AFI DEVELOPMENT PL INVESTORS PRESENTA AFI DEVELOPMENT PLC INVESTORS PRESENTATION
AFI DEVELOPMENT PLC INVESTORS PRESENTATION 1
Outline
Disclaimer
Overview
Strategy and key competencies
Holding structure update
Market update
Operational update
Financial update
Outlook
2
Disclaimer This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of AFI Development Plc (the "Company") or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this document, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of the Company or any of its affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with the document. This communication is only being distributed to and is only directed at (1) qualified institutional buyers (within the meaning of Rule 144A of the United States Securities Act of 1933, as amended (the "Securities Act") or (2) accredited investors (as defined in Rule 501(a) of Regulation D adopted pursuant to the Securities Act). Any person who is not a "qualified institutional buyer" or "accredited investor" should not act or rely on this document or any of its contents. This document contains "forward-looking statements", which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forwardlooking, including, among others, the achievement of anticipated levels of profitability, growth, cost and synergy of recent acquisitions, the impact of competitive pricing, the ability to obtain necessary regulatory approvals and licenses, the impact of developments in the Russian economic, political and legal environment, volatility in stock markets or in the price of our shares or GDRs, financial risk management and the impact of general business and global economic conditions. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as at the date as of which they are made, and the Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. Neither the Company, nor any of its agents, employees or advisors intends or has any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this document. The information contained in this document is provided as at the date of this document and is subject to change without notice.
3
Overview
AFI Development PLC (AFID) is one of the leading real estate developers of unique large-scale commercial and residential projects with focus on Moscow, Russia
Active on the market since 2001, operating as AFI Development since 2006 and admitted to the London Stock Exchange (LSE) in 2007
Strong reputation, track record of value creation and an established position on Moscow’s unsaturated real estate market with high entry barriers
Affiliate company of Africa Israel Group – a major Israeli conglomerate with global focus on real estate, construction and infrastructure
Successful track record of 8 completed projects with total of 193,000 sqm of commercial and residential space
Project pipeline: 5 ongoing projects to be completed within the next 1-3 years, 3 projects in active preparatory stage and 19 additional land plots in the portfolio for future development (land bank)
Strong liquidity position with over US$ 110 mln in cash (June 30, 2010) and secured credit facilities to complete ongoing projects
4
Total space to be delivered within the next 5-7 years – over 3 mln sqm
Market Cap:
US$ 1.1 bln (as of Dec. 1, 2010), premium LSE listing
NAV
US$ 1.65 bln (as of September 30, 2010)
Projects delivered
8 with total area of c. 193,000 sqm
On-going projects
5 with total area of c. 400,000 sqm
Land bank:
19 projects with total area of over 3 mln sqm of future construction including 3 projects to be started within the next 18 months
Strategy and key competencies Strategy points:
Commitment to value maximization for shareholders through creation of bestin-class, well-balanced property portfolio
Commitment to the highest standards of corporate governance, disclosure and operational predictability
Development of new projects only with confirmed demand levels
Retaining only the highest quality / best located properties with certain residential, non-prime commercial projects and selected land bank sold off
Suspension of new acquisitions and staged development of acquired land bank: presently 5 major high-quality projects under development
Professional development company with strong local experience
Key competencies:
Proven ability to deliver top quality multi-use multiphase real estate
Strong market reputation
Access to debt funding through impeccable credit history
Concentration on the most sustainable segment of Russian real estate – Moscow Central high quality
5
Holding structure update AFI Investments 54%
Free float 36%
Nirro Group 10%
Issued shares public during IPO in 2007 on LSE
Achieved a Premium Listing on LSE in Summer 2010
6
MARKET UPDATE
7
Moscow real estate SWOT Strengths
Largest city in Europe with c. 13 mln inhabitants
Highest per capita incomes in Eastern Europe
Financial center of Russia with vast presence international business
Undersupply of quality real estate in all segments
Historically provided one of the most attractive returns on the global real estate market
Developing real estate market institutionalism
Low competition level in real estate development
Opportunities
8
