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Mirland Dev Corp PLC (MLD)

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Wednesday 16 May, 2012

Mirland Dev Corp PLC

1st Quarter Results

RNS Number : 4237D
Mirland Development Corporation PLC
16 May 2012
 



 

16 May 2012

 

MIRLAND DEVELOPMENT CORPORATION PLC

("MirLand" / "Company")

 

UNAUDITED INTERIM CONSOLIDATED REPORT FOR THE

THREE MONTHS ENDED 31 MARCH 2012

 

MIRLAND CONTINUES GOOD PROGRESS WITH EARNINGS GROWTH AND STRONG SALES

 

 

MirLand Development Corporation, one of the leading international residential and commercial property developers in Russia, today announces its interim results for the three months ended 31 March 2012.

 

Financial Highlights:

·     Total assets up 3.2% to US$763.4 million (31 December 2011: US$739.6 million), of which 95% are property and land assets; 

·     Shareholders' equity US$365.8 million at 31 March 2012, equating to 48% of total assets (31 December 2011: US$347.1 million);

·     Total revenues up 35.2% to US$13.2 million (three months ended 31 March 2011: US$9.8 million) due to improved occupancy rates in yielding properties, income from the Tamiz property and further recognition of house sales at the Western Residence project in Perkhushkovo;

·     Net operating income (NOI) from investment properties up 71% to US$6.7 million (three months ended 31 March 2011: US$3.8 million), due to improved occupancy, the opening and letting of  the Tamiz building and increased income from rent indexation;

·     EBITDA increased 144% to US$2.2 million (three months ended 31 March 2011: US$0.9million);

·     Total comprehensive income of US$18.2 million for the three months ended 31 March 2012 (three months ended 31 March 2011: US$21.7 million); 

·     Loss of US$19.8 million (three months ended 31 March 2011: loss of US$3.5 million) due to currency movements following appreciation of the Rouble against the US Dollar of approximately 9% that resulted in nominal depreciation of commercial assets at the same rate. The nominal depreciation was compensated for by an increase in equity;

·     Net leverage maintained at 44.6% of total assets (31 December 2011: 43.9%). In January 2012, the Company repaid the remaining balance of Shareholders' loans amounting to approximately US$6.4 million (including accumulated interest). 

 

Operational Highlights

·     Continued progress in the Company's flagship project, Triumph Park in St. Petersburg:

-    Ongoing strong sales of Phase One with 258 apartments sold subject to contract and a further  54 reserved, representing a projected income of approximately US$41 million

-    Since launch of sales in November 2011, apartments  that account for an area of approximately 16,200 sqm out of total saleable area of approximately 26,220 sqm, or 61.7%, have been sold;

-    Launch of sales of Phase Two, consisting of 630 apartments planned for Q3 2012.

·     In April of 2012, a jointly controlled entity ("Avtoprioritet") reached a final judicially approved settlement agreement  with regards to its lease dispute with Reiffeisen Bank for a space of approximately 5,600, according to which it collected an outstanding rent debt of US$6.4 million and received a final compensation of US$8.6 million for the remaining term of the lease (both amounts without VAT);

·     Acquisition of an additional 10% of MirLand's  jointly controlled entity Inomotor LLC, which owns an office building with a leasable area of approximately 11,000 sqm in the Century Project, for a total consideration of US$1.5 million in cash, taking the Company's interest to 61%;

·     Ongoing progress regarding renovation of the MAG buildings with expected completion in Q2 2012. Negotiations to re-let the space at an advanced stage.

 

Nigel Wright, Chairman, commented:

 

"We have started the year strongly, with good levels of revenue growth from our income producing portfolio and better than expected sales of residential units. The economy continues to show signs of improvement and stabilization. MirLand has also benefited from improving demand for residential property supported by  growing demand from owner occupiers supported by lower mortgage rates, which have acted to significantly boost sales at Triumph Park, our flagship residential project in St. Petersburg. We are optimistic about prospects for the next phase of the project.

