Rose : Interim Results Ended 30 June 2014

Wednesday 27 August 2014

Rose Group Limited

(AIM: RGI)

UNAUDITED RESULTS

FOR THE 6 MONTHS ENDED 30 JUNE 2014

Rose Group Limited ("Rose Group" or the "Company"), the AIM listed developer of quality residential properties in Moscow and the surrounding areas, today announces unaudited results for the six months ended 30 June 2014.

Highlights:

Financial

·     Revenues of US$140m (2013: US$11m)

·     Operating profit of US$31m (2013: loss US$13m)

·     Cash totalled US$32m at 30 June 2014 (31 December 2013: US$26m)

·     Total debt down to US$163m from US$187m at year end

Operational

Microgorod «V Lesu»

·     During H1 the first residents moved into Microgorod «V Lesu» as 595 apartments were transferred to buyers

·     Strong sales of 311 apartments during H1 2014 (H1 2013: 233)

·     Construction on track across the development with Phase 2 finance secured

Tsvetnoy Central Market

·     Tsvetnoy footfall up 23% reflecting strengthened customer offering

·     Strong performance from concessions, with revenues increasing by 20%

·     Tight control of operating costs continuing improvements made in 2013

Other Projects

·     Continued design work and launched marketing for Kvazar, the Company's premium office park development, adjacent to V Lesu

·     Continued design work on Forum cinema project in historic central Moscow

Commenting, Chief Executive Andrey Nesterenko said:

"Microgorod «V Lesu» has been very well received and we continue to see growth and progress in our comfort class residential development business.  The positive response from residents is affirmation of our belief in the strong latent demand for high quality, comfort class housing.  With the delivery of this phase, we have established ourselves as leaders in quality in this segment of the market. 

We are also pleased that Tsvetnoy continues to grow and perform according to plan.  The management team, now in place for over a year, is delivering top line growth and controlling expenses. 

This first half of 2014 was a landmark for Rose Group as we recorded our first revenues from «V Lesu». Our company has always been about quality. We have in making «V Lesu» and Tsvetnoy work and now we are now seeing a financial return, despite the politically and financially unstable environment.  We will be doing our best to keep the momentum up during the rest of the year, however, we are mindful of the impact prolonged instability in Ukraine is having on the Russian economy as a whole." 

Enquiries:

About Rose Group

Rose Group Limited has been successfully creating new markets in Moscow real estate since 1993.  The Company's innovative drive played a key role in the transformation of Moscow's Golden Mile in the 1990s, when new landmark buildings were constructed that set the benchmark for modern living and working spaces in the rapidly changing Russian capital. Today the Company is focused on serving Moscow's growing middle class professionals by building aspirational, design led, residential communities. Its pioneering Microgorod « V Lesu » project has set new standards for the Moscow residential sector by offering homebuyers a well configured development, with good facilities and apartments finished to a high quality. In addition to its distinctive residential properties, RGI developed, owns and operates Tsvetnoy Central Market, Moscow's first iconic department store on Tsvetnoy Boulevard. The Company is listed on the LSE's AIM market and has significant land holdings in central Moscow.

Chairman's Statement

Introduction

The first half of 2014 has indeed been a watershed for Rose Group.  We delivered the first apartments at Microgorod «V Lesu» and anticipate having all 1193 apartments of Phase 1 sold and handed over to residents by the year-end.  In addition to welcoming residents into a new community, we accelerated our construction of Phase 2 and have intensified our planning process for the residential part of Kvazar, which will form Phase 3 of Microgorod «V Lesu». 

Tsvetnoy was another highlight for Rose Group during the period.  Our iconic department store in central Moscow saw significant increases in both footfall (23%) and underlying revenues (39%).  Our management team, which was largely recruited in the first half of 2013, continues to deliver bottom line results as well by controlling costs while improving the store's appeal.  Both factors led to a much improved performance, with a net trading profit of US$2 million (1H2013: loss of US$1.4m). 