As one of the top priorities of the new Mayor Mr. Sobyanin involves solving traffic problems – real estate projects will be more thought out and better planned with higher proportion of supporting infrastructure Real estate yields are significantly higher in Moscow then in the rest of Europe – yield compression is forecast
Weaknesses
High entry barriers caused by bureaucracy (during the permitting process) and restrictions for new development
High costs of borrowing and uneasy process of securing project level debt financing
Lack of professionalism among the developers
Threats
Real estate in Russia has high correlation to oil price Significant drop in oil has proven to depress the market
Municipal authorities may significantly adjust the Moscow General Plan and many projects in concept and design stage be cancelled
High bureaucracy may continue even under the new Mayor which will prevent healthy levels of real estate development
Market during economic crisis Real estate sector affected by the global financial crisis
Russia’s real estate sector was significantly affected by the crisis which caused a decline in commercial real estate values of over 50% and in residential by 30-40% Numerous bankruptcies and change of ownership of development companies Almost no transactions on the market and highly limited distressed sales Banks are holding on to pledged assets transferred to their ownership due to insolvencies Deteriorating demand from tenants and increased vacancies driving uncertainty regarding future take-up levels and feasibly of new construction (up to 20% for Moscow office according to Jones Lange LaSalle (JLL))
Impact of the crisis on real estate
Slow recovery with gradual improvement in demand levels and vacancies
Low number of quality assets and projects under construction on the market (excess supply of mid and low quality properties)
Virtually no investor interest in acquisition of new land plots / development sites leading to a dramatic drop in prices compared to pre-crisis levels Financing remains limited and costs of financing remain high (15-20% in ruble terms)
9
Decline in competition levels with many projects in construction phases suspended and no new projects being started Companies with substantial own production capacities and large land banks remain at risk of default
Market landscape after economic crisis Who is at risk? We believe developers with…
B class offices in the pipeline: the most significant fall in occupancy (up to 30%) and rent level (down by c. 40-50%)
limited credit history and access to cheap debt financing
own production capacities that make operation less flexible to demand levels
significant level of land bank and speculative projects in the portfolio
Who are the survivors? We believe, companies with…
established market reputation
high operational expertise and successful track record
diversified portfolio of projects in high-quality class category and A class income generating properties for which demand remains high
absence of own production capacities that can promptly react to changing market conditions
secured debt financing and established credit history with banks
sufficient liquidity levels
10
2 2 1 1 1 1
250 000 750 500 250 000 750 500 250
000 000 000 000 000 000 000 000 000 0
2 100 000
Office Supply and Vacancy 1 800 000 1 300 000 1 100 000 850 000 650 000
2005
2006
total supply
2007
2008
vacancy
2009
21,0% 19,5% 18,0% 16,5% 15,0% 13,5% 12,0% 10,5% 9,0% 7,5% 6,0% 4,5% 3,0% 1,5% 0,0%
USD/psqm/pa
sqm
Moscow office market
USD volume
500 250 000 750 500 250 000 750 500 250 000 750 500 250 0
2 719 2 027
1 730 1 252
927 555
2005
2006
2007
2008
Investment deal volume
2009
13,5% 13,0% 12,5% 12,0% 11,5% 11,0% 10,5% 10,0% 9,5% 9,0% 8,5% 8,0% 7,5% 7,0%
2010
yields Source: AFID, JLL, C&W
11
Class A rental rates in Moscow 2 000 1 500 1 000 800
1 000
1 400 800
750
600
850 650
620
2006
rental rate
CBD vacancy
Transaction volumes and yields
200 000 800 600 400 200 000 800 600 400 200 0
2005
2010
Source: AFID, JLL, C&W 3 3 3 2 2 2 2 1 1 1 1
2 2 1 1 1 1 1
2007
2008
2009
2010
rental rate CBD prime Source: AFID, JLL, C&W
Current market drivers
Central Class A rents: US$ 850 – US$ 1,000 per sqm per annum Class A office yields: 9.5% – 10.5%
Class A CBD vacancy: 3% - 5%
Investment volume CBD prime: minimum
Moscow retail market Moscow retail supply and vacancy
3 130 000
3 000 000 sqm
2 500 000
2 200 000
2 000 000 1 500 000 1 000 000
1 000 000
1 200 000
1 500 000
1 800 000
500 000 0 2005
2006
2007
2008
2009
5,5% 5,0% 4,5% 4,0% 3,5% 3,0% 2,5% 2,0% 1,5% 1,0%
2010
Quality retail rents in Moscow
USD psqm pa
3 500 000
2 2 2 2 2 1 1 1
900 700 500 300 100 900 700 500
USD volume
2 1 1 1 1 1
000 800 600 400 200 000 800
vacancy
1 689 1 527
177 30
1
2
3
4
Investment deals volume 12
5
2 200
2007 2008 2010 Source: AFID,2009 JLL, C&W Source: AFID, JLL, C&W
13,00%
Current market drivers
12,00%
Quality retail rents: US$ 2,200 – US$ 2,400 per sqm per annum
Yields: 10% – 11%
Vacancy: 2% - 4%
10,00%
600 400 200 0
2006
2 400
14,00%
11,00%
780
2 400
2 200
rental rate
Moscow retail transaction volumes and yields 1 554
2 500
2005
Source: AFID, JLL, C&W total area
2 700
9,00% 8,00%
6
yields Source: AFID, JLL, C&W
Operational update
Opening of Mall of Russia scheduled for December 2010. Investment contract with the City was extended to March 2012. Contracts signed for 70% of shops. New name for the Mall is selected and registered: AFIMALL CITY.
