject to that the company obtained new capital of at least USD 3 million, to be paid to the bank as an extraordinary amortisation. The company did raise USD 3 million in June 2017 and repaid this the required extraordinary amortisation in July 2017.
| Other receivables | 31.12.2017 | 31.12.2016 |
|---|---|---|
| Taxes receivable | 0 | 0 |
| Other receivables | 91 | 87 |
| Sum other receivables | 91 | 87 |
| Finance income | 2017 | 2016 |
|---|---|---|
| Interest income | 8 | 154 |
| Changes in fair value, held-for-trading financial investments | 0 | 0 |
| Interest gains from group companies | 603 | 607 |
| Dividends from subsidiaries | 0 | 2,376 |
| Gains from the disposal of shares in subsidiaries | 0 | 0 |
| Changes in fair value, financial derivatives over profit and loss | 478 | 395 |
| Reversal of provision for loss on group companies | 0 | 0 |
| Other finance revenues | 0 | 0 |
| Sum finance income | 1,089 | 3,532 |
| Finance costs | 2017 | 2016 |
|---|---|---|
| Interest costs from loans measured at amortised cost | -1,963 | -2,075 |
| Changes in fair value, financial derivatives over profit and loss | 0 | 0 |
| Changes in fair value, held-for-trading financial investments | 0 | -2,952 |
| Interest costs from group companies | 0 | 0 |
| Impairment of investment in group companies | -2,804 | -1,695 |
| Other finance costs | -30 | -62 |
| Sum finance costs | -4,797 | -6,784 |
| Foreign exchange gains and losses | 2017 | 2016 |
|---|---|---|
| Foreign exchange gains | 881 | 1,338 |
| Foreign exchange losses | -598 | 0 |
| Sum foreign exchange gains and losses | 283 | 1,338 |
| Net finance gains (losses) | -3,425 | -1,915 |
| Other operating expenses | 2017 | 2016 | |
|---|---|---|---|
| Management fees | 364 | 1,012 | |
| Legal, agency and consultancy fees | 33 | 98 | |
| Auditors | 84 | 199 | |
| Other operating expenses | 110 | 182 | |
| Sum other operating expenses | 590 | 1,491 | |
| Auditor fees | (auditor fees are quoted excl. vat) | 2017 | 2016 |
| Audit fees | 37 | 53 | |
| Other services | 47 | 146 | |
| Sum auditor expenses | 84 | 199 |
| Personnel costs | 2017 | 2016 |
|---|---|---|
| Board fees | 48 | 75 |
| Social security taxes | 8 | 9 |
| Sum personnel costs | 55 | 84 |
The parent company did not have any employees in 2016 or 2017 and therefore no pension scheme.
| Board fees (incl fees for board committees) paid out in the year | 2017 | 2016 |
|---|---|---|
| Stein Aukner, chairman of the board | 250 | 290 |
| Morten E. Astrup | 0 | 0 |
| Kim Mikkelsen | 0 | 165 |
| Nini H. Nergaard | 125 | 125 |
| Christopher W Ihlen (former board member) | 43 | 125 |
| Silje Augustson (former board member) | 0 | 125 |
| Sum board fees | 418 | 830 |
Board members: 125.000 NOK
Board fees for 2017-2018 are subject to approval by the Annual General Meeting in May 2018. The Audit Committee has been discontinued from 2016-2017.
| 2017 | 2016 | |
|---|---|---|
| Accrued expenses | 90 | 45 |
| Other current liabilities | 13 | 93 |
| Sum other current liabilities | 103 | 138 |
| Income statement | 2017 | 2016 |
|---|---|---|
| Current income tax (withholding tax from other jurisdictions) | 30 | 41 |
| Movement in deferred tax | 0 | 0 |
| Sum income tax | 30 | 41 |
| Basis for taxation, parent company | 2017 | 2016 |
| Earnings before tax in functional currency USD | -4,070 | -3,490 |
| FX variations between functional currency and tax currency | 1,664 | 381 |
| Income and expenses not subject to taxation | 1,224 | 3,956 |
| Movement in temporary differences | -1,979 | -2,924 |
| Basis for taxation | -3,161 | -2,740 |
| Tax payable | 0 | 0 |
| Share capital and nominal value | 31.12.2017 | 31.12.2016 |
|---|---|---|
| Shares issued | 88,345,623 | 18,345,623 |
| Nominal amount | 0,40 | 0,40 |
| Share capital | 35,338,249 | 7,338,249 |
All shares are fully paid. There is only one share class. All shares have equal rights.