 

"Given the improving conditions and the success we have achieved in our developments, illustrated by their near 100% occupancy rate, we are continuing  to seek new opportunities to enhance shareholder value by bringing forward our pipeline projects and assessing new acquisitions with the aim of delivering long term shareholder value."

 

-ENDS-

 

 

For further information, please contact:

 

MirLand Development Corporation plc

Roman Rozental

roman@mirland-development.com  

 

+7 499 130 31 09

FTI Consulting

Dido Laurimore / Will Henderson

dido.laurimore@fticonsulting.com will.henderson@fticonsulting.com  

+44 20 7831 3113



We are pleased to report MirLand's financial results for the three months ended 31 March 2012. During the period the Russian economy continued to perform well and the Board of MirLand made further good, positive progress in implementing measures to successfully deliver on the Company's business plan and strategy, which include the following key goals:

·     to maximize returns from our existing diversified portfolio of assets;

·     to successfully complete those projects currently under construction; and

·     to resume our pipeline projects in light of both cost and availability of funding and market demand.

 

In addition, due to improved market conditions and the growing availability of financing sources, MirLand continued to exploit opportunities for new investments, as we believe that there are currently a number of attractive deals available in the market.

 

FINANCING

The Company maintained modest leverage at 44.6% of total assets (31 December 2011: 43.9%).  Total net borrowings amounted to US$340.2 million (31 December 2011: US$324.7 million).

 

In January 2012, the Company repaid the remaining balance of Shareholders' loans amounting to US$6.4 million (including accumulated interest). The Company intends to continue to diversify its funding sources whilst obtaining bank financing in order to fund its planned development activities, as well as ensuring it is appropriately capitalized to enable it to make new acquisitions where it sees opportunities to deliver value to shareholders.  

 

OPERATIONAL UPDATE

Sales of Sub Phase One of Triumph Park Project in St. Petersburg, comprising 510 apartments, continued at a higher than projected pace and contracts for the sale of 258 apartments have been executed and a further 54 apartments have been reserved.  Construction of this first phase is on track and the Company is now making preparations for the sale of the second phase, comprising 630 apartments, which is planned for launch during Q3 2012.

 

As described in Note 28 of the Company's Financial Statements for the year ended 31 December 2011, in October 2008, Avtoprioritet, Mirland's jointly controlled entity, entered into a lease agreement with Raiffeisen Bank ("the Lessee") according to which the Lessee undertook to lease approximately 5,600 sqm for a period of 10 years. In December 2008, the Lessee announced that it had no intention of fulfilling the lease agreement. Following a sequence of mutual legal claims filed in connection with the validity of the lease agreement, the Russian Supreme Court made a final ruling that the lease agreement is binding to both parties and the leased space was indeed transferred to the Lessee in accordance with the agreement. Following the Court ruling, Avtoprioritet has filed a number of monetary claims for different periods of the lease agreement and collected a total amount of US$7.6 million to date. In April 2012, Avtoprioritet reached a final judicially approved settlement with the Lessee under which it collected an outstanding rent debt of US$6.4 million and received a final compensation of US$8.6 million for the remaining term of the lease (all amounts are excluding VAT). Following the final settlement, the Company is now undertaking a marketing campaign to let up the vacant space. 

 

As part of Mirland's strategy to increase its yielding asset portfolio, on 30 March 2012, the Company acquired a 10% additional interest in shares of jointly controlled entity Inomotor for a total consideration of $1.5 million in cash. As a result, the Company now holds a 61% interest in Inomotor. Inomotor owns an office building with leasable area of approximately 11,000 sqm in the Century Project.

  

We have also made good progress in the renovation works of the MAG buildings which was damaged by fire in March 2010. Renovation works are expected to be completed in Q2 2012 and negotiations to let the renovated space are at an advanced stage.