Construction of Ozerkovskaya III is on schedule to be completed Q3 2011 Negotiations with large tenant for Ozerkovskaya III at advanced stage
Paveletskaya project is on schedule to be completed Q4 2010
Kalinina project re-geared, planned delivery end 2011
Development to be started (Brestskaya, Kunzevo, Pochtovaya)
High focus by management on corporate governance and business transparency
Focus on improvements in Investor Relations: During September – November participation in 5 investment bank conferences in New York, London and Moscow; additional investor meetings in Frankfurt, Stockholm, Helsinki and Tel Aviv. Conference call with Q3 results took place on Nov 22, 2010
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on
another
3
projects
Portfolio overview Current MV in USD
800 000 000
AFID Active Pipeline (USD)
AFID Property Portfolio (Current MV in USD)
600 000 000
157,500,000\ 6% 885,609,845 37%
400 000 000 200 000 000 0
399,130,000 17%
retail
office
resi
hotel
0
142 300 000
282 460 000
0
Under development
657 300 000
94 000 000
0
9 487 000
Delivered and in the portfolio
16 545 000
311 585 000
56 092 840
71 000 000
Next for development
GLA SQM
commercial space sold resi space sold resi space unsold Delivered commercial AFIMALL CITY Under development Land bank
189,087,000 8%
571,700,000 24%
Current MV of portfolio – US$ 2.1 bln
600 000
Total space of portfolio – 3 mln sqm
500 000
Current MV of active projects – US$ 1.6 bln
400 000
Total space of active projects – over 1 mln sqm
700 000
AFID Active Pipeline (GLA SQM)
300 000 100 000 0
Next for development Under development Delivered and in the portfolio
Active pipeline by current MV: Retail – 41% Office – 34% Residential – 20% Hotel – 5% *Numbers based on valuation done by JLL, AFID share of projects shown, disposed projects not included , active projects include projects “next for development”
200 000
14
142,993,824 6% 47,415,000 2%
retail
office
resi
hotel
0
101 501
580 000
0
121 962
39 729
0
12 665
5 008
129 101
17 492
21 431
Completed Projects (1) Four Winds
Four Winds
Aquamarine I,II
Aquamarine II
residential
office
office
residential
Status
1000 sqm unsold
Status
Completed Completed GSA, sqm GLA retail, sqm
GBA, sqm
28,309
GLA office, sqm
17,556
18,272
Sold
Completed
2005/2007
GBA, sqm
14,000/12,800
Sold
5,008
Status
2200 sqm unsold
3,416
Sale price, mln
Completed
Q4 2008
GBA, sqm
37,296
GSA, sqm
16,711
2005/2008 $54mln/$207 mln
$10,000 NOI, mln pa Average net rent, psqm pa
15
Status
H2 2008
H2 2008
GLA retail, sqm Average price psqm
50% owned
$30mln $1,340
Price psqm of GBA
$3860/$16,190
Average price psqm
$13,000
Completed Projects (2) Aquamarine II
Plaza SPA
H2O
Berezhkovskaya
hotel
hotel in Kislovodsk
office
office
Status
Completed Put into operation Business class GBA, sqm
100% owned Q4 2009 Nov 2009
4 stars 16,372
Status
50% owned
Status
Completed
2006
H2O
Put into operation
2006
Office
Resort hotel GBA, sqm
RevPar 16
159 $132
# of keys RevPar
2009 B
Status
Completed Office
75% owned 2006 B+
GBA, sqm
10,698
GBA, sqm
11,612
GLA, sqm
8,996
GLA, sqm
10,136
3 stars 25,000 NOI
# of keys
100% owned
$2.9mln
NOI
$3.8mln
2 $237
Average net rent, psqm pa
$290
Average net rent, psqm pa
$400
Development: Mall of Russia
AFIMALL CITY
Project details Located in the heart of Moscow City, the Russian capital’s newest business district, currently one of the largest and most ambitious real estate projects in Europe (15 multi-use complexes with nearly 4 mln sqm of total space) Moscow’s largest shopping mall with over 350 stores and outstanding leisure facilities including abundance of dining, a movie theater, a concert hall, and a skating ring Current status GBA
179,423 sqm
GLA
c.114,000 sqm
Delivery
December 2010
Project ownership
75% (100% of cost)
Forecast NOI
US$ 120 mln (annualized)
MV upon completion
US$ 941.5 (for 100% equity)*
*Valuation done by JLL , Dec 31, 2009
17
