17th Aug 2007 07:01
Mirland Development Corporation PLC17 August 2007 17 August 2007 MirLand Development Corporation plc ("MirLand" / "Company") INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2007 MirLand Development Corporation, one of the leading residential and commercialproperty developers in Russia, today announces interim results for the sixmonths ended 30 June 2007. The Company successfully raised net proceeds of US$293 million in its IPO on theAIM market of the London Stock Exchange in December 2006. Highlights: • Profit after tax for the six months to 30 June 2007 increased to US$59.479 million (30 June 2006: loss US$0.74 million) • Income for the six months ended 30 June 2007 increased to US$73.733 million (30 June 2006: US$2.185 million) • Increase in total assets to US$ 578.4 million (31 December 2006: US$ 475.5 million) • Company's real estate assets valued at US$1.238 billion (for 100% freehold/ leasehold rights as at 30 June 2007). MirLand's share in this is US$1.036 billion, up 36% (US$270m) since 30 September (US$764.6 million) • Company invested US$ 72.4 million of the IPO proceeds during the first six months • 10 significant ongoing projects which, on completion, will provide approximately 1.5 million sq m of office, retail and residential property • Two pipeline projects now acquired and further eleven new projects undergoing due diligence in the cities of St Petersburg, Kazan, Chelyabinsk, Novosibirsk, Barnaul, Voronezh and Klin • After the period end, MirLand entered into an agreement to acquire the entire issued share capital of two Russian companies whose development projects will on completion comprise over 13,000 sq m of Class B offices next to the Company's existing Hydromashservice and MAG office developments for approximately US$ 6.7 million • Successful opening of first shopping centre in Yarolslavl in April. Centre opened 97% pre-leased. Nigel Wright, Chairman, commented: "The Company has continued to make good progress in executing its strategy sinceIPO. Existing projects have been progressed and we are also pleased to haveconsolidated further some of our pipeline of assets. We are also progressing newacquisition opportunities. "With the ongoing demand for high quality residential and commercial real estatefrom investors and occupiers we are confident that MirLand is stronglypositioned to continue to deliver significant growth in the future." For further information, please contact: MirLand Development Corporation plc +972 5227 76640 Roman Rozental +7 495 130 31 09 [email protected] Financial Dynamics +44 20 7831 3113 Dido Laurimore/ Nicole Marino [email protected]/ [email protected] CHAIRMAN'S STATEMENT I am pleased to report on our results for the six months to 30 June 2007 whichconfirm that strong progress has continued to be made in all aspects of ourbusiness. I particularly pay tribute to my colleagues whose hard work andendeavour since our successful IPO has been exceptional. Strategy MirLand is one of the leading developers of high-quality residential andcommercial real estate in Russia and aims to maximise value for its shareholdersthrough an investment strategy of: • Focusing on the successful execution of development projects; • Generating value through active management; • Continuing to acquire attractive sites in targeted locations for future development; and • Maintaining a diversified property portfolio to maximise investment opportunities and reduce risks We continue to see significant potential in the rapidly growing and improvingRussian real estate market, both in Moscow and St. Petersburg, but alsoimportantly in the larger regional cities where populations exceed half amillion inhabitants. Demand in such locations continues to exceed supply andthis fact, combined with the relative absence of substantial, high quality,experienced and soundly financed development companies, gives MirLand anexceptional opportunity. Furthermore, these favourable conditions are, webelieve, reflected in the rental, capitalisation and discount rate trends whichare evident across these parts of the market. Results Profit before tax was US$61.690 million (US$1.331 million: 30 June 2006). Totalassets as at 30 June 2007 amounted to US$578.4 million, growing from US$475.5million as at 31 December 2006. The main reasons for the increase in value was: • the revaluation of our assets; • our continuing investments in land, properties and construction; and • further investment in a significant joint venture company developing residential projects in Moscow. During the period, IIK the Company's subsidiary entered into loan agreement withEBRD bank for a facility of up to 65% of the construction costs of approximatelyUS$35 million and refinancing of an additional US$13.5 million post completion. As set out in more detail below, the Company's real estate assets were valued asat 30 June 2007 at US$1.237.8 billion (for 100% freehold/leasehold rights) by