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Edited Transcript of AFRB.L earnings conference call or presentation 27-Nov-19 2:00pm GMT

Nine Months 2019 AFI Development PLC Earnings Call

LIMASSOL Nov 29, 2019 (Thomson StreetEvents) -- Edited Transcript of AFI Development PLC earnings conference call or presentation Wednesday, November 27, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Alexei Miroshnikov

AFI Development Plc - Deputy CEO of Finance & Economics at AFI RUS LLC

* Ilya Kutnov

AFI Development Plc - Corporate Affairs & Investments Director and CSR Manager

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Presentation

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Operator [1]

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Hello, and welcome to the AFI Development 9 Months 2019 Results Conference Call. My name is Lydia, and I'll be your coordinator for today's event. Please note, this conference is being recorded. (Operator Instructions)

I will now hand you over to your host, Ilya Kutnov, to begin today's conference. Thank you.

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Ilya Kutnov, AFI Development Plc - Corporate Affairs & Investments Director and CSR Manager [2]

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Thank you very much, Lydia. Welcome, ladies and gentlemen, and thank you for attending the investor conference call to discuss our business and financial results for the 9 months of 2019. Yesterday, we published our 9 months results and investor presentation. I hope you had time to look at these materials prior to our call.

At today's call, Alexei Miroshnikov, our CFO, will guide you through our results for the period. As usual, we will briefly discuss our financial and operational results, and afterwards, we will give you time for questions. Alexei, please.

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Alexei Miroshnikov, AFI Development Plc - Deputy CEO of Finance & Economics at AFI RUS LLC [3]

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Thank you, Ilya, and good afternoon, ladies and gentlemen. On Tuesday, AFI Development published its financial results for the first 9 months of 2019 and investor presentation. Speaking of our results for the period, I am pleased to report that the company had good financial performance, however, the pace of our residential sales has been decreasing quarter-on-quarter, which we explained by increasing competition in residential sector in Moscow. Our revenue increased 23% year-on-year and reached $254.4 million for the period. This increase is largely due to advanced construction stage of our residential project, which allowed us to recognize higher revenues for the sale of trading properties.

Our residential segment remains a key driver of our financial performance. It accounted for about 62% of our total revenue and about 61% of our gross profit for the 9 months period. Our revenue in the commercial segment was $94.9 million, a 1% increase over 9 months 2018.

We continue to repay our debt in accordance with schedule of payments of principal. As of the end of September 2019, our total outstanding debt was $382.6 million compared to $404.4 million at the end of H1 2019.

Also speaking in more detail of our financial results for the 9 months, our revenue reached $254.4 million. The residential sales and presales revenue was $156.5 million versus $112.4 million in 9 months 2019 -- 2018. Rental and hotel operating income grew only 1% year-on-year. It reached $94.9 million for the 9 months versus $93.9 million in 9 months 2018. Our gross profit increased to $138.1 million for the period. The growth in gross profit is also largely explained by higher percentage of construction completion and pre-sales of our residential project, which allowed us to recognize more revenue and thus increased the profit. Our net profit for 9 months 2019 was $77.1 million. The gross value of our property portfolio was $1.25 billion. Our cash position at the end of the reporting period, including cash, cash equivalents and securities was $109.6 million.

Speaking of the operational highlights at Odinburg, we are pleased to report that we completed the transfer of apartments in Building 6, which was delivered in May 2019. We continue construction works and marketing in Building 3 Phase 1 and Building 2 Phase 2. As of 18 November 2019, the number of signed sale contracts stood at 810 in Building 3, 150 in Building 3 and 217 in Building 6.

At AFI Residence Paveletskaya, we have also completed the sale of presold apartments to customers in Phase 2 and delivered in May 2019. The construction and marketing concentrate in Phase 3. On the marketing side, we have reported that 625 contracts for the sales and presales of apartments and special units has been signed. This is 78% of Phase 1, 2 and 3 combined. Data is as of 18 November 2019.

At Bolshaya Pochtovaya construction and marketing work continue. As of 19 November, 2019, we pre-sold 347 apartments. This is 55% of Phases 1, 2 and 3 combined.

At the Botanic Garden, we are pleased to update the market that Phase 1 was state-commissioned in September and we have launched the transfer of apartments to customers. Construction works continue in Phase 2. As of 18 November 2019, we pre-sold 434 apartments. This is 54% of Phase 1.

The occupancy of AFIMALL City as of end of September 2019 was 81%. NOI of the project for the 9 months was $52.1 million versus $50.3 million in 9 months 2018.

At Tverskaya Plaza Ic and Tverskaya Plaza IV construction work continues as planned. This is a brief update of the financial and operational results of AFI Development for 9 months 2019. Now we are happy to address your questions.

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Ilya Kutnov, AFI Development Plc - Corporate Affairs & Investments Director and CSR Manager [4]

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Thank you very much, Alexei. Lydia, can you please announce the Q&A?

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Operator [5]

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(Operator Instructions) We currently have no incoming questions.

(Operator Instructions) We have no questions, I will turn the call over to your hosts.

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Ilya Kutnov, AFI Development Plc - Corporate Affairs & Investments Director and CSR Manager [6]

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Okay. Thank you very much, Lydia. Thank you, ladies and gentlemen, for attending today's conference call. As always, we are open to your questions, please contact us at any time. And you have our contact details on the website. Thank you very much, and have a nice evening.

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Operator [7]

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Thank you for joining today's conference. You may now disconnect your lines.