Opening of the Mall scheduled for December 2010 70% pre-let at an average rate of US$ 1,200 per sqm per year for the first year, another 10% are under negotiation Construction loan refinanced resulting in extension of maturity by 2 years to Aug 2013 and a decrease in interest rates from 16% to 13.25% in ruble terms
Moscow City
18
Development: Tverskaya Mall Project details Located under ground in the centre of Moscow in one of high-end neighborhoods near the Belorusskaya subway station The Mall is part of AFID’s complex redevelopment of Tverskaya Zastava Square (over 500,000 of total commercial and residential space, part of AFID’s present land bank) Easy access from subway, rail terminal and specifically built underground pedestrian passes Nearly 200 stores, 700-800 underground parking slots and various entertainment facilities GBA
106,137 sqm
GLA
36,303 sqm
Delivery Project ownership Construction completion Forecast NOI MV upon completion Valuation done by JLL, Dec 31, 2009
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Q4 2013 100% In progress $US 55.9 mln* $US 421.3 mln*
Current status External wall construction and utility lines relocation is ongoing The City of Moscow agreed to and started financing a part of the engineering infrastructure Negotiations with a new general contractor are ongoing (to be finalized before year end)
Development: Ozerkovskaya III Project details Ozerkovskaya Phase III is part of the Ozerkovskaya Embankment development site comprising four individual development projects referred to as Phases I, II, III and IV Located in Zamoskvorechye, Moscow’s prestigious business and residential area within the Garden Ring First two phases of office development were completed, rented out and successfully sold in 2005 and 2008 GBA
78,647 sqm
GLA
51,388 sqm
Delivery
Q3 2011
Project ownership
50%
Forecast NOI (100%)
US$ 27.6 mln*
MV upon completion (100%)
US$ 261.2 mln*
Valuation done by JLL, Dec 31, 2009
20
Current status Works on facades, internal engineering systems and fit-out are on-going Leasing negotiations are on-going New credit facility for US$ 74 mln at 13.25% was signed with Sberbank. The loan is sufficient to cover all construction costs
Development: Pavelezkaya I Project details The overall Paveletskaya Embankment development comprises 10 commercial buildings which will be redeveloped into a Class B+ business park located in a dynamically developing business area on the border of Moscow's Central and Southern Administrative Districts Paveletskaya I is the first phase of the Paveletskaya development and envisages a reconstruction of an ex-printing house facility into an office center GBA
16,512 sqm
GLA
14,035 sqm
Current status
Delivery
Q4 2010
Reconstruction is 95% completed
Project ownership
100%
Forecast NOI
US$ 5.1 mln*
MV upon completion
US$ 34.9 mln*
Valuation done by JLL, Dec 31, 2009
21
Commissioning is scheduled end of December 2010 Negotiations with potential tenants are in progress Possibility to let the building to a single anchor tenant
Development: Kalinina Hotel Project details The Kalinina project is located in Russia’s south region in the city of Zheleznovodsk, popular resort destination The project envisions a renovation of an existing building to a 3-star hotel with sanatorium facilities The hotel is planned to be operated by AFI Hotels Opening date is expected December 2011
GBA
12,665 sqm
Current status
GLA
175 keys
Delivery
Q3 2011
Tender for general contractor completed with full development budget approved (c. US$20 mln)
Project ownership
100%
Stabilized ADR
US$ 300
Forecast NOI
US$ 4.1 mln*
MV upon completion
US$ 26 mln*
Valuation done by JLL, Dec 31, 2009
22
Subsidized loan from municipality at 6.25% in RUR secured for the full development budget
Next for development Brestskaya
GBA
51,263 sqm
GSA (resi)
25,538 sqm
GLA (retail)
1,274 sqm
Delivery
2013
Project ownership
100%
Forecast sale price psqm
$10,000
Forecast NOI (retail)
