LONDON (Alliance News) - Ukraine-focused Arricano Real Estate PLC Wednesday reported a sharp drop in pretax profit for the full year, after lower revaluation gains for its properties.
The real estate operator posted pretax profit of USD4.1 million for 2013, down from USD21.3 million in 2012, after realising only a USD1.8 million gain on revaluation of its investment properties compared with USD26.9 million a year earlier.
Arricano said the USD1.8 million gain demonstrates there were no significant fluctuations in the property market during the year. The revaluation gain in 2012 was principally as a result of the recognition of its RayON shopping and entertainment complex, it added
Underlying pretax profit, which excludes benefits from revaluation of the portfolio, stood at USD2.4 million, up from a USD5.6 million loss a year earlier, a period which was affected by a series of one-off costs.
Revenue rose to USD25.3 million from USD16.4 million, as rental income from investment properties totalled USD24.9 million compared with USD16.0 million. The improved position also reflects additional revenue following the opening of the RayOn complex in August 2012.
At the year end the portfolio was valued at USD287.8 million, compared to USD161.2 million a year before. The current valuation includes the acquisition of the development land and property under construction valued at USD86.9 million and USD38 million of direct additions to the investment property during the period, Arricano added.
The company's net asset value at the period-end was USD231.5 million, up from USD134.6 million, resulting in an adjusted net asset value per share of USD2.24 compared with USD1.58 a year earlier.
"The increase in net asset value was driven principally by the placing for cash in September 2013 as well as the acquisition of further assets," it added.
Financially, bank debt stood at USD72.7 million the majority of which is secured on individual assets, Arricano said.
The company will not pay a dividend for the period. However, it intends to "make distributions to shareholders in the future in line with the profitability of the business".
Looking ahead, the firm said it is well positioned to capitalise on the under-developed retail estate market in Ukraine. However progress will be slower than expected due to current political and economic uncertainty.
"Everyone connected to the company is hoping for a peaceful solution over the coming months, though there is likely to be an impact on the capital markets while issues remain unresolved," Chairman Rupert Cottrell said in a statement.
"However, at the time of release of this statement for Arricano, there has been no material impact on the underlying trading and it remains 'business as usual', with new leases continuing to be signed, loans extended and rents paid," he added.
The stock was trading at 2.13 pence Wednesday, down 0.34 pence or 14%.
By Anthony Tshibangu; anthonytshibangu@alliancenews.com; @AnthonyAllNews
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