anexternal independent appraiser, Cushman & Wakefield Stiles & Riabokobylko("Cushman & Wakefield"), in accordance with International Valuation Standards.The Company's share in these assets is US$1.036 billion (30 September 2007:US$764.6 million). The interim valuation showed a 36%, or US$270 million,increase in the value of the Company's real estate assets since 30 September2006. The Company's policy is to revalue its assets twice a year, on 30 June and31 December. Net profit for the six months to 30 June 2007 was US$59.9 million, in comparisonto loss of US$0.1 million for the comparative period for the six months to 30June 2006. This increase is due to the uplift in the value of the Company'sassets and rental income from the Company's three finished projects, namely thefirst phase of the Yaroslavl shopping centre (Global1), MAG and Hydromashserviceproperties. Income for the six months ended 30 June 2007 grew to US$73.7 million, incomparison to US$2.2 million for the comparative period in 2006. Income from investment properties also grew due to the completion and successfulopening of a shopping center in Yaroslavl (Global1) in April 2007, and theongoing process of replacing tenants and increasing rental rates in therenovated spaces in the MAG and Hydromashservice projects. The principal operating expenses of the Company are property maintenance andmanagement costs which rose from US$0.1 million to US$1.7 million due to theincrease in the number of properties and the increasing scale of our operations. The Company's general and administrative expenses for the period rose to US$7.3million compared to US$0.6 million for the half-year period ended 30 June 2006.This increase was mainly due to the provision of management services for MAG,Hydromashservice and Global1 by an external management companies, salaries forthe employees (including a share option plan) and professional expenses.Financial income for the period was US$5.7M, being primarily deposit interest onunutilized IPO proceeds. Portfolio Performance The details of the Company's key existing projects are shown in the summarytable below. The comprehensive report prepared by Cushman & Wakefield isavailable on the Company's website www.mirland-development.com. City Property Name and Market Value Total sqm of Mirland Value Address as at 30th of Land Share attributed to June 2007 Mirland (Rounded) Moscow Hidromashservice, $75,424,000 12,237 100% $75,424,000 2-Khutorskaya str., 38A Moscow MAG, 2-Khutorskaya str., $95,370,000 21,940 100% $95,370,000 38A Moscow Perkhushkovo, $67,934,000 225,300 100% $67,934,000Region Odintsovsky district Saratov Retail mall, 167 $33,009,000 22,000 90% $29,708,100 Zarubina street Moscow Skyscraper, Dmitrovskoe $142,952,000 9,079 100% $142,952,000 schosse, 1 St. Residential $383,662,000 326,651 100% $383,662,000Petersburg St. Trade Centre, Baumana $41,071,000 81,663 100% $41,071,000Petersburg str., 86 Moscow Techagrocom, Kaluzhskoe $109,020,000 220,000 50% $54,510,000Region Highway Yaroslavl Phase I: Operating $89,440,000 120,000 49% $43,825,600 Shopping Centre, Kalinina str. Yaroslavl Phase II (Remaining $15,892,000 180,000 49% $7,787,080 unimproved Land Plot of 18 ha) Moscow Matrosskaya Residential $36,582,000 n/a 51% $18,656,820 Dev. Moscow Nemchinovka $147,477,000 n/a 51% $75,213,270 $1,237,833,000 $1,036,113,870 As stated above, the Company's real estate assets were externally valued as at30 June 2007 at US$1.238 billion and the Company's share in the value of theseassets is US$1.036 billion. This represents a US$270 million (36%) increase fromthe previous valuation as at 30 September 2006. During the period 1 October 2006 to 30 June 2007 notable valuation changes canbe attributed to most of the properties in the portfolio. These changescontributed an increase of US$177m (23%) in the like-for-like value of MirLand'sproperties that were included in the valuation in the Company's Admissiondocument. The Yaroslavl shopping centre, the Company's first shopping mall development hasbeen completed and opened in April 2007 with over 97% of the units let. Thisinstitutional quality single storey mall is strategically located on the mainentry road to Yaroslavl from Moscow. The centre contributed US$19 million to theincrease in the value of MirLand's portfolio. The Company owns a 49% stake inthe project. The refurbishment of the MAG and Hydromashservice office and retail propertieshas been ongoing during the period. The 19,450 sqm MAG project will be fullycompleted during the course of September 2007 and the 20,200 sqmHydromashservice project by March 2008. MirLand owns 100% of the leaseholdrights to both the projects. Good progress on the refurbishment, together withthe positive movement in the Moscow real estate market has increased thevaluation of the two projects by a total of US$88 million. In terms of our development properties, the most significant uplift in valuationof US$55 million occurred at MirLand's