We also made progress on our other projects.  Following receipt of initial planning approvals for Kvazar and Forum last year, we have advanced both projects towards the permitting stage.  We announced marketing of a commercial office park at Kvazar in March, and we have continued discussions with the various city agencies that will have the responsibility for approving the renovation, restoration and rebuilding works on the historic Forum Cinema. 

At the Khilkov and Ostozhenka 49 development, the legal proceedings we initiated in April 2013 to compel our partners in the development to fulfil their obligations are moving slowly.  In May of this year, our partners in the development filed a new claim, indicating, in our view, that they have no intention of seeking a constructive way forward.  As a result, we have reassessed the recoverability of our investment in the project, which historically has amounted to over US$50 million, and booked an impairment of US$48 million during the period.

Financial Summary

The first half of the year was historic in the development of Rose Group as we recorded our first revenues from apartment sales at V Lesu. Revenues for apartment sales are recorded upon transfer of the keys to new residents and during the period the Company recorded US$127m of revenue from the delivery of the first 595 apartments and 572 parking spaces to residents.   We recorded a net profit of US$31 million on the transfer of these apartments, at a gross margin of 25%.  We expect over time to be able to improve these margins as we build more efficient buildings and maintain our premium market positioning. 

During the first half, we also contracted sales of 311 apartments in Microgorod «V Lesu», meaning that by the end of June we had contracted to sell 91% of remaining available units in Phase 1 and 28% of the units in Phase 2.  This generated US$81m (1H 2013: US$59m) of cash flow, from which we invested US$39m (1H 2013: US$50m) in construction during the period, and made US$20m net of repayments on principal and interest related to Microgorod «V Lesu» (1H 2013: US$3m).  In addition, the Company announced in April that it had entered into a new loan agreement with Sberbank CIB for RUR 5.8bn (US$161m) supporting Phase 2. The Company will not require any additional third party funding to complete Phase 2 and has not yet drawn any funds under this facility. 

Tsvetnoy recorded US$13m in revenue during the period (1H 2013: US$11m), with increases of 19% and 23% for concession revenue and the store's own goods, respectively.  Total property operating costs fell to US$11m (1H 2013 US$12m). Both revenue increases and cost controls contributed to a net trading profit of US$2m (1H 2013: US$1m loss). The outstanding Sberbank loan on Tsvetnoy was reduced by US$4m during the period to US$134m. 

Rose Group recorded a net profit for the period of US$7m (1H 2013: loss US$21m) or US$0.05 per share.  The operating profit for the period was US$31m (1H 2013: loss US$13m), which was aided by a US$3m reduction in G&A expenses versus 2013.  In addition to operating results, the Group's net profit was affected by the Group's US$19m share in the loss attributable to the Khilkov JV (1H 2013: US$0m), US$3m of foreign exchange loss on borrowings (1H 2013: US$8m) and income tax expense of US$2m (1H 2013: US$0m). 

The Group's balance sheet remained healthy, with overall debt declining to US$163m (2013: US$187m) while cash and cash equivalents increased to US$32m from US$26m at year-end.  Thus, net debt decreased 19% to US$130m (2013: US$160m) while total book equity decreased by US$3m to US$391m (2013: US$394m), as a result of exchange rate fluctuations.

Corporate Developments

During the period, the shareholders approved a proposal to change the Group's name to Rose Group from RGI International. This initiative, which we announced in our 2013 annual report, is intended to align our corporate and marketing image around a brand that has stood for quality in real estate development since 1993. 

We received a notice of claim filed in Cyprus by Litonor Financial Limited, the Company's partner in the Khilkov Project, on 30 May 2014.  We believe the claim is completely without merit and intend to defend ourselves vigorously in the matter.  Litonor's action follows the Group's claim, filed in District Court in Nicosia in April 2013, claiming damage from Litonor following Litonor's failure to perform its obligations in accordance with the partnership agreement dated 19 September 2006.

