1st Quarter Results

16 May 2013

MIRLAND DEVELOPMENT CORPORATION PLC

("MirLand" / "Company")

UNAUDITED INTERIM CONSOLIDATED REPORT FOR THE

THREE MONTHS ENDED 31 MARCH 2013

MIRLAND CONTINUES GOOD PROGRESS UNDERPINNED BY STRONG SALES

MirLand Development Corporation, one of the leading international residential and commercial property developers in Russia, announces its interim results for the three months ended 31 March 2013.

Financial Highlights:

·; Total assets up 7.6% to US$800.4 million (31 December 2012: US$743.7 million), of which 94% are property and land assets; 

·; Total equity up 7.4% to US$340.7 million (31 December 2012: US$317.3 million), equating to 43% of total assets;

·; Total revenues up 19.2% to US$11.8 million (three months ended 31 March 2012: US$9.9 million) due to high occupancy in the investment portfolio (approximately 99%) and positive impact of rental indexation;

·; Net operating income (NOI) from investment properties up 17% to US$7.0 million (three months ended 31 March 2012: US$6.0 million);

·; EBITDA increased 73% to US$3.8 million (three months ended 31 March 2012: US$2.2 million);

·; Net profit of US$0.5 million (three months ended 31 March 2012: loss of US$19.8 million) due to increased operational profitability and fair value adjustments of investment properties following appreciation of the US Dollar against the Rouble of approximately 2.3% which resulted in nominal appreciation of commercial assets at the same rate;

·; Net leverage reduced to 39.6% of total assets (31 December 2012: 40.9%).

Operational Highlights

·; Triumph Park in St. Petersburg: ongoing high rate of sales at the Company's flagship project

- Phase I: 497 out of 510 apartments pre-sold by the end March 2013 (484 at 31 December 2012), representing a projected income of approximately US$66 million to be recognized during 2013 in accordance with IFRS standards;

- Phase II: Launched in Q3 2012, 353 out of 630 units pre-sold, being approximately 56% of the apartments available, representing a projected income of approximately US$50 million to be recognized in Q4 2014 in accordance with IFRS standards;

- Phase III: Planning ongoing with sales campaign of approximately 1,350 units on track to launch in Q4 2013.

Nigel Wright, Chairman, commented:

"We have started the year strongly, with good levels of revenue growth from our income producing portfolio and better than anticipated sales of residential units. The economy continues to show signs of improvement and stabilization, and demand for residential property from owner occupiers, underpinned by stable mortgage rates, continues. MirLand benefited from this, as reflected by strong sales at Triumph Park, our flagship residential project in St. Petersburg. We remain optimistic about prospects for the next phase of the project.

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

-ENDS-

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We are pleased to report MirLand's financial results for the three months ended 31 March 2013. 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 subject to both cost and availability of funding and market demand.

In addition, due to improved market conditions and the growing availability of financing sources, MirLand continues to identify opportunities for new investments which we believe will enhance shareholder value, as we believe that there may be a number of attractive deals available in the market.

FINANCING

During the period, net leverage decreased to 39.6% of total assets (31 December 2012: 40.9%). Total net borrowings amounted to US$316.8 million (31 December 2012: US$304.2 million).

As part of our ongoing strategy to diversify our funding sources, in March, 2013 the Company obtained a short-term credit line of up to New Israeli Shekel ('NIS') 37 million (approximately US$10.3 million) from Investment house which is a non-related party bearing Israeli inter-bank lending interest rate plus 2% margin (5.75% as of March 31, 2013). At 31 March 2013, the Company had withdrawn approximately NIS 32 million (US$ 8.9 million). The proceeds will be applied for general working capital purposes.

In May 2013, the Company received commitments from two institutional investors to subscribe privately for new D Series bonds (the "Bonds") to be issued by the Company. If issued, the Bonds will raise additional debt of NIS 62 million (approximately US$17.2 million, before expenses). The Bonds will be issued on identical terms to the existing D Series bonds and will be rated as "ilBaa1/Stable" on a local Israeli scale by Midroog, a subsidiary of Moody's Investor Services. The net proceeds of the issue of the Bonds will be applied for general working capital purposes.