$1.5 mln
Current status: Design works started, construction is planned for Q3 2011 23
Kunzevo
Bolshaya Pochtovaya
GBA
Over 1 mln sqm
GBA
143,000 sqm
Delivery
First phase c. 300K sqm
GSA (resi)
80,000 sqm
Land plot size
40 Ha
Delivery
Q3 2011
Project ownership
100%
Project ownership
100%
Forecast sale price psqm
$4,000
Forecast sale price psqm
$7,000
Current status: General concept approval with the city authorities. Looking for coinvestor All financials are AFID’s preliminary estimates
Current status: Redesign to residential
Map of active projects in Moscow Tverskaya Mall
Mall of Russia
Brestskaya Kuntsevo
Pochtovaya Paveletskaya Ozerkovskaya
24
Land bank Project
Kosinskaya (existing building)
Type
Land (Ha)
office
10.3
GBA upon completion (sqm)
B/S value June 30, 2010 (AFID share)
MV upon completion ($)
mixed use
1.0
111,770 134,712
Plaza II
office
0.6
55,030
60,238,053
253,865,450
Plaza IIa
office
0.2
10,500
6,016,609
34,195,025
Plaza IV
hotel and office
1.3
100,522,320
624,083,926
1,966,882
2,380,000
Brestskaya 50/2 (Plaza Ic, Ia, Ib)
Ozerkovsky per., 3 (future phaze IV)
office
0.0
132,500 1,864
144,740,438
240,380,533
133,627,424
602,480,000
Serebryakova
residential
3.2
246,700
67,596,618
443,833,042
Odintsovo
residential
30.0
729,420
106,576,537
1,230,087,950
8,224,844
92,400,000
Extensive land bank Over 650 Ha of land Total future area – c. 3 mln sqm (commercial/residential % 60/40) MV when completed – over US$ 6.6 bln* Land bank strategy Development upon securing necessary financing and gaining full confidence in levels of demand from tenants/buyers
Park Plaza Kislovodsk
hotel resort
5.3
47,683
Versailles project in Kislovodsk
hotel resort
0.6
11,762
9,591,744
29,000,000
Old lake - Kislovodsk
hotel resort
20.8
51,625
9,225,502
129,074,000
Kuntsevo
hotel resort
50.7
1,000,000
77,461,937
1,505,037,509
mixed use
387.0
n/a
4,138,360
273,693,000
hotel resort
3.7
n/a
1,823,161
1,810,000
Brestskaya 50/2
retail
7.7
n/a
2,957,041
2,925,000
Kuntzevo
Bolshaya Pochtovaya
residential
4.5
1,113,157,019
Boryspol (Ukraine)
130.7
143,000 n/a
206,149,456
residential
11,723,304
11,730,000
4.6
n/a
5,166,975
5,170,000
662.2
2,958,381
Ruza St. Petersburg Volgograd
Zaporozhie (Ukraine) TOTAL
25
office
957,854,385
6,595,302,454
Planned next
for
development
Bolshaya Pochtovaya *valuation done by JLL, Dec 31, 2010, includes only project ownership of AFID
FINANCIAL UPDATE
26
Debt & liquidity 
With over 110 mln in cash and cash equivalents as of September 30, 2010 the liquidity position remains strong

Sufficient debt financing secured to complete current pipeline In $USD Project
Total facility
Drawn/Balance Outstanding as of June 30, 2010
Available for investment as of June 30, 2010
Mall of Russia
277.9
228.7
49.2
Sberbank
Tverskaya Mall
280.0
78.3
201.7
Sberbank
Ozerkovskaya III
74.0
7.8
66.1
Sberbank
Kalinina hotel
20.0
0
20.0
Four Winds
75.0
74.1
0.0
Deutsche Bank
Corporate
60.0
10.0
0.0
Morgan Stanley
Corporate
20.1
7.8
0.0
807.0
406.7
337.0
Lending bank VTB
MDM Bank
Total
27
Balance sheet Balance sheet as at 30.09.2010 USD'th Narrative Total non-current assets Total current assets Total assets Retained earnings Total equity Minority interest Total non-current liabilities Total current liabilities Total liabilities Total equity and liabilities
US$ '000 Balance as at
Balance as at
Balance as at
Balance as at
30/09/2010
30/06/2010
31/03/2009
31/12/2009
Change 9m 2010 abs
1,753,428 45,282 594,214 (131,971) 2,347,641 (86,689)
%%
1,798,709 462,243 2,260,952
1,739,351 474,740 2,214,092
1,812,779 525,117 2,337,896
3% (22%) (4% )
26,933
17,953
72,594
80,949
(54,017)
(67% )
1,649,786 3,031
1,617,922 2,810
1,720,084 2,719
1,702,661 2,867
(52,874) 164
(3% ) 6%
423,018 185,118 611,167
396,727 196,632 596,169
397,475 217,619 617,812
366,688 275,425 644,980
56,330 (90,307) (33,813)
15% (0) (5% )
2,260,952
2,214,092
2,337,896
2,347,641
(86,688)
(4% )