 

The fully occupied Vernissage Mall in Yaroslavl and the Triumph Mall in Saratov continued to enjoy high footfall. Occupancy rates in Hydro, MAG and the Century office buildings are at 97% (of available lettable space). We have also made excellent progress in letting the Tamiz building, which was opened in Q3 2011, and now has an occupancy rate of 92%. 

 

MARKET UPDATE

Overall, the Russian macro-economy continued to perform well in Q1 2012, driven by low inflation, continued consumer spending growth, increased consumer lending and favorable global commodity demand.

 

GDP recorded a 4.1% year-on-year increase in Q1 2012 . Industrial production performed well, improving by 5%, driven by growing demand of energy resources due to the extremely cold weather experienced in Russia during the period. 

 

Inflation was at record low at 1.5% year-on-year, helped by a freeze in utility and fuel prices. However, a post election inflation increase is expected in the second half of 2012.

 

The favorable macro economic conditions led to increased consumer spending growth, further supported by low inflation and growing consumer lending. Retail trade turnover grew by 7.3% in the first two months of 2012, compared to 5.2% during the same period of last year.

 

The Rouble strengthened against the US Dollar by 9% during Q1. One of the main concerns for the Russian macro economy remains the continued trend of capital outflow, which amounted to US$35.1 billion in Q1 2012.

  

The overall macroeconomic stability had a positive influence on the real estate sector. The total volume of investments in Q1 2012 reached US$1.46 billion (30% lower than Q1 2011, which was the most successful year on record for the Russian commercial real estate investment market, but close to the pre-crisis hiatus of 2006-7.)

 

Real estate investment activity showed two main trends: growing confidence of foreign investors (responsible for US$1.11 billion or 76% of total investment volume in Q1 2012) and growing interest in regional assets (80% of the total investment volume). Capitalization rates in Q1 2012 remained at the Q4 2011 level - 8.5% for Class A offices and 9.25% for retail.

 

The office sector saw relatively high take-up of c.357,000 sqm. Tenant demand is concentrated on completed offices, while pre-lease deals amounted to only 5% of the total. Despite relatively low levels of new construction, a slight increase in vacancy rate from 13.4% to 13.8% was recorded for the market due to  most of the demand coming from tenants that who left other buildings rather than taking on new, additional space. Despite the vacancy, rental rates remained stable and the leasing environment continues to be favorable for high quality well located office accommodation.

 

In the retail sector, consumer spending remained high, driven by increase in real wages and the growing prominence of Russia's middle class. The vacancy rate for retail space in Moscow remained very low at 0.6%. There is high demand for retail space in all Russian cities where the population is greater than 300,000.   

 

The residential sector witnessed a continued trend of sales price increases in the Moscow and St. Petersburg markets, supported by increased levels of mortgage lending and greater affordability through a stable mortgage rates.

 

The Russian economy continues to perform well, but the transition of Presidential power, expected state monopoly price increases and increasing budget spending will present future challenges.

 

MANAGEMENT

As announced yesterday, Emil Budilovsky stepped down from his position as Chief Financial Officer of the Company and resigned from the board of directors of the Company (the "Board") in order to pursue other business interests with immediate effect.

The Company is pleased to announce that Yevgeny Steklov has been promoted to the role of Chief Financial Officer and has been appointed to the Board with effect from the close of the Annual General Meeting on Monday 14 May 2012.

 

 

OUTLOOK

The Board remains focused on the delivery of the Company's business plan and, in light of ongoing stability in the Russian economy, will continue to focus its resources and activities on completing projects under construction and commencing those where funding is in place, building on the recent success. We anticipate bringing further new projects on stream into this improving environment as well as capitalising on the current market opportunities to identify new investments. The Board is willing to examine the merit of any such opportunities as and when they arise, given the availability of appropriate financial resources.

 

MirLand has a high quality portfolio of completed, income producing investment property. In addition, our development pipeline should provide both competitive advantage and significant future benefit to shareholders as conditions continue to improve.

