LONDON (Alliance News) - Mirland Development Corp PLC on Wednesday said it must stand up to "significant challenges" in the months ahead, as the residential and commercial property developer in Russia reported that it swung to a loss in the first nine months of its financial year amid a tough time for the country's economy.
The property developer's pretax loss amounted to USD96.5 million in the nine months to September 30, compared with a pretax profit of USD30.4 million in the corresponding period the prior year, as higher revenue was hit by bigger cost of sales and maintenance of residential units and a downwards adjustment to the fair value of its investment properties and those under construction. There was a financing expenses hit of USD27.09 million and a foreign exchange hit of USD51.4 million.
"Despite an encouraging increase in revenues, solid performance at our Triumph Park residential project and stable occupancy rates in our key retail investments our results and cash flows continue to be adversely affected by the weak Rouble and the uncertain outlook for the Russian economy," Chairman Nigel Wright said in a statement.
Meanwhile, net leverage has risen over the past year, primarily due to a fall in the value of the company's property portfolio and tough currency exchange rates. Net leverage was equivalent to about 74% of total assets at the end of September, up from 57% at the end of 2014.
"It is especially unfortunate that our financial results have disappointed largely as a result of external factors over which we have little or no control. We continue, however, to work diligently on those areas we can control through prudent cost and asset management," Wright said.
Turning to the company's financing, Wright said he was pleased to have reached a conditional agreement on the restructuring of Mirland's bond debt, though he noted the "challenging" bank financing market. He said Mirland remains "highly cautious" about the availability of new finance in the short to medium term.
"In summary, therefore, we do not underestimate the challenges we face but are determined to remain focused on maximising portfolio performance, doing our utmost to maintain and improve cash flow and strengthening our core business for the benefit of both creditors and shareholders," Wright said.
Shares in Mirland were down 6.7% at 70.00 pence on Wednesday in London.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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