AFI Development, a leading real estate company focused on developing property in Russia, has today announced its preliminary audited financial results for the year ended 31 December 2018.

Financial highlights:

  • Revenue for the year, including proceeds from the sale of trading properties, increased by 65% year-on-year to US$296.0 million (2017: US$179.1 million):
    • The sale of residential properties contributed US$169.6 million to total revenue, a 174% increase year-on-year (2017: US$61.8 million), mostly due to revenue recognition from delivery of apartments in AFI Residence Paveletskaya in Q2 2018 and the implementation of IFRS 15[1]
    • Rental and hotel operating income increased 7% year-on-year to US$125.5 million (2017: US$117.0 million)
    • AFIMALL City revenue contribution increased to US$86.8 million (2017: US$82.7 million), a 5% increase year-on-year
  • Gross profit up 47% year-on-year to US$89.4 million (2017: US$61.0 million)
  • Net profit of US$31.5 million in 2018, compared to a loss of US$4.7 million in 2017
  • Total gross value of portfolio of properties of US$1.25 billion, down from US$1.42 billion in 2017
  • Cash, cash equivalents and marketable securities stood at US$100.2 million at 31 December 2018

Operational highlights

  • At Odinburg, the construction and sales of Building 3 (phase II) have commenced. Building 3 (Phase I) and Building 6 (Phase II) are under construction and currently being marketed to customers. As of 31 March 2019, 697 apartments (99% of total) were sold in Building 2, 680 (74% of total) in Building 3 (Phase I) and 206 (92% of total) in Building 6
  • At AFI Residence Paveletskaya, all apartments in Phase I have been delivered to customers. The construction of Phase II and Phase III apartments is currently ongoing. As of 31 March 2019, 558 contracts for the pre-sales of apartments and “special units” had been signed (88% of Phase I and Phase II combined)
  • At Bolshaya Pochtovaya, construction and marketing of the project progressed according to plan and as of 31 March 2019, 251 apartments (62% of Phase I and Phase II combined) had been pre-sold to customers
  • The construction and pre-sale of properties at Botanic Garden remain on track. As of 31 March 2019, 348 apartments (43% of Phase I) had been pre-sold to customers.
  • In Q1 2019, the Company started construction works at the Tverskaya Plaza Ic, a grade A office development in central Moscow
  • At AFIMALL City , the NOI for 2018 increased slightly by 1% year-on-year to US$63.7 million (2017: US$63.0 million).

Commenting on today’s announcement, Eli Avrahampour, Chairman of AFI Development, said:

“We are pleased to report another year of growth in revenue and gross profit, driven primarily by a continued strong performance in residential sales, the successful delivery of apartments in AFI Residence Paveletskaya in the first half of the year and the adoption of IFRS 15.

As we enter the new financial year, we are mindful of the ongoing uncertainty in Russia, in terms of the evolving legal, business and economic environment, which is expected to place downward pressure on the profitability of the Company’s yielding properties and residential projects. In particular, high rouble volatility, recent tax increases and inflation will increase construction costs, while the implementation of the new escrow schemes and increased lending rates pose further challenges for the property development market. We also face rising competition stemming from the launch of the state-funded housing program.

That said, we remain cautiously optimistic and believe that AFI Development will meet the challenges in both the residential and commercial segments, supported by our market experience and competitive projects.”

 

[1] - AFI Development has adopted IFRS 15 ‘Revenue from Contracts with Customers’ from 1 January 2018. The “sale of residential properties” figure includes the revenue from sales of residential properties transferred over time calculated under IFRS 15.

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