 

 

Nigel Wright                                                               Roman Rozental

Chairman                                                                    Chief Executive

16 May 2012                                                              16 May 2012

 

  

 

 

 

 

 

 

MIRLAND DEVELOPMENT CORPORATION PLC

 

 

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

AS OF 31 MARCH 2012

 

 

U.S. DOLLARS IN THOUSANDS

 

 

UNAUDITED

 

  

 


INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

 



31 March


31 December



2012


2011


2011



Unaudited


Audited



U.S. dollars in thousands

ASSETS














CURRENT ASSETS:







Cash and cash equivalents


14,658


35,542


32,333

Short-term loans


-


816


-

Restricted bank deposits


1,909


-


1,739

Trade receivables


5,118


1,394


4,568

Other receivables


2,330


2,652


2,780

VAT receivable


7,711


31,604


7,393

Inventories of buildings for sale


172,492


193,945


157,772










204,218


265,953


206,585








NON-CURRENT ASSETS:







Investment properties


382,432


311,807


363,569

Investment properties under construction


83,346


131,344


82,703

Inventories of buildings for sale


71,952


32,525


67,062

Long-term loans to related parties


10,601


10,802


10,611

Fixed assets, net


1,267


1,451


1,190

VAT receivable


261


204


317

Other long-term receivables


4,417


3,170


2,851

Prepaid expenses


2,460


1,230


1,802

Deferred taxes


2,447


353


2,915










559,183


492,886


533,020








TOTAL ASSETS


763,401


758,839


739,605

 

 

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



INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

 



31 March


31 December



2012


2011


2011



Unaudited


Audited



U.S. dollars in thousands

EQUITY AND LIABILITIES














CURRENT LIABILITIES:







Credit from banks


67,842


70,013


66,992

Current maturities of long-term loans from banks and debentures


43,777


20,888


40,962

Credit from banks for financing of inventory of buildings for sale


22,984


-


24,218

Loans from shareholders


-


20,612


6,402

Government authorities


3,634


3,021


3,981

Trade payables


9,355


11,563


9,135

Deposits from tenants


2,925


4,265


3,831

Advances from buyers


13,817


7,538


7,099

Other accounts payable


2,110


1,949


1,871










166,444


139,849


164,491








NON-CURRENT LIABILITIES:







Loans from banks


78,827


71,345


79,960

Loans from shareholders


-


5,772


-

Debentures


141,474


166,802


138,488

Other non-current liabilities


10,268


5,644


9,528

Deferred taxes


564


6,514


-










231,133


256,077


227,976








TOTAL LIABILITIES


397,577


395,926


392,467








EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT:







Issued capital


1,036


1,036


1,036

Share premium


359,803


359,803


359,803

Capital reserve for share-based payment transactions


11,902


10,781


11,341

Capital reserve for transactions with controlling shareholders


6,565


3,207


6,565

Foreign currency translation reserve


(14,161)


(435)


(52,126)

Accumulated deficit (retained earnings)


679


(11,479)


20,519








TOTAL EQUITY


365,824


362,913


347,138








TOTAL EQUITY AND LIABILITIES


763,401


758,839


739,605

 

 

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



INTERIM CONSOLIDATED INCOME STATEMENTS 

 

 



Three months ended

31 March


Year ended

31 December



2012


2011


2011



Unaudited


Audited



U.S. dollars in thousands

(except per share data)








Rental income from investment properties


10,628


7,868


39,679








Income from sale of inventories


1,628


912


3,932








Revenues from managing fees


966


996


3,922








Total revenues


13,222


9,776


47,533








Cost of sales


(2,553)


(1,046)


(6,279)








Cost of maintenance and management


(4,941)


(4,979)


(20,915)








Gross profit


5,728


3,751


18,839








General and administrative expenses


(3,732)


(4,235)


(16,583)








Marketing expenses


(428)


(822)


