20th Nov 2007 07:01
Mirland Development Corporation PLC20 November 2007 20 November 2007 MIRLAND DEVELOPMENT CORPORATION PLC ("MirLand"/the "Company") UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2007 MirLand Development Corporation, one of the leading residential and commercialproperty developers in Russia, today announces its interim consolidatedfinancial statements for the nine months to 30 September 2007. Since the announcement of our Interim results for the six months to 30 June 2007the Company has continued to make good progress. We have entered into an agreement to acquire the last remaining stake in ourSkyscraper project at Dmitrovskoe schosse 1 Moscow. The acquisition will enableus to fully progress plans to develop a 47-storey office tower, offering circa90,000 sq m of prime lettable office space and 1,500 parking spaces.Construction is anticipated to begin in Spring 2008. We also announced in October that the Company has entered into an agreement forthe acquisition of a market trading pavilion in Kazan that will result in theacquisition of a site of approximately 0.8 hectares in size. It is expected thatthe programme will involve the construction by MirLand of a new shopping andentertainment centre of approximately 34,000 sq m plus some 600 parking spacesover a total of 2.2 hectares of land. Nigel Wright, Chairman, commented: "We are pleased with the progress that the company is making. We continue tolook at acquisition opportunities that fit in with our overall strategy, with aview to expanding our portfolio with additional high quality assets." For further information: MirLand Development Corporation plc +972 5227 76640Roman [email protected] Financial Dynamics +44 20 7831 3113Dido Laurimore/Nicole [email protected]/ [email protected] CONSOLIDATED STATEMENTS OF INCOME Nine months ended Year ended 30 September 31 December 2007 2006 2006 Unaudited Audited U.S. dollars in thousands (except earnings per share) Rental income from investment properties 6,697 2,485 3,707 Management fees 1,166 276 533 Fair value adjustments of investment properties 67,414 37,527 35,878 Total income 75,277 40,288 40,118 Expenses Operating expenses (2,841) (623) (863) Adjustment for the provision of service provider (4,844) (4,462) (3,588) Cost of registration of land-lease (5,469) - - General and administrative expenses (11,967) (1,488) (5,251) Financial income 17,270 15 3,556 Financial expenses (4,582) (423) (1,226) Profit before tax expense 62,844 33,307 32,746 Tax expense (3,786) (2,188) (2,797) Profit for the period attributable to the equity 59,058 31,119 29,949holders of the parent Basic and diluted earnings per share 0.57 0.65 0.34 The accompanying notes are an integral part of the financial statements. CONSOLIDATED BALANCE SHEETS 30 September 31 December 2007 2006 Unaudited Audited U.S. dollars in thousandsASSETS NON-CURRENT ASSETSInvestment properties 199,504 65,709Investment properties under construction 68,508 46,930Inventories of land - 76,193Long-term loan granted (Note 3c) 14,476 -Advance on acquisition of subsidiary 1,000 1,600Fixed assets, net 3,773 1,082Long-term receivables and prepayments - 5,958Other assets, net 966 - 288,227 197,472CURRENT ASSETSResidential projects for sale under construction 91,390 -Short- term loans 1,147 -Trade receivables 17,483 10,157Restricted bank deposits 71,276 *) 71,330Cash and cash equivalents 113,681 *) 196,586 294,977 278,073 Total assets 583,204 475,545 EQUITY AND LIABILITIES EQUITYEquity attributable to equity holders of the parent:Share capital 1,036 1,000Share premium 359,285 *) 328,510Options 4,747 2,348Currency translation reserve 5,999 2,402Retained earnings 91,325 *) 32,267 462,392 366,527Minority interest 25 25 Total equity 462,417 366,552 NON-CURRENT LIABILITIESLong-term loans from banks 19,913 *) 21,719Other long-term liabilities 9,183 4,313Deferred taxes 4,072 1,755 33,168 *) 27,787CURRENT LIABILITIESShort-term loans from bank 73,109 *) 71,330Income tax payable 1,237 1,207Accounts payable and accruals 13,273 8,669 87,619 *) 81,206 Total liabilities 120,787 108,993 Total equity and liabilities 583,204 475,545 *) Reclassified The accompanying notes are an integral part of the financial statements. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Attributable to equity holders of the parent Currency Total recognized Share Share translation Retained Minority Total income and expenses capital premium Options reserve earnings Total interest equity Parent Minority U.S. dollars in thousands At 1 January 7 3,717 - (95) 3,000 6,629 25 6,654 - -2006 (audited) Issuance of *) 693 *)3,679 - - *) (682) 3,690 - 3,690 - -shares Capitalization - 62,192 - - - 62,192 - 62,192 - -of shareholderloansIssuance of 300 258,922 - - - 259,222 - 259,222 - -shares in IPO,net ofexpenses (1)Profit for - - - - 29,949 29,949 - 29,949 29,949 -the periodShare-based - - 2,348 - - 2,348 - 2,348 - -paymentForeign - - - 2,497 - 2,497 - 2,497 2,497 -currencytranslationadjustments At 31 December 1,000 *)328,510 2,348 2,402 *)32,267 366,527 25 366,552 32,446 -2006 (audited) Issuance of 36 30,775 30,811 - 30,811 - -shares, net(Note 4b)Share-based 2,399 2,399 - 2,399 - -paymentProfit for 59,058 59,058 - 59,058 59,058 -the periodForeign 3,597 3,597 - 3,597 3,597 -currencytranslationadjustments At 30 1,036 359,285 4,747 5,999 91,325 462,392 25 