| NOK | ||||
|---|---|---|---|---|
| 20 largest shareholders as of 31 December 2016 | Type | Country | Shares | % |
| ACONCAGUA MANAGEMENT LTD | LUXEMBOURG | 23,880,399 | 27.0 % | |
| SKANDINAVISKA ENSKILDA BANKEN AB | NOM | SWEDEN | 22,177,036 | 25.1 % |
| J.P. MORGAN BANK LUXEMBOURG SA | NOM | UK | 6,560,151 | 7.4 % |
| BANAN II AS | 2,895,281 | 3.3 % | ||
| PACTUM AS | 2,791,494 | 3.2 % | ||
| AUBERT VEKST AS | 2,495,907 | 2.8 % | ||
| J.P. MORGAN BANK LUXEMBOURG S.A. | NOM | UK | 2,326,118 | 2.6 % |
| ØSTLANDSKE PENSJONISTBOLIGER AS | 1,909,578 | 2.2 % | ||
| ØRN NORDEN AS | 1,082,286 | 1.2 % | ||
| SAMSØ AS | 1,003,419 | 1.1 % | ||
| THORE HYGGEN | 931,250 | 1.1 % | ||
| MOTOR-TRADE EIENDOM OG FINANS AS | 866,811 | 1.0 % | ||
| INGRID MARGARETH LANGBERG | 850,000 | 1.0 % | ||
| ALBION HOLDING AS | 747,625 | 0.8 % | ||
| SVENSKA HANDELSBANKEN AB | NOM | 722,343 | 0.8 % | |
| TDL AS | 476,250 | 0.5 % | ||
| FINANSFORBUNDET | 416,650 | 0.5 % | ||
| BLAKSTAD MASKIN AS | 338,162 | 0.4 % | ||
| EILERTSEN | 303,911 | 0.3 % | ||
| REAL VALUE AS | NORWAY | 303,911 | 0.3 % | |
| Sum 20 largest shareholders | 73,078,582 | 82.7% | ||
| OTHER SHAREHOLDERS | 15,267,041 | 17.3% | ||
| Sum | 88,345,623 | 100.0 % |
* NOM = Nominee investor owning shares on behalf of clients.
The shareholder list shows the shareholder register from VPS as at 31 December 2017.
Any trades via brokers before the closing date which is registered after the closing date is not reflected in the shareholder list.
| Shares held by board members | Shares | % | |
|---|---|---|---|
| Morten E. Astrup | via Aconcagua Management Ltd and Ørn Norden AS, | 24,962,685 | 28.3 % |
| Kim Mikkelsen | via Strategic Investments A/S | 22,177,036 | 25.1 % |
| Stein Aukner | via Banan II AS and Aukner Holding AS | 3,047,235 | 3.4 % |
| Sum | 50,186,956 | 56.8 % |
| Temporary differences, parent company | 31.12.2017 | 31.12.2016 | Change |
|---|---|---|---|
| Financial liabilties | 521 | 951 | -429 |
| Receivables * | 5,213 | 6,895 | -1,682 |
| Tax losses carried forward | 9,011 | 6,432 | 2,578 |
| Sum temporary differences | 14,745 | 14,278 | 467 |
| Tax rate | 23% | 24% | 23% |
| Deferred tax asset (liability) | 3,391 | 3,427 | -35 |
| Recognised deferred tax asset (liability) | 0 | 0 | 0 |
| Non-recognised deferred tax asset (liability) | 3,391 | 3,427 | -35 |
(*) The large movement in temporary differences on receivables is a result of unrealised currency gains on intra-group balances, which were eliminated as a result of the inter-company merger (see note 2).
USD
| Transactions with | 2017 | 2016 |
|---|---|---|
| Storm Capital Management Ltd. - management fee | 364 | 324 |
| Storm Capital Management Ltd. - termination fee | 0 | 688 |
| Storm Capital Management Ltd. - accounting services | 30 | 66 |
| Sum related party transactions | 393 | 1,078 |
The balance againts related parties other than group companies were nil as of 31 December 2016 and 31 December 2017. The parent had the following balances against group companies:
| Current receivables | 31.12.2017 | 31.12.2016 |
|---|---|---|
| Tiberton Yard Holding 2 Ltd | 50 | 47 |
| Storm Real Estate Ltd | 0 | 74 |
| LLC Martex | 311 | 23 |
| Sum current receivables from related parties | 360 | 144 |
| Non-current receivables | 31.12.2017 | 31.12.2016 |
|---|---|---|
| Gasor Consulting Ltd | 0 | 150 |
| LLC Martex | 4,566 | 4,330 |
| Sum non-current receivables from related parties | 4,566 | 4,480 |
The Group has an asset management agreement with Storm Capital Management Ltd. on Asset Management services. Board member Morten E. Astrup is sole shareholder of Storm Capital Management Ltd.
In December 2015 the Company received a notice of termination of the management agreement from Storm Capital Management Ltd. The agreement expired 21 December 2016, with a termination fee payable. The parties entered into a new management agreement from 21 December 2016 at NOK 750k per quarter.
USD
| Current liabilities | 31.12.2017 | 31.12.2016 |
|---|---|---|
| Tiberton Yard Holding 2 Ltd | -26 | -22 |
| Gasor Consulting Ltd | -34 | -212 |
| Liabilities towards group companies, bank cash pooling | -2,482 | -2,518 |
| Sum current liabilities towards group companies | -2,542 | -2,752 |
| Net receivables (liabilities) , group companies | 2,384 | 1,872 |
The Board of Directors and the General Manager have today reviewed and approved the Board of Directors' report and the consolidated and separate financial statements for Storm Real Estate ASA and the Group for the 2017 calendar year as at 31 December 2017.
The consolidated financial statements have been prepared in accordance with IFRSs and related interpretations as adopted by the EU and additional disclosure requirements in the Norwegian Accounting Act and generally accepted accounting principles in Norway as at 31 December 2017. The Board of Directors' report for the Group and the Parent Company complies with the requirements in the Norwegian Accounting Act and Norwegian accounting standard no 16, as at 31 December 2017.
To the best of our knowledge:
Morten E. Astrup Board member
Stein Aukner Chairperson
Nini E.H. Nergaard Board member
Einar Pedersen General Manager
Anna Muisej Aanensen Board member
Kim Mikkelsen Board member
Storm Real Estate ASA Berger House 36-38 Berkeley Square London W1J 5AE United Kingdom Ph: +44 (0)20 7409 3378 www.stormrealestate.no
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