Non-current assets remained stable throughout Q3 2010. The increased value of assets is due to progressed development on several projects. The Company did not conduct a full revaluation of its development and core-income assets portfolio having adjusted its value for costs incurred only
Current liabilities continue gradual reduction as the Company decreases its short-term loans and borrowings
In Q3 2010 long term liabilities increased by US$26 mln following drawdowns made to complete Mall of Russia and Aquamarine III projects
Retained earnings remain low as no significant profit was booked in Q3 2010
28
Income statement P&L as at 30 September 2010 USD'th
US$ '000 9m 2010
Q3 2010
9m 2009
3q 2009
Narrative Gross operating profit
16,768
4,989
20,308
Net valuation (loss)/gain
(47,874)
(0)
Impairement loss for trading property
(14,133)
Results from operating activities
(3,540)
(17% )
262,316
0 (310,190)
(118%)
-
(16,048)
-
(45,239)
4,989
266,531
Net finance income/(costs)
(4,571)
3,290
18,495
Profit before income tax
(49,810)
8,279
285,026
(4,094)
845
(67,930)
(53,904)
9,124
217,095
Income tax expense Profit for the period
5,637
Change 9m 2010 / 9m 2009 abs %%
1,915
(12%)
5,569 (311,770)
(117%)
2,186
(23,066)
(125%)
7,756 (334,835)
(117% )
(5,810)
63,836
(94%)
1,946 (270,999)
(125% )
The Company recorded US$ 54 mln loss in for 9m 2010 compared to US$ 217 mln profit for 9m 2009 . The loss in 2010 is due to the Company’s conservative approach to valuation in Q2 2010 which resulted in impairment of assets
Revenues for nine months to 30 September 2010 including net proceeds from the sale of trading properties increased by 15% year-on-year to US$53.9 million driven by higher rental income and residential sales.
Loss before tax driven by reevaluation for the period was US$49.8 million compared to profit of US$285 million for nine months to 30 September 2009.
Net loss for nine months to 30 September 2010 was US$53.9 million compared to profit of US$217.1 million for nine months to 30 September 2009. Of this, US$9.1 million was achieved in the third quarter which was not affected by fluctuations in the valuation of our investment properties and investment properties under development, against US$1.9 million in the third quarter of 2009.
29
Cash flow Condensed Statement of Cash Flows as at 30 September 2010
US$ '000
1/1/10 - 30/9/10
1/1/09 - 30/9/09
Net cash used in operating activities
33,824
-6,420
Net cash used in investing activities
-100,657
-45,177
Net cash used in financing activities
-33,205
30,337
-520
-17,392
Net decrease in cash and cash equivalents
-100,558
-38,652
Cash and cash equivalents at 30 Sept. 2010
110,272
164,226
Effect of exchange rate fluctuations
Cash inflow from operating activities for 9m 2010 reached US$ 34 mln compared to US$ 6 mln outflow in 9m 2009
Following active development of several projects cash outflow from investment activities reached US$ 101 mln for 9m 2010 compared to cash outflow of US$ 45 mln in 9m 2009
Cash flow from financing activities was negative for the period and constituted US$ 33 mln outflow
Cash balance as of 9m 2010 remains high at the level of US$ 110 mln
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Outlook
Focus on continued improvements in corporate governance standards and transparency levels
Geographical focus on Moscow as it provides the strongest real estate fundamentals; concentration on high quality centrally located commercial and residential properties
Currently 5 projects under construction and several others at concept design stage with plan to start construction within 18 months
Significant focus on liquidity
Provided levels of available financing, liquidity and market demand are sufficient continue capitalization of extensive land bank
Work-in-progress to dispose several non-strategic assets
Effective measures of cost control and operational efficiency in place
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