Strategy and Outlook

These results affirm that our business models at Microgorod «V Lesu» and Tsvetnoy are both working and proving resilient.  We have demonstrated growth in both of those businesses against a backdrop of a slowdown in the Russian economy, decreasing consumer confidence and rising interest rates.  We are cautious of the economic and political environment; however, we will continue to execute a strategy of delivering a high quality residential community positioned at the top end of the segment in which it competes.  We will also seek to keep Tsvetnoy synonymous with fashion in Moscow while keeping a close eye on margins.  While keeping control of costs we will continue to invest free cash flow into Microgorod «V Lesu» and other similar projects.  With a solid business model and tangible success at our developments, we are positioning Rose Group for moderate growth in what is expected to be a very challenging year, while maintaining optionality to accelerate that growth when the Russian economy and consumer sentiment improve.

Emmanuel Blouin

Non-Executive Chairman

26 August 2014

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

Approved for issue and signed on behalf of the Board of Directors on 26 August 2014. 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

CONDENSED CONSOLIDATED INTERIM STATEMENT OF PROFIT OR LOSS

The accompanying notes are an integral part of these condensed consolidated interim financial statements

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

The accompanying notes are an integral part of these condensed consolidated interim financial statements

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1.         ROSE GROUP LIMITED

These condensed consolidated interim financial statements of Rose Group Limited (until 29 of May 2014 R.G.I. International Limited) (hereinafter, "RGI" or the "Company") and its subsidiaries (together referred to as the "Group") and the Group's interest in joint venture for the period from 1 January 2014 to 30 June 2014 were authorized for issue in accordance with a resolution of the directors on 26 August 2014.

The Company was incorporated in Guernsey on 14 March 2006 as a limited liability company and its shares are quoted on the AIM market of the London Stock Exchange since December 2006.

The Company's registered address is Frances House, Sir William Place, St. Peter Port, Guernsey, GY1 4EU.

The principal office of the Group's Russian operations is Korobeinikov Lane, 1, Moscow 119034, Russia.

The principal business activity of the Group is property development and property management in the Russian Federation, with its core business being the development and management of high-end office and retail businesses and luxury residential and premium economy class residential properties in central Moscow and the surrounding areas. The Group is also engaged in concession management as well as retail sales both of which are executed in the Tsvetnoy shopping center project.

The Group was involved in the development of the following projects during the six months period ended 30 June 2014 and 2013:

2.         SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1       Basis of preparation

These condensed consolidated interim financial statements for the six months period ended 30 June 2014 have been prepared in accordance with IAS 34, "Interim financial reporting", as adopted by the European Union.

These condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2013, which have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and with the requirements of the Companies (Guernsey) Law, 2008.

The condensed consolidated interim financial statements have been prepared on a going concern basis, applying the historical cost convention, except for the revaluation of certain financial assets and liabilities at fair value which are recognized through profit or loss and the revaluation of investment.

2.2       Changes in accounting policy and disclosures

The accounting policies applied and the methods of computation are consistent with those of the annual consolidated financial statements for the year ended 31 December 2013, except as described below.

Adopted standards effective for annual periods beginning on or after 1 January 2014:

These amendments have not had a material effect on the Group's financial position or results of operations.

3.         CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING POLICIES

The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities. Estimates and judgments are continually evaluated and are based on the Directors' experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Directors also make certain judgments, apart from those involving estimations, in the process of applying the accounting policies. Judgments that have the most significant effect on the amounts recognized in the consolidated financial statements and which could cause a significant adjustment to the carrying amount of assets and liabilities within the next financial year include:

Valuation of investment property

The Group has estimated fair values of its investment property in their current state as at 30 June 2014. The fair value of investment property is determined by Group's internal specialists using recognized valuation techniques. The development projects' valuation was determined based on the best estimates of future cash flows, supported by the terms of any existing lease and other contracts and by external evidence such as current market prices for similar properties in the same location and condition, and using discount rates that reflect current market assessments of the uncertainty in the amount and timing of the cash flows.

Management has reviewed the valuation assumptions underlying discounted cash flow models used in the valuation, and confirmed that factors such as the discount rate applied have been appropriately determined considering the market conditions at the end of the reporting period. The discount cash flow methodology, which involves calculation of net present value of all future cost and income to be incurred and generated by property development, to derive market value via the residual method, i.e. assessing property as completed and deducting costs of development, is considered to provide a most accurate and sound valuation, taking into consideration the specific nature of the valued properties and limited market data available. Notwithstanding the above, management considers that the valuation of its investment property is currently subject to an increased degree of judgment and an increased likelihood that actual proceeds on a sale may differ from the carrying value.