462,417 95,101 -September 2007(unaudited) At 1 January 7 3,717 - (95) 3,000 6,629 25 6,654 2,905 -2006 (audited) Issuance of 11 3,680 - - - 3,691 - 3,691 - -sharesProfit for - - - - 31,119 31,119 - 31,119 31,119 -the periodForeign - - - 2,245 - 2,245 - 2,245 2,245 -currencytranslationadjustments At 30 18 7,397 - 2,150 34,119 43,684 25 43,709 33,364 -September 2006(unaudited) (1)Issuance expenses amounted to US $ 20,388 thousand. *) Reclassified The accompanying notes are an integral part of the financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS Nine months ended Year ended 30 September 31 December 2007 2006 2006 Unaudited Audited U.S. dollars in thousandsCash flows from operating activities:Profit before tax expense 62,844 33,307 32,746Adjustments for:Interest payable 582 423 2,901Income on loans provided to subsidiaries (8,620) - -Share based payment 2,399 - *) 2,348Fair value adjustments of investment properties (67,414) (37,527) (35,878)Addition to residential project for sale under (10,631) - -constructionDepreciation of equipment 166 4 8Increase in trade and other receivables (7,477) (5,787) (4,475)Increase in accounts payable and accruals 4,716 4,994 *) 7,712Income taxes paid (1,997) (54) (1,465) Net cash flows provided by (used in) operating (25,432) (4,640) 3,897activities Cash flows from investing activities:Providing of service on account of prepayments 5,958 (2,315) (2,315)(Prepayments)Purchase of equipment (2,709) (245) (892)Additions to investment properties (26,612) (5,731) (4,031)Additions to investment properties under (49,296) (8,581) (16,333)constructionInterest capitalized in investment properties under - (4,049) (3,658)constructionPurchase of inventories of land ' - (39,279) (48,235)Interest capitalized in inventories of land - - (373)Advance on acquisition of subsidiary (1,000) (1,600) (1,600)Depositing to restricted bank deposits - - *) (71,000)Loans granted (14,122) (6,437) -Payment of amount due in respect of purchase of - (300) (1,250)subsidiariesAcquisition of joint ventures, net of cash acquired - (12,875)Acquisition of subsidiaries, net of cash acquired - (5,959) (5,959) Net cash flows used in investing activities (87,781) (74,496) *) (168,521) Cash flows from financing activities:Proceeds from issuance of shares by the Company, net 31,550 3,691 259,222Accrued expenses on account of loan (966)Repayment of short-term borrowings from related - (460) (460)parties, netRepayment of short-term borrowings (523)Proceeds from long-term borrowings - - *) 16,153Proceeds from short-term borrowings 496 - *) 71,000Proceeds from long-term borrowings from related - 81,245 *) 39,286partiesRepayment of long-term borrowings from related - *) (28,812)parties Net cash flows provided by financing activities 30,557 84,476 356,389 Increase (decrease) in cash and cash equivalents (82,656) 5,340 *) 191,765Net foreign exchange differences on cash and cash (249) (96) *) 4,157equivalentsCash and cash equivalents at beginning of period 196,586 664 664 Cash and cash equivalents at end of period 113,681 5,908 *) 196,586 Non-cash transactions:Payables included for investment properties under - 693 2,481construction Capitalization of shareholders loans to equity - - 62,192 *) Reclassified The accompanying notes are an integral part of the financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1:- GENERAL These financial statements have been prepared as of 30 September 2007 and forthe nine month period then ended. These financial statements are to be read inconjunction with the audited annual financial statements of the Company as of 31December 2006, and their accompanying notes ("annual financial statements"). NOTE 2:- BASIS OF PREPARATION AND ACCOUNTING POLICIES The interim condensed consolidated financial statements are prepared inaccordance with IAS 34, "Interim Financing Reporting". The accounting policies applied in the preparation of these interim financialstatements are consistent with those followed in the preparation of the annualfinancial statements. NOTE 3:- SIGNIFICANT EVENTS DURING THE PERIOD a. On 3 January 2007, the Company announced that, in connection with itsinitial public offering of Ordinary shares, Merrill Lynch International, asstabilizing manager, gave notice that it is exercising the over-allotment optionin respect of 3,558,000 Ordinary shares in the Company ("the Over-allotmentShares"). The Over-allotment Shares were issued at the offer price of 478 penceper Over-allotment Share. These shares were issued on 8 January 2007 for aconsideration of U.S.$ 30,811, net of issuance expenses of U.S.