26 Feb 2015 07:01
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION
IN OR INTO THE RUSSIAN FEDERATION, THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
AFI DEVELOPMENT PLC
("AFI DEVELOPMENT" OR "THE COMPANY")
FOURTH QUARTER 2014 TRADING UPDATE
London, 26 February 2015 - AFI Development, a leading real estate company focused on developing property in Russia, today provides a fourth quarter 2014 trading update.
Based on preliminary indications of valuation results received from an independent appraiser (Cushman & Wakefield), the Company expects to record a net valuation loss on investment properties, investment properties under development and inventory of real estate during the fourth quarter of 2014 of circa US$210 million before taxes. Estimated loss after tax for the fourth quarter of 2014, including foreign exchange loss, will be circa US$300 million. AFI Development expects the fourth quarter results to be affected by an equity deduction in the amount of circa US$390 million.
The valuation loss and impairment reflect a decrease in the value of the Company's projects due to negative developments in the macroeconomic environment in Russia, which resulted in several negative factors influencing valuation models across the portfolio of properties. First, the significant devaluation of the Russian rouble in relation to the US dollar during the fourth quarter caused a decrease in net operating income projections. Second, the recent downgrades of the Russian Federation sovereign credit rating by Standard & Poor's and Moody's triggered an increase in the risk-free rate and a corresponding increase in the discount rate employed in DCF valuation models. AFI Development expects the gross value of its portfolio of properties to decrease from circa US$2.5 billion recorded at end-September 2014 to circa US$2.0 billion at year-end.
It should be noted that the figures presented in this update are estimates based on preliminary data. The preparation of the Company's quarterly financial statements is currently underway and remains subject to a review by KPMG, the Company's auditor. The figures in AFI Development's final financial statementsmay differ from the information stated above.
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For further information, please contact:
AFI Development, +7 495 796 9988
Ilya Kutnov
Ekaterina Shubina
Citigate Dewe Rogerson, London+44 20 7638 9571
David Westover
Sandra Novakov
Shelly Chadda
About AFI Development
AFI Development is one of the leading real estate development companies operating in Russia. Established in 2001, AFI Development is a publicly traded subsidiary of Africa Israel Investments Ltd.
AFI Development is listed on the Main Market of the London Stock Exchange and aims to deliver shareholder value through a commitment to innovation and continuous project development, coupled with the highest standards of design, construction and quality of customer service.
AFI Development focuses on developing and redeveloping high quality commercial and residential real estate assets across Russia, with Moscow being its main market. The Company's existing portfolio comprises commercial projects focused on offices, shopping centers, hotels and mixed-use properties, and residential projects. AFI Development's strategy is to sell the residential properties it develops and to either lease the commercial properties or sell them for a favorable return.
AFI Development is a leading force in urban regeneration, breathing new life into city squares and neighborhoods and transforming congested and underdeveloped areas into thriving new communities. The Company's long-term, large-scale regeneration and city infrastructure projects establish the necessary groundwork for the successful launch of commercial and residential properties, providing a strong base for future.