Estimation of net realisable value of the property developed for sale

Net reali s able value for completed property developed for sale is assessed with reference to market conditions and prices existing at the reporting date and is determined by the Group having taken suitable external advice and in the light of recent market transactions.

Net realisable value for property under construction is assessed withreference to the selling market prices at the reporting date for similar completed property, less estimated cost to complete the construction provided in the current construction budget, adjusted for the time value of money if material.

The Group has estimated net realizable value of property developed for sale as at 30 June 2014 by approximating it to the fair value of properties. As the fair value of property developed for sale significantly exceeded its carrying value that Group concluded that no write off to net realizable value was required.

Management has reviewed the major assumptions underlying discounted cash flow models used in the valuation, and confirmed that factors such as the discount rate applied have been appropriately determined considering the market conditions at the end of the reporting period. The discount cash flow methodology, which involves calculation of net present value of all future cost and income to be incurred and generated by property development, to derive market value via the residual method, i.e. assessing property as completed and deducting costs of development, is considered to provide a more accurate and sound valuation, taking into consideration the specific nature of the valued properties and limited market data available. Notwithstanding the above, management considers that the estimation of fair value and thereof net realizable value for its property developed for sale is currently subject to an increased degree of judgment and an increased likelihood that actual proceeds on a sale may differ from the carrying value.

Indication of impairment of property, plant and equipment

The Group assessed at 30 June 2014 whether there is an indication that an asset may be impaired and concluded that no indication of impairment exists at the reporting date.

4.         INVESTMENT PROPERTY

As of 30 June 2014 all properties are measured at fair value (Level 3 of the hierarchy defined by IFRS 13).

As of 30 June 2014, investment property with a book value of US$35,000 in the Microgorod project is pledged to Sberbank, and investment property of the Chelsea and Ostozhenka, 37 projects with a book value of US$16,403 are pledged as guarantees to NOMOS (see note 8).

The significant assumptions made relating to valuations of the properties of the Group are set out below:

Quantitative disclosures fair value measurement hierarchy for investment property as at 30 June 2014:

Description of significant unobservable inputs to valuation of investment property:

The following table summarises the unrealized gains or losses on investment property. These arise from both assets held at fair value and from movements in provision for impairment when projects are recorded at cost.

5.         PROPERTY DEVELOPED FOR SALE

As of 30 June 2014 property developed for sale with a book value of US$452,116 is pledged to Sberbank (See Note 8).

6.         BORROWINGS

The loan agreements that were in place as at 30 June 2014 are set out below:

On 30 June 2011, the Group's subsidiary LLC Central Market entered into a loan facility of US$ 150,000 with Sberbank. The loan is secured against the property rights to the Tsvetnoy building, the share capital of LLC Central Market, the right of a long-term land lease which Tsvetnoy building occupies and the share capital of LLC Tsvetnoy Central Market. As at 30 June 2014 the carrying value of the pledged assets and rights equal US$ 53,592.

The terms of the loan with Sberbank include covenants common to loans of this type.  As of 30 June, 2014  there have been some technical breaches of the covenants set forth in the contract for US$ 150,000 even though the Group has remained current on its payments under the loan.  As a result, loan has been classified as a current liability as of the reporting date. The Group regularly monitors its compliance with these covenants, is in periodic contact with the bank regarding performance of the loan, and is up to date with the scheduled repayments of the loan. Therefore, the Group does not consider it probable that the bank will exercise its discretion to demand repayment for so long as the Group continues to meet these requirements.

On 25 May 2011, the Group's subsidiary LLC Jevosset entered into a loan facility of RUR 4,922,000,000 with Sberbank. The loan is secured against the property rights to the Microgorod Development Phase 1 (comprising of 3,720 sq.m residential premises, 3,500 sq.m commercial premises, 97 parking lots), the share capital of LLC Jevosset and the right of two long term land leases on which the Microgorod project is being built. The loan facility has no recourse to the Company and is being used to fund the construction of the Microgorod Project Phase 1.