(2,593)








Fair value adjustments of investment properties and investment properties under construction, net


(29,671)


(18,255)


33,485








Other income, net


190


702


3,849








Operating income (loss)


(27,913)


(18,859)


38,497








Finance income


264


704


2,141








Finance costs


(6,151)


(4,129)


(18,031)








Net foreign exchange differences


15,220


14,730


(6,349)








Profit (loss) before taxes on income


(18,580)


(7,554)


16,258








Taxes on income (tax benefit)


1,260


(4,081)


(12,267)








Net income (loss)


(19,840)


(3,473)


28,525








 Basic and diluted net earnings (loss) per share


(0.19)


(0.03)


0.28

 

 

 

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



INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 

 



Three months ended

31 March


Year ended

31 December



2012


2011


2011



Unaudited


Audited



U.S. dollars in thousands








Net income (loss)


(19,840)


(3,473)


28,525








Other comprehensive income (loss) (net of tax effect):














Exchange differences on translation of foreign operations


37,965


25,161


(26,530)








Total other comprehensive income (loss)


37,965


25,161


(26,530)








Total comprehensive income


18,125


21,688


1,995

 

 

 

 

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

 

 

INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

 

 










Capital


Capital reserve for













reserve for


transactions




Retained









share-based


with


Currency


earnings





Share


Share


payment


controlling


translation


(accumulated





capital


premium


transactions


shareholders


reserve


deficit)


Total



U.S. dollars in thousands































At 1 January 2011


1,036


359,803


10,579


3,207


(25,596)


(8,006)


341,023
















Net income for the year


-


-


-


-


-


28,525


28,525

Other comprehensive loss


-


-


-


-


(26,530)


-


(26,530)
















Total comprehensive income (loss), net


-


-


-


-


(26,530)


28,525


1,995
















Share-based payment transactions


-


-


762


-


-


-


762

Equity component of transaction with controlling shareholders


-


-


-


3,358


-


-


3,358
















At 31 December 2011


1,036


359,803


11,341


6,565


(52,126)


20,519


347,138
















Net income for the year


-


-


-


-


-


(19,840)


(19,840)

Other comprehensive loss


-


-


-


-


37,965


-


37,965
















Total comprehensive income (loss), net


-


-


-


-


37,965


(19,840)


18,125
















Share-based payment transactions


-


-


561


-


-


-


561

Equity component of transaction with controlling shareholders


-


-


-


-


-


-


-
















At 31 March 2012 (unaudited)


1,036


359,803


11,902


6,565


(14,161)


679


365,824

 

 

 

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



INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

 

 

 










Capital reserve














For share-based



Currency







Share


Share


payment



translation


Accumulated





capital


premium


transactions


shareholders


reserve


Deficit


Total



U.S. dollars in thousands
















At 1 January 2011 (audited)


1,036


359,803


10,579



(25,596)


(8,006)


341,023















Net loss for the period


-


-


-



-


(3,473)


(3,473)

Other comprehensive income


-


-


-


-


25,161


-


25,161
















Total comprehensive income (loss), net


-


-


-



25,161


(3,473)


21,688















Share-based payment transactions


-


-


202



-


-


202
















At 31 March 2011 (unaudited)


1,036


359,803


10,781


3,207


(435)


(11,479)


362,913

 

 

 

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

 


INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 



Three months ended

31 March


Year ended

31 December



2012


2011


2011



Unaudited


Audited



U.S. dollars in thousands

Cash flows from operating activities:














Net income (loss)


(19,840)


(3,473)


28,525








Adjustments to reconcile net income (loss) to net cash used in operating activities:














Adjustments to the profit or loss items:














Deferred taxes, net


1,286


(4,587)


(13,482)

Depreciation and amortization


123


121


467

Finance costs (income), net


(9,333)


(11,305)


22,239

Share-based payment


561


202


762

Fair value adjustment of investment properties and investment properties under construction