flagship 41 hectare residential, officeand retail project in St. Petersburg. MirLand owns 100% of the leaseholdinterest in this project. The changes in residential prices in St. Petersburg,together with progress in the project planning and approvals, were the maincontributing factors. During the period MirLand entered into a joint venture to develop two newresidential projects in Moscow and in the Moscow region called the MatrosskayaResidential Development and Nemchinovka. This joint venture has a net assetvalue of US$184 million of which MirLand owns 51% representing US$92 million. Portfolio activity During the period the Company continued to make strategic acquisitions utilizingcirca US$72.4 million of the IPO proceeds. In March the Company signed a letter of intent with a view to acquiring aRussian company for up to US$10 million that owns the rights to a plot of landin the City of Ufa. The intention is to build a 180,000 sq m logistics centre. MirLand has also made further progress in its acquisition of rights to the sitefor a 48 storey skyscraper in a prime Moscow location close to the third ring.MirLand now effectively owns and controls a 79% interest in the Russian companythat has the leasehold rights to the land and has an agreement to acquire theremaining 21% by the end of 2007 for US$4.5 million. On completion the propertywill provide circa 92,000 sq m of rentable accommodation and 1,500 parkingspaces. In May 2007, MirLand entered into a framework property development agreementwith a local Russian company, open Joint Stock Company "494 Department of WorkChief", to establish a limited liability joint venture partnership to develop upto three residential real estate projects in Moscow. Under the agreement MirLandwill, subject to completion of due diligence and definitive agreements, providedebt funding of up to US$116.5 million in aggregate for the first two Moscowprojects, the Sokolniki project and the Nemchinovka project. The funding will beprovided by MirLand subject to completion of various commercial conditions. Inreturn, MirLand will receive a 51% equity interest in the joint venture and ashare of the profits attributable to the joint venture of not less than 50%. The Company made its first funding payment of approximately US$14 million intothe joint venture in June 2007 in order to support the initial set-up and designstages of the project. This amount is repayable in the event that thetransaction is not completed. Construction continues on Perkhushkovo and Saratov and we are satisfied with thecurrent progress. After the period end MirLand entered into an agreement to acquire the entireissued share capital of two Russian companies whose development projects will oncompletion comprise over 13,000 sq m of Class B offices next to the Company'sexisting Hydromashservice and MAG office developments for approximately US$ 6.7million. MirLand expects the developments to be completed within 12 months. Market Both economic and real estate market conditions in Russia remain positive in thecontext of MirLand's business. Russia remains both a major and fast growingeconomy. Real GDP growth continues in the region of 7% and inflation, whilststill high, appears to be in gradual decline. Personal incomes are rising andthe increase in retail turnover closely mirrors that rise. The real estate market remains strong with continuing growth forecast in allsectors. Capitalisation rates (property yields) continue to exceed those in mostareas of Central and Western Europe, fuelling institutional investment demandand offering continuing profit opportunity. Demand for quality real estateproduct, whether from tenants, investors or private homebuyers presentlyoutstrips supply and we do not anticipate a major change in this relationship. Dividend Policy As previously stated, the Company has adopted a dividend policy that willreflect long-term earnings and cash flow potential while at the same timemaintaining both prudent dividend cover and adequate capital resources withinthe business. Subject to these factors and where it is otherwise appropriate to do so, theCompany intends to declare at the time of its 2008 final results a dividend of2% of adjusted net asset value, measured at the end of 2008 and 7% of adjustednet asset value at the end of December 2009, with a view thereafter toincreasing the level of dividend payments in line with the Company's cash flowgrowth. Board Mr Gergios Hadjianastasiou has accepted an invitation to serve as privatesecretary to the President of Cyprus and, as announced at the Company's AnnualGeneral Meeting, has therefore stood down from the Board with effect from 10August. The Board wishes to express its appreciation to Mr Hadjianastasiou forhis contribution. The Company expects to announce a replacement for MrHadjianastasiou in the near future. Outlook The Company has continued to make good progress in executing its strategy sinceIPO. Existing projects have been