OPERATIONAL UPDATE

The Company's progress in the pre-sale and delivery of its BREEAM certified Green residential project, Triumph Park in St. Petersburg, continues. A further 15 apartments have been sold from the first phase taking it very close to fully sold and sales on Phase II are progressing very well. The Company is now finalising detailed design with regard to Phase III, and is firmly on track to launch this to the market in Q4 2013. 

On 4 January, the Company agreed with its partners in Inomotor LLC and Avtoprioriet LLC ("The Century Companies") that they would waive their pre-existing option to acquire 1% of the Century Companies. In consideration of this waiver, the Company has agreed to pay its partners US$600,000, such sum to be offset against a loan presently outstanding to one of the partners from the Company. In addition, the repayment date of the loan was extended in a six month. The purpose of these amended agreements is to ensure that the Company secures overall control of the Century Companies. The parties have also agreed to amend the existing Management Agreement to give the Company overall control of the project.

The fully occupied Vernissage Mall in Yaroslavl and the Triumph Mall in Saratov continued to enjoy high footfall. Occupancy rates in the MirLand Business Center office buildings are at 98%.

MARKET UPDATE

After a strong performance in 2012, with 3.4% annual growth, Russia's GDP grew by 1.1 % year-on-year in the same period of 2013, mainlydue to the modest investment growth of 0.1% and weak external demand.

Inflation started rising again after reaching a record historical low rate of 3.6% in early 2012, and it had picked up to 6.6% by the year end. In Q1 2013, the consumer prices index increased by 1.9%, and resulted in marginal growth in consumption, which was supported by a 5.4% increase in real disposable income compared to Q1 2012. Retail turnover growth achieved the relatively high figure of 3.9% growth versus Q1 2012. However, this represents just half of the year-on-year increase seen in Q1 2012 (up 7.9% on the level of Q1 2011).

The US Dollar strengthened against the Rouble by 2.3% during Q1. One of the main concerns for the Russian macro economy remains the continued trend of capital outflow, which amounted to US$25 billion in Q1 2013.

The overall macroeconomic stability in Russia had a positive influence on the real estate sector. The total volume of investments in real estate in Q1 2013 accounted for US$3.4 billion, reaching a historical record high, and representing nearly half of the US$8 billion forecast for investments for the whole of 2013. The office and retail sectors received similar levels of investment in Q1 2013, at US$1.6 billion and US$1.2 billion, respectively. Capitalization rates in Q1 2013 remained at the Q4 2012 level, at 8.5% for Class A offices and 9.5% for retail.

Overall, the office segment in Moscow remains stable. In Q1 2013 it experienced strong demand and a high level of take up for quality office space compared to the previous quarter, with 450,833 sqm of offices either leased or sold, compared to 2 million sqm in the entire 2012 year. Based on Cushman & Wakefield's projections, the new construction forecast for 2013 increased to 700,000 sqm (200,000 sqm more than the previous forecast). Rental rates are expected to remain stable, as the leasing environment continues to be favorable for high quality, well located office accommodation.

In the retail sector, consumer spending remained high, driven by an increase in real wages and the growing prominence of Russia's middle class. Retail sales revenues grew by 3.9% year-on-year in real terms. Demand for good quality space is steady, and the vacancy rate in Moscow remains low at 1.2%. The increase in vacancy rate (from 0.4% in Q4 2012) is the result of typical tenant rotation in the beginning of the year.

Demand for residential real estate remains strong and has been supported by growing mortgage affordability. New mortgages extended in Russia since the beginning of 2013 (January and February) showed good growth and totaled over Rouble 133 billion (Rouble 14.9 billion in St. Petersburg). The growth has been barely affected by the slight increase of the mortgage interest rates. In 2013 approximately 3 million sqm of residential space is planned to be delivered in St. Petersburg, similar to the previous two years, when approximately 2.7 million sqm was delivered.

The Russian economy continues to perform well, but slowing economic growth in China, combined with ongoing uncertainty in the European economy along with the situation in Cyprus, may affect it future performance, and therefore we continue to monitor economic data very closely in undertaking our financial and operational decisions on behalf of MirLand.

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 its 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

13 May 2013 13 May 2013

*) Reclassified, see Note 2b.

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

*) Reclassified, see Note 2b.

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

*) Reclassified, see Note 2b.

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

*) Reclassified, see Note 2b.

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

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

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

*) Reclassified, see note 2b.

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