29,671


18,255


(33,485)










22,308


2,686


(23,499)

Changes in asset and liability items:














Increase in trade receivables


(96)


(1,760)


(5,547)

Decrease (increase) in VAT receivable and others


(169)


1,405


23,708

Increase in inventories of buildings for sale


(3,960)


(3,555)


(21,759)

Increase (decrease) in trade payables


(44)


-


165

Increase in other accounts payable


4,735


323


6,612










466


(3,587)


3,179

Cash paid and received during the period for:














Interest paid


(7,340)


(6,802)


(23,370)

Interest received


2


15


20

Taxes paid


(153)


(45)


(948)

Taxes received


-


-


22










(7,491)


(6,832)


(24,276)








Net cash flows used in operating activities


(4,557)


(11,206)


(16,071)

 

 

 

 

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



INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 



Three months ended

31 March


Year ended

31 December



2012


2011


2011



Unaudited


Audited



U.S. dollars in thousands








Cash flows from investing activities:














Additions to investment properties


(1,924)


(4,198)


(6,365)

Additions to investment properties under construction


(42)


(2,507)


(8,742)

Acquisition of additional interest in jointly

  controlled entity


(1,500)


-


-

Purchase of fixed assets


(200)


(141)


(349)

Loans granted to related parties


(1,446)


-


-

Proceeds from repayment of loans granted


-


6,860


8,428

Investment in restricted deposit


-


-


(1,739)








Net cash flows used in (provided by) investing activities


(5,112)


14


(8,767)








Cash flows from financing activities:














Issuance of debentures, net


-


46,985


54,104

Repayment of debentures


-


-


(10,768)

Short-term credit from banks and others, net


-


7,142


-

Repayment of loans from shareholders


(5,567)


(17,504)


(36,843)

Receipt of long-term loans


5,314


-


47,696

Repayment of loans from banks


(7,282)


(1,755)


(6,206)








Net cash flows provided by (used in) financing activities


(7,535)


34,868


47,983








Exchange differences on balances of cash and cash equivalents


(471)


892


(1,786)








Increase (decrease) in cash and cash equivalents


(17,675)


24,568


21,359

Cash and cash equivalents at the beginning of the period


32,333


10,974


10,974








Cash and cash equivalents at the end of the period


14,658


35,542


32,333

 

 

 

 

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


 

NOTE 1:-   GENERAL

 

a.       These interim consolidated financial statements have been prepared in a condensed format as of 31 March 2012 and for the three-month period then ended ("interim condensed consolidated financial statements"). These financial statements should be read in conjunction with the Company's annual financial statements and accompanying notes as of 31 December 2011 and for the year then ended ("annual financial statements").

 

b.       Based on management plans and as reflected in the Company's forecasted cash flows, the Company expects to finance its activities, inter alia, by obtaining loans from banks in Russia which will be secured by properties which are presently unsecured with a fair value as of 31 March 2012 amounting to approximately $ 89 million, and revenues from sales of building projects that are expected to be completed during 2012.

 

In addition, the short-term loans from banks amounting to approximately $ 70 million are secured by non-cancelable bank guarantees of the controlling shareholders until the full repayment of the loans.

 

NOTE 2:-   SIGNIFICANT ACCOUNTING POLICIES 

 

Basis of preparation of the interim financial statements:

 

The interim condensed consolidated financial statements for the three months ended 31 March 2012 have been prepared in accordance with the International Financial Reporting Standard IAS 34 ("Interim Financial Reporting").

 

The significant accounting policies and methods of computation followed in the preparation of the interim condensed consolidated financial statements are identical to those followed in the preparation of the latest annual financial statements, except for the adoption of new Standards and Interpretations as noted below:

 

IAS 12 - Income Taxes:

 

The amendment to IAS 12 ("the Amendment") applies to investment property measured at fair value. According to the Amendment, the deferred tax asset/liability in respect of such property should be measured based on the presumption that the carrying amount of the property will be recovered in full through sale (and not through use). However, if the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits embedded in the investment property over time rather than through sale, the sale presumption is rebutted and the Group should apply the regular guidelines of IAS 12 (namely, deferred taxes are measured based on the expected recovery of the property as determined by management - through sale or use).