progressed and we are also pleased to haveconsolidated some of our pipeline of assets. We are also progressing newacquisition opportunities. With the ongoing demand for high quality residential and commercial real estate,from both investors and occupiers, we are confident that MirLand is stronglypositioned to continue to deliver significant growth in the future. Nigel Wright Chairman 17 August 2007 To the Shareholders of Mirland Development Corporation Plc Re: Review of interim condensed consolidated financial statements as of and for the six months ended 30 June 2007 Introduction We have reviewed the accompanying interim condensed consolidated financialstatements of Mirland Development Corporation plc and its subsidiaires ("theGroup") as at 30 June 2007, comprising of the interim consolidated balance sheetas at 30 June 2007 and the related interim consolidated statements ofoperations, changes in equity and cash flows for the six-month period then endedand explanatory notes. Management is responsible for the preparation andpresentation of these interim condensed consolidated financial statements inaccordance with International Financial Reporting Standard IAS 34 InterimReporting ("IAS 34"). Our responsibility is to express a conclusion on theseinterim condensed consolidated financial statements based on our review. Scope of review We conducted our review in accordance with the International Standard on ReviewEngagements 2410, "Review of Interim Financial Information Performed by theIndependent Auditor of the Entity". A review of interim financial informationconsists of making inquiries, primarily of persons responsible for financial andaccounting matters, and applying analytical and other review procedures. Areview is substantially less in scope than an audit conducted in accordance withInternational Standards on Auditing and consequently does not enable us toobtain assurance that we would become aware of all significant matters thatmight be identified in an audit. Accordingly, we do not express an auditopinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the accompanying interim condensed consolidated financial statements arenot prepared, in all material respects, in accordance with IAS 34. Limassol, Cyprus ERNST & YOUNG CYPRUS 16 August 2007 CONSOLIDATED STATEMENTS OF OPERATIONS Six months ended Year ended 30 June 31 December 2007 2006 2006 Unaudited Audited U.S. dollars in thousands (except earnings per share) Rental income from investment 4,017 1,902 3,707properties Management fees 302 283 533 Fair value adjustments of investment 69,414 - 35,878properties Total income 73,733 2,185 40,118 Expenses Operating expenses (1,680) (110) (863) Adjustment for the provision of (3,342) - (3,588)service provider Cost of registration of land-lease (5,469) - - General and administrative expenses (7,253) (561) (5,251) Financial income (loss), net 5,701 (183) 2,330 Profit before tax expense 61,690 1,331 32,746 Tax expense (2,211) (1,405) (2,797) Profit (loss) for the period 59,479 (74) 29,949attributable to the equity holders of the parent Basic and diluted earnings per share 0.578 - 0.34 The accompanying notes are an integral part of the financial statements. CONSOLIDATED BALANCE SHEETS 30 June 31 December 2007 2006 Unaudited Audited U.S. dollars in thousands ASSETS NON-CURRENT ASSETS Investment properties 188,074 65,709Investment properties under construction 47,613 46,930Inventories of land - 76,193Long-term loan granted (Note 3c) 14,122 -Advance on acquisition of subsidiary 1,000 1,600Equipment 2,207 1,082Long-term receivables and prepayments - 5,958 253,016 197,472CURRENT ASSETS Residential projects for sale under construction 85,221 -Trade and other receivables 12,046 10,157Cash and cash equivalents 228,154 267,916 325,421 278,073 Total assets 578,437 475,545 EQUITY AND LIABILITIES EQUITY Equity attributable to equity holders of the parent: Share capital 1,036 1,000 Share premium 359,378 327,828 Options 3,776 2,348 Currency translation reserve 3,502 2,402 Retained earnings 92,428 32,949 460,120 366,527 Minority interest 25 25 Total equity 460,145 366,552 NON-CURRENT LIABILITIES Long-term loans from banks 92,760 93,049 Other long-term liabilities 7,705 4,313 Deferred taxes 2,244 1,755 102,709 99,117 CURRENT LIABILITIES Short-term loans from bank 756 - Income tax payable 1,573 1,207 Accounts payable and accruals 13,254 8,669 15,583 9,876 Total liabilities 118,292 108,993 Total equity and liabilities 578,437 475,545 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 Share Share translation Retained capital premium Options reserve earnings U.S. dollars in thousands At 1 January 2006 (audited) 7 3,717 - (95) 3,000 Issuance of shares 693 2,997 - - -Capitalization of shareholder - 62,192 - - -loans Issuance of shares in IPO, net 300 258,922 - - -of expenses (1) Profit for the period - - - - 29,949Share-based payment - - 2,348 - -Foreign currency translation - - - 2,497 -adjustments At 