On 16 April 2014, the Group's subsidiary LLC Jevosset entered into a loan facility of RUR 5,787,000,000 with Sberbank. The loan is secured against the property rights to the Microgorod Development Phase 2 (comprising of 76,274 sq.m residential premises, 8,056 sq.m commercial premises, 1,033 parking lots, 17,123 sq.m school and 4,385 sq.m kindergarten premises), the share capital of LLC Jevosset and the right of two long term land leases on which the Microgorod  project is being built. The loan facility has no recourse to the Company and when drawn, will be used to fund the construction of the Microgorod  Project Phase 2.

As at 30 June 2014 the carrying value of the pledged assets and rights of loans with LLC Jevosset equal US$ 191,968.

On 19 December 2012 the Group's subsidiary LLC Project Bureau entered into a loan facility in the form of a credit line of RUR 500,000,000 with OJSC "Nomos-Bank". The loan is secured against guarantees of other Group companies such as LLC Profit Invest, LLC Ostozhie, LLC Titan along with a pledge of real estate property owned by the abovementioned Group companies. This loan facility was amended in December 2013 changing the maximum facility amount to RUR 350,000,000, extending the final maturity to December 2015 and changing the interest rate on subsequent draws to 12.7%.  The carrying amount of the pledged real estate property equals US$ 22,009.

The loans' fair value as at 30 June 2014 and as at 31 December 2013 does not differ significantly from their carrying value.

The loan agreements that were in place as at 31 December 2013 are set out below:

7.         SEGMENT INFORMATION

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (CODM). The chief operating decision-maker who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer, who makes strategic decisions.

For the purpose of financial reporting for the 6 months period ended 30 June 2014 the Group identified two reportable segments: Assets management (Tsvetnoy department store) and Development (Development projects of the Group).

Due to the nature of trading of the Tsvetnoy Project it is managed separately from the other activities of the Group. The Tsvetnoy project has its own management team who report to the CEO and have the objective of increasing rental and other revenues from this investment. The Asset management segment earns revenue by leasing out the sales floor space, acting as an agent in retail and selling goods in its own shopping space.

The major source from which the Development segment derives its revenue is the sale of apartments in Microgorod.

The Group does not split the business into geographical segments due to the fact that all business activities are performed in one geographical area, Moscow and the Moscow Region.

The accounting policies of the operating segments are the same as those described in the summary of significant accounting policies.

As the Group's business is strictly divided into two segments leaving no Group companies that are not included in either of the two segments, the total amounts of the segments assets and liabilities as at 30 June 2014 and 31 December 2013, revenues and expenses for six months ended 30 June of 2014 and 2013 are equal to the summary amounts of these financial statements items cumulatively for the Group. In this regard no reconciliations between the total of the reportable segments' assets and liabilities, revenues and expenses and the Group's corresponding amount are performed. Intersegment revenue and expenses are immaterial.

8.         CONTINGENCIES, COMMITMENTS AND OPERATING RISKS

Legal proceedings

On 22 April 2013 the Company began legal action against Litonor Financial Limited ("Litonor"), its joint venture partner in the Khilkov and Ostozhenka luxury residential projects in central Moscow (together "Khilkov project"). The claim is one for damages against Litonor as a result of impossibility of constructing the Project as originally envisaged and agreed by the parties in accordance with the provisions of the partnership agreement dated 19 September 2006. The action was filed with the District Court of Nicosia, Cyprus ("the Court") by R.G.I. Residential Holdings Limited ("RGI Residential"), a Cyprus registered subsidiary of Rose Group. RGI Residential owns a 50% stake in the Khilkov project. Coincidental to the action filed in Court and pursuant to an application by RGI Residential, the Court has granted an interim injunction preventing Litonor from disposing of its shares in the Khilkov project.

The Company was compelled to commence the above-mentioned legal proceedings as part of its effort to move forward with the realization of the Khilkov Project, which was delayed, by Litonor's refusal to commence construction in accordance with current permit regime. By taking legal action against Litonor, the Company seeks to recover its investment in the project. The Company is hopeful that Litonor will agree to conduct negotiations in good faith with a view of an amicable solution between the two parties.