 

The Amendment supersedes the provisions of SIC 21 that require separation of the land component and the building component of investment property measured at fair value in order to calculate the deferred tax.

 

The Amendment is applied retrospectively commencing from the financial statements for annual periods beginning on January 1, 2012. The Amendment has had no effect on the financial statements.

 

 

NOTE 3:-   SEGMENTS

 



Commercial


Residential


Total



Unaudited

Three months ended 31 March 2012:


U.S. dollars in thousands








Segment revenues


11,594


1,628


13,222








Segment results


(23,583)


(1,395)


(24,978)








Unallocated expenses






(2,935)








Finance costs, net






9,333








Loss  before taxes on income






(18,580)

 

 



Commercial


Residential


Total



Unaudited

Three months ended 31 March 2011:


U.S. dollars in thousands








Segment revenues


8,864


912


9,776








Segment results


(14,928)


(489)


(15,417)








Unallocated expenses






(3,442)








Finance costs, net






11,305








Loss  before taxes on income






(7,554)

 

 



Year ended 31 December 2011



Commercial


Residential


Total



U.S. dollars in thousands








Segment revenues


43,601


3,932


47,533








Segment results


50,840


(4,661)


46,179








Unallocated expenses






(7,682)








Finance cost, net






(22,239)








Profit before taxes on income






16,258

 

 

 

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

NOTE 4:-   SIGNIFICANT EVENTS DURING THE REPORTED PERIOD

 

a.       On March 12, 2012, the Company's board of directors approved by a way of reallocation the prolongation of the expiration date of 1,122,994 options, previously granted by the Company, to 19 March 2014, and updated the exercise price of those options from 4.8 GBP per share to exercise price of 3.5 GBP per share. According to IFRS 7, the additional value of those options was measured by independent appraiser and amounted to $494 thousand. The Company recognized this amount as expenses in the income statement. As of the balance sheet date, the options are fully vested.

 

b.       During the period, the Company repaid shareholder's loans in total amount of approximately $ 6.4 million (including interest accrued).

 

c.       On March 30 2012 the Company acquired 10% additional interest in shares of jointly controlled entity ("Inomotor") for total consideration of $ 1.5 million. As a result, the Company holds 61% in shares of Inomotor as of the balance sheet date. The joint venture agreement between the parties was not amended as a result of acquisition, therefore as of the balance sheet date the Company accounts investment in Inomotor using the proportionate consolidation method.

 

 

NOTE 5: -  SUBSEQUENT EVENTS

 

Further to Note 28i to the Company's annual financial statements, on April 9, 2012, the Company signed a compromise agreement with Raiffeisen Bank ("the lessee") which was approved by ruling court agreement in Russia. According to the agreement, a debt balance, for which the lessee was liable in respect to 2011 in an amount aggregating to about $ 4.8 million (not including VAT), was paid. Further, on April 23, 2012 an additional compromise agreement and lease termination agreement were signed and were approved by court ruling. Pursuant to the compromise agreement, the Company collected the debt balance, for which the lessee was liable in respect to the period from January 1, 2012 until the date on which the compromise was signed, in the amount of about $ 1.5 million (not including VAT). Further, in accordance to the lease termination agreement between the parties it was agreed that in reference to the period up to the end of the original lease agreement, to which the lessee was liable, an amount aggregating to $ 7.7 million will be paid in addition to the deposit in the amount of about $ 1.3 million that the lessee deposited with it and that was transferred to the Company at the inception of the lease agreement. The compromise amounts were received by the Company in full. As of the balance sheet date, the compromise agreement had no effect on the fair value of leased property.

 

 


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