31 December 2006 (audited) 1,000 327,828 2,348 2,402 32,949 Issuance of shares, net (Note 36 30,775 - - -4b) Share-based payment - - 1,428 - -Profit for the period - - - - 59,479Foreign currency translation - - - 1,875 -adjustments At 30 June 2007 (unaudited) 1,036 358,603 3,776 4,277 92,428 At 1 January 2006 (audited) 7 3,717 - (95) 3,000 Loss for the period - - - - (74)Foreign currency translation - - - 1,536 -adjustments At 30 June 2006 (unaudited) 7 3,717 - 1,441 2,926 Table continued below Attributable to equity holders of the parent Total recognized Total Minority Total income and expenses interest equity Parent Minority U.S. dollars in thousands At 1 January 2006 (audited) 6,629 25 6,654 Issuance of shares 3,690 - 3,690 - - Capitalization of shareholder 62,192 - 62,192 - - loans Issuance of shares in IPO, net 259,222 - 259,222 - - of expenses (1) Profit for the period 29,949 - 29,949 29,949 - Share-based payment 2,348 - 2,348 - - Foreign currency translation 2,497 - 2,497 2,497 - adjustments At 31 December 2006 (audited) 366,527 25 366,552 32,446 - Issuance of shares, net (Note 30,811 - 30,811 - - 4b) Share-based payment 1,428 - 1,428 - - Profit for the period 59,479 - 59,479 59,479 - Foreign currency translation 1,875 - 1,875 1,875 - adjustments At 30 June 2007 (unaudited) 460,120 25 460,145 61,354 - At 1 January 2006 (audited) 6,629 25 6,654 Loss for the period (74) - (74) (74) - Foreign currency translation 1,536 - 1,536 1,536 - adjustments At 30 June 2006 (unaudited) 8,091 25 8,116 1,462 - (1) Issuance expenses amounted to US $ 20,388 thousand. The accompanying notes are an integral part of the financial statements. CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended Year ended 30 June 31 December 2007 2006 2006 Unaudited Audited U.S. dollars in thousands Cash flows from operating activities: Profit before tax expense 61,690 1,331 32,746Adjustments for: Interest payable (2,215) 445 2,901Options granted 1,428 - *) 2,348Fair value adjustments of investment (69,414) - (35,878)properties Addition to residential project for sale (7,489) - -under construction Depreciation of equipment 89 4 8Increase in trade and other receivables (429) (3,100) (4,475)Increase in accounts payable and accruals 9,237 3,479 *) 7,712Income taxes paid (2) (2) (1,465) Net cash flows provided by (used in) (7,105) 2,159 3,897operating activities Cash flows from investing activities: Prepayments - - (2,315)Purchase of equipment (1,184) (123) (892)Additions to investment properties (39,256) (2,965) (4,031)Additions to investment properties under (7,950) (3,121) (16,333)construction Interest capitalized in investment (1,213) (1,749) (3,658)properties under construction Purchase of inventories of land - (35,900) (48,235)Interest capitalized in inventories of - (209) (373)land Advance on acquisition of subsidiary (1,000) - (1,600)Loans granted (14,122) - -Payment of amount due in respect of - - (1,250)purchase of subsidiaries Acquisition of joint ventures, net of - - (12,875)cash acquired Acquisition of subsidiaries, net of cash - (5,520) (5,959)acquired Net cash flows used in investing (64,725) (49,587) (97,521)activities Cash flows from financing activities: Proceeds from issuance of shares by the 30,811 - 259,222Company, net Repayment of short-term borrowings from - - (460)related parties, net Proceeds from long-term borrowings - 10,069 87,153Proceeds from short-term borrowings 496 - -Proceeds from short-term borrowings from - 42,972 *) 39,286related parties Repayment of long-term borrowings from - - *)(28,812)related parties Net cash flows provided by financing 31,307 53,041 356,389activities Increase (decrease) in cash and cash (40,523) 5,613 262,765equivalents Net foreign exchange differences on cash 761 (228) 4,487and cash equivalents Cash and cash equivalents at beginning of 267,916 664 664period Cash and cash equivalents at end of 228,154 6,049 267,916period Non-cash transactions: Payables included for investment 32,081 - 2,481properties under construction Capitalization of shareholders loans to - - 62,192equity *) 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 June 2007 and for the sixmonth 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 its initialpublic offering of Ordinary shares, Merrill Lynch International, as stabilizingmanager, gave notice that it is exercising the over-allotment option in respectof 3,558,000 Ordinary shares in the Company ("the Over-allotment Shares"). TheOver-allotment Shares were issued at the offer price of 478 pence perOver-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 purchase agreementto acquire the entire issued share capital of Gasconade Holding Ltd., a Cypriotcompany that holds a 58% interest in Real Estate LLC, a Russian company that hasthe leasehold rights in land to be used for the Company's skyscraper developmentproject in Moscow. The consideration under this agreement is a total of US$13,000 thousand (of which US$ 1,600 