18 March 2016

AFI DEVELOPMENT PLC ANNOUNCED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015

VALUATION LOSSES OVERSHADOW SOUND OPERATIONAL PERFORMANCE  

Financial highlights:

Revenue for the year amounted to US$93.7 million, significantly less than the US$144.1 million recorded in 2014 due to continuous macroeconomic pressure affecting the Russian real estate market. Rental income (including hotel operating income) was US$92.9 million:

          - AFIMALL City revenue contribution declined by 33% year-on-year to US$71.3 million versus US$106.9 million in 2014

  • Despite the significant decrease in AFIMALL revenue, gross profit for 2015 was US$42.1 million, compared to US$49.9 million in 2014
  • AFI Development incurred a net loss of US$466.7 million for the year, compared to a net loss of US$287.3 in 2014, mainly due to a valuation loss on investment properties of US$490.5 million recorded in Q4 2015
  • Cash, cash equivalents and marketable securities amounted to US$42.4 million as at 31 December 2015, compared to US$93.3 million as at 31 December 2014
  • Gross Asset Value declined to US$1.4 billion as at 31 December 2015 (compared to US$2.0 billion as at 31 December 2014), due to sharp downward revaluation in Q4 2015 across the portfolio as difficult macroeconomic conditions continued to prevail

Operational Highlights:

  •  Despite difficult market conditions, AFIMALL City retained the majority of its tenants and welcomed several new retailers to the Mall during 2015

          - Average monthly footfall in December 2015 was 3% higher than in December 2014, reflecting the success of targeted sales             promotions executed during the year

           - NOI declined from US$83.0 million in 2014 to US$53.3 million in 2015

  • The main construction phase and pre-sale of apartments at the Paveletskaya II residential development commenced in December 2015
  • Apartment sales at Odinburg Building 1 are almost complete, while the construction of Building 2 is ongoing

        -  The number of sale contracts signed amounted to 706 in Building 1 and 132 in Building 2 as of 16 March 2016

        -  In March 2016, the Company met all formal requirements to start delivery of apartments in Building 1, which is planned to start by   the end of the month

Commenting on today's announcement, Lev Leviev, Executive Chairman of AFI Development, said:

“As expected, our operating conditions remained challenging throughout 2015 driven by macroeconomic and geopolitical developments affecting our market. Continued deterioration in demand for real estate assets across Russia has served to not only reinforce our focus on maintaining a high level of efficiency at our yielding assets, but has resulted in further downward revision to the value of our portfolio. This has had a major effect on our profitability in 2015 and has overshadowed our operational achievements during the year. Given the high level of uncertainty in our market, we plan to continue with the development of selected residential projects and will adapt our strategy to any changes in our operating environment to ensure sustainable development of our business going forward.”

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