$ 2,389. b. On 3 January 2007, the Company completed the first share purchaseagreement to acquire the entire issued share capital of Gasconade Holding Ltd.,a Cypriot company that holds a 58% interest in Real Estate LLC, a Russiancompany that has the leasehold rights in land to be used for the Company'sskyscraper development project in Moscow. The consideration under this agreementis a total of US$ 13,000 thousand (of which US$ 1,600 thousand was paid by theCompany in 2006). In addition, the Company acquired completed an additionalshare purchase agreement, pursuant to which it had further 21% interest in theRussian company referred to above for a consideration of US$ 4,500 thousand. TheCompany intends to enter into an additional agreement with a view to acquire theremaining 21% interest for a further US$ 4,500 thousand by the end of 2007. c. In March 2007, the Company signed a letter of intent ("LOI") withEkford Commercial Inc. (the "Seller") whereby the Company expressed itsintention to purchase from the Seller a 100% interest in Zhilstroyproekt LimitedLiability ("ZLL"), a legal entity incorporated in Russia. According to the LOI the Company intends to acquire the interest in ZLLfor an aggregate purchase price of up to US$ 10 million subject to the followingconditions: - Payment of a first installment of US$ 1 million. This installment waspaid on March 19, 2007 and is refundable, if the acquisition is not consummated. - A second installment of US$ 6 million is payable upon occurrence of allof the following conditions: (i) The transfer of 100% of the interest in ZLL from the seller to theCompany. (ii) ZLL enters into a new land lease agreement in respect of the landleased by ZLL in the Dema District in the City of Ufa for a period of not lessthan two years, in order to design a shopping mall. (iii) ZLL is granted with a legal and valid resolutions of the governmentaland municipal authorities pursuant to which ZLL will be permitted to commencethe designing of the shopping mall. - A third installment of US$ 3,000 thousand is payable upon occurrence ofthe later of the following conditions: (i) The date of issuance to ZLL of legal and valid resolutions andauthorizations of the governmental and municipal authorities pursuant to whichthe Company will be permitted to commence the construction of the shopping mall. (ii) The date on which the Company enters into another land lease agreementin respect of the land for a period of not less than five years, in order toconstruct the shopping mall. d. In May 2007, Mirland entered into a framework property developmentagreement with a local Russian company, open Joint Stock Company "494 Departmentof Work Chief", to establish a limited liability joint venture partnership todevelop up to three real estate projects in Moscow. Under the agreement Mirland will, subject to completion of duediligence to its satisfaction and definitive agreements, provide debt funding ofup to US$ 116.5 million in aggregate for the first two Moscow projects, theSokolniki Project and the Nemchinovka Project. The funding will be provided byMirland subject to completion of various milestones. In return, Mirland willreceive a 51% equity interest in the joint venture and a share of the profitsattributable to the joint venture of not less than 50%. The Company made itsfirst funding payment of approximately US$ 14 million into the joint venture, inorder to support initial project set-up and design stages. This amount isrepayable in the event that the transaction is not completed. e. On July 30, 2007, a subsidiary of the Company signed an agreement foracquiring the share capital of two Russian companies that own together therights for the construction of investment property in Moscow. The Company intends to complete the construction of the investmentproperty. The cost of the acquisition amounted to approximately U.S 6.3 million. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4:- SEGMENT INFORMATION The following table presents revenue and profit information regarding theGroup's business segments for the nine months ended 30 September 2007, 30September 2006 and for the year ended 31 December 2006. Nine months ended 30 September 2007 Nine months ended 30 September 2006 (unaudited) (unaudited) Commercial Residential Total Commercial Residential Total U.S. dollars in thousandsRevenueRental income 6,697 - 6,697 2,485 - 2,485from investmentpropertiesRevenue from 1,166 - 1,166 276 - 276management feesFair value 67,414 - 67,414 37,527 - 37,527adjustments ofinvestmentproperties 75,277 - 75,277 40,288 - 40,288 Segment results 57,369 (724) 56,645 33,998 (50) 33,948 Unallocated (6,489) (234)expensesNet finance 12,688 (407)income (costs) Profit before 62,844 33,307income taxTax expense (3,786) (2,188) Profit for the 59,058 31,119period NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4:- SEGMENT INFORMATION (Cont.) Year ended 2006 (audited) Commercial Residential Eliminations TotalRevenueRental income from investment 3,707 - - 3,707propertiesRevenue from management fees 533 - - 533Fair value adjustments of investment 35,878 - - 35,878propertiesInter segment income 203 - (203) - 40,321 - (203) 40,118 Segment results 33,289 (289) - 33,000 Unallocated expenses (2,584)Net finance income 2,330 Profit before income tax 32,746Tax expense 2,797 Profit for the year 29,949 NOTE 5:- SUBSEQUENT EVENTS a. In October 2007, a subsidiary of the Company signed an agreement foracquiring the commerce area in Kazan city, Russia. The cost of the acquisitionamounted to approximately U.S$ 1.3 million. The signature is the first step forrealization of the Memorandum of Understanding (MoU) between the Company andKazan's municipality relating to the development by the Company of a new shopping and entertainment centre in the Kirov district of Kazan. b. In October 2007, the company signed an agreement to acquire theremaining 21% of RealService's share capital. The acquisition consideration amounts to approximately U.S.$ 3.9 million and is expected to be paid before the end of 2007. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
MLD.L