thousand was paid by the Company in 2006).In addition, the Company acquired completed an additional share purchaseagreement, pursuant to which it had further 21% interest in the Russian companyreferred to above for a consideration of US$ 4,500 thousand. The Company intendsto enter into an additional agreement with a view to acquire the remaining 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") with EkfordCommercial Inc. (the "Seller") whereby the Company expressed its intention topurchase from the Seller a 100% interest in Zhilstroyproekt Limited Liability("ZLL"), a legal entity incorporated in Russia. According to the LOI the Company intends to acquire the interest in ZLL for anaggregate purchase price of up to US$ 10 million subject to the followingconditions: - Payment of a first installment of US$ 1 million. This installment was paid onMarch 19, 2007 and is refundable, if the acquisition is not consummated. NOTE 3:- SIGNIFICANT EVENTS DURING THE PERIOD (Cont.) - A second installment of US$ 6 million is payable upon occurrence of all of thefollowing conditions: (i) The transfer of 100% of the interest in ZLL from the Seller to the Company. (ii) ZLL enters into a new land lease agreement in respect of the land leased byZLL in the Dema District in the City of Ufa for a period of not less than twoyears, in order to design a logistics centre. (iii) ZLL is granted with a legal and valid resolutions of the governmental andmunicipal authorities pursuant to which ZLL will be permitted to commence thedesigning of the logistics centre. - A third installment of US$ 3,000 thousand is payable upon occurrence of thelater 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 logisticscentre. (ii) The date on which the Company enters into another land lease agreement inrespect of the land for a period of not less than five years, in order toconstruct the logistics centre. d. In May 2007 Mirland entered into a framework property development agreementwith a local Russian company, open Joint Stock Company "494 Department of WorkChief", to establish a limited liability joint venture partnership to develop upto three real estate projects in Moscow. Under the agreement Mirland will, subject to completion of due diligence to itssatisfaction and definitive agreements, provide debt funding of up to US$ 116.5million in aggregate for the first two Moscow projects, the Sokolniki projectand the Nemchinovka project. The funding will be provided by Mirland subject tocompletion of various milestones. In return, Mirland will receive a 51% equityinterest in the joint venture and a share of the profits attributable to thejoint venture of not less than 50%. The Company made its first funding paymentof approximately US$ 14 million into the joint venture in order to supportinitial project set-up and design stages. This amount is repayable in the eventthat the transaction is not completed. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4:- SEGMENT INFORMATION The following table presents revenue and profit information regarding theGroup's business segments for the six months ended 30 June 2007, 30 June 2006and for the year ended 31 December 2006. Six months ended 30 June 2007 (unaudited) Commercial Residential Eliminations Total U.S.dollars in thousands Revenue Rental income from 4,017 - - 4,017investment properties Revenue from 302 - - 302management fees Fair value 69,414 - - 69,414adjustments of investment properties Inter segment 104 - (104) -income 73,837 - (104) 73,733 Segment results 59,972 (183) - 59,789 Unallocated (3,800)expenses Net finance income 5,701(costs) Profit before 61,690income tax Tax expense (2,211) Profit (loss) for 59,479the period Table continued below Six months ended 30 June 2006 (unaudited) Commercial Residential Total U.S.dollars in thousands Revenue Rental income from 1,902 - 1,902investment properties Revenue from management 283 - 283fees Fair value adjustments - - -of investment properties Inter segment income - - - 2,185 - 2,185 Segment results 1,632 (112) 1,520 Unallocated expenses (6)Net finance income (183)(costs) Profit before income tax 1,331Tax expense (1,405) Profit (loss) for the (74)period NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4:- SEGMENT INFORMATION (Cont.) Year ended 2006 (audited) Commercial Residential Eliminations Total Revenue Rental income from 3,707 - - 3,707investment properties Revenue from management fees 533 - - 533Fair value adjustments of 35,878 - - 35,878investment properties Inter 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 In August 2007, the Company's wholly-owned subsidiary entered into agreements toacquire the entire issued share capital of two Russian companies which,together, own the rights to the office construction project in Moscow that theCompany intends to complete. The aggregate consideration payable for the twocompanies is approximately US$ 6.7 million. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
MLD.L