On 30 May 2014, the Group received a notice of claim filed in Cyprus by Litonor Financial Limited for approximately US$100,000.  The Company believes the claim is completely without merit and intends to defend itself vigorously in the matter. 

Taxation environment in Russia

Russia currently has a number of laws related to various taxes imposed by both federal and regional governmental authorities. Applicable taxes include VAT, corporate income tax and payroll (social) taxes, together with others. Laws related to these taxes have not been in force for significant periods, in contrast to more developed market economies; therefore, the government's implementation of these regulations is often inconsistent or nonexistent. Accordingly, few precedents with regard to tax rulings have been established. Tax declarations, together with other legal compliance areas (for example, customs and currency control matters), are subject to review and investigation by a number of authorities, which are enabled by law to impose extremely severe fines, penalties and interest charges. These facts create tax risks in Russia that are more significant than typically found in countries with more developed tax systems. Management believes that the Group is in compliance with the tax laws affecting its operations; however, the risk remains that governmental authorities could take differing positions with regard to interpretative issues.

While management believes that it has adequately provided for tax liabilities based on its interpretation of current and previous legislation, it is possible that the tax authorities in the Russian Federation could take a differing position with regard to certain interpretive tax issues.

Transfer pricing in Russia

The new Russian transfer pricing legislation, which came into force on 1 January 2012, allows the tax Russian authority to apply transfer pricing adjustments and impose additional profits tax liabilities in respect of all "controlled" transactions if the transaction price differs from the market price. The list of "controlled" transactions includes transactions performed with related parties and certain types of cross-border transactions. The current Russian transfer pricing rules have considerably increased the compliance burden for the taxpayers compared to the transfer pricing rules which were in effect before 2012 due to, inter alia, shifting the burden of proof from the Russian tax authorities to the taxpayers. These rules are applicable not only to the transactions taking place in 2012-2014 but also to the prior transactions with related parties if related income and expenses were recognized in 2012-2014. The new provisions apply for both cross-border and domestic transactions. For domestic transactions the transfer pricing rules apply only if the amount of all transaction with related party exceeds RUR 3 billion, RUR 2 billion and RUR 1 billion (or RUR 100 million, RUR 80 million and RUR nil million for international transactions) in 2012, 2013 and 2014, respectively. In cases where the domestic transaction resulted in an accrual of additional tax liabilities for one party to the transaction, another party could correspondingly adjust its profit tax liabilities. Special transfer pricing rules apply to transactions with securities and derivatives.

In 2012-2014 the Group determined its tax liabilities arising from "controlled" transactions using actual transaction prices.

Due to the uncertainty and absence of current practice of application of the current Russian transfer pricing legislation the Russian tax authorities may challenge the level of prices applied by the Group under the "controlled" transactions and accrue additional tax liabilities unless the Group is able to demonstrate the use of market prices with respect to the "controlled" transactions, and that there has been proper reporting to the Russian tax authorities, supported by appropriate available transfer pricing documentation.

Capital expenditure commitments

At 30 June 2014, the Group had contractual capital expenditure commitments in respect of property development totaling US$ 63,924 (31 December 2013: US$ 92,036).

The Group has already allocated the necessary resources in respect of these commitments. The Group believes that future net income and funding will be sufficient to cover this and any similar such commitments.

Guarantees

During the reporting period the Group has not granted or provided collateral to third parties, except for the liens provided to Sberbank in relation to Microgorod  Project and liens provided to Nomos-Bank (Note 8).

Insurance policies

The Group holds insurance policies in relation to its assets, operations, and in respect of public liability or other insurable risks. At 30 June 2014, the total insurance coverage is US$ 280,716 (31 December 2013: US$ 465,885).

9.         EVENTS AFTER THE REPORTING PERIOD 

In July and August 2014 several countries imposed limited sectoral sanctions on some Russian companies, including the ultimate parent company of the Group, Vnesheconombank. The impact of these sanctions on the Group's financial position and financial performance could not be assessed.