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Press Releases > Financial Corporation "Sistema"  all about the company

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Financial Corporation "Sistema"

December 10, 2007

Sistema-Hals delivers solid 28.8% top-line growth in the first three quarters of 2007

Moscow, Russia - December 10, 2007 - Sistema-Hals, one of the largest diversified companies on the real estate market in Russia and the CIS, today announces its consolidated unaudited financial results for the first nine months of 2007 in accordance with US GAAP.

Financial Highlights

 

9M 2007

(USD 000)

9M 2006

(USD 000)

Revenues

207,540

161,099

Operating expenses, incl,:

(279,301)

(105,391)

Stock-based compensation

(97,966)

-

Operating income/(loss)

(71,761)

55,708

OIBDA 

Net income/(loss)

(77,640)

34,349

Sistema-Hals' consolidated revenues for the first nine months of 2007 increased by 28.8% year-on-year to USD 207.5 million, compared to USD 161.1 million in the first nine months of 2006, driven mainly by the strong performance of the Real Estate Development division.

Commenting on the results for the first nine months of 2007, Felix Evtushenkov, President of Sistema Hals, said:

"We are pleased to report strong results for the first three quarters including a 28.8% increase in our revenues in comparison to the prior year period.  Our continued efforts towards building a diverse portfolio of attractive projects will add shareholder value.  We expect exceeding growth in revenues in the 4th quarter 2007 due to sale of interest in some of our projects."

Real Estate Development:

Sistema-Hals' consolidated revenue from Real Estate Development grew by 29.3 % year-on-year to USD 142.4 million in the first nine months of 2007. This growth was led by several factors including the completion and sale of the Sadovnicheskaya 75 building in Moscow; the sale of the "Camenniy Ostrov" project; higher prices and sales of land plots under the Avrora project in the Moscow region; revenue recognition from "Dnepropetrovskaya" and "Nahimovskiy" residential projects; and the construction of the Yartsevskaya 27v residential building in Moscow.

The Real Estate Development division accounted for 68.6% of total revenues in the first nine months of 2007.

Project and Construction Management:

Project Construction Management revenues amounted USD 20.2 million the first nine months of 2007 compared to USD 28.1 million for same period in 2006.

OIBDA of the Project Construction Management division grew by 13% year-on-year to USD 10.4 million in the first nine months of 2007.

The Project and Construction Management division represented 9.7% of total revenues in the first nine months of 2007.

Asset Management:

Asset Management revenues increased by 82.0% year-on-year to USD 28.9 million in the first nine months of 2007, primarily due to an increase in house sales and rental revenues from single family houses. The Serebryany Bor settlement remained the most significant source of rental revenues in the first nine months of the year.

OIBDA of the Asset Management division increased by 127.0% year-on-year to USD 19.9 million.

The Asset Management division represented 13.9% of total revenues in the first nine months of 2007.

Facility Management:

The Facility Management division reported year-on-year revenue growth of 129% to USD 16.1 million in the first nine months of 2007. The growth was primarily due to an increase in revenues from services provided to subsidiaries of JSFC Sistema.

This division represented 7.8% of total revenues for the period.

Operating expenses

Total operating expenses for the first nine months of 2007 amounted to USD 279.3 million, compared to USD 105.4 million in the same period last year:

  • Cost sales of amounted to USD 131.3 million (USD 75.3 million in the same period last year);
  • Sales, general and administrative expenses (SG&A) amounted to USD 139.3 million (USD 25.9 million in the same period last year);
  • Depreciation and amortization charges increased to USD 8.8 million from USD 4.3 million the previous year.

The increase in Sales, general and administrative expenses was largely due to the one-off non-cash expense on stock option bonus plan for the Company's management and members of the Board of Directors to the amount of USD 98 million. The increase in SG&A was also caused by increased number of personnel in line with an increase in the number of new development projects. 
 

OIBDA

Consolidated OIBDA represented a negative amount of USD 63.0 million in the first nine months of 2007.

Income Tax

Income tax payments increased to USD 13.9 million during the period from USD 7.4 million a year earlier.

Net loss

The Company's consolidated net loss in the first nine months 2007 amounted to USD 77.6 million.

Subsequent events

In October 2007 Sistema-Hals announced the commencement of trading in its ordinary, dematerialized registered shares on the RTS. From 30 October 2007, shares in JSC Sistema-Hals have been included on the exchange's list of 'securities admitted to trading but not officially listed', under the ticker HALS.

Also in October 2007 Sistema-Hals announced the 100% acquisition of two companies: Khamovniki Experimental Factory of Drinks and Prestige. As a result of these transactions Sistema-Hals has acquired control of land with a total area of more than 2.2 hectares located at 23/7 and 23/5 Lev Tolstoy Street, Moscow, formerly the site of the Khamovniki Experimental Factory of Drinks. The plot is currently occupied by about 20 administration buildings now in disrepair. Sistema-Hals is planning to build a mixed use office-residential complex with a total area of approximately 70,000 square metres on the site, which will include luxury apartments, three detached mansions, office accommodation, and underground and ground-level car parking, as well as infrastructure.

In November 2007 Sistema-Hals obtained a credit line from VTB Bank. VTB will provide Sistema-Hals with financing of up to USD 200 million for a period of five years. These credit resources will be used to finance the company's current investment programme.

Also in November 2007 Sistema-Hals acquired a 4.42% stake in the KAMELIA Health Spa. JSC Sistema-Hals had already acquired 95.58% of the shares in KAMELIA Health Spa in July 2007, resulting in a present-day holding of 100%.

In December 2007 Sistema-Hals announced the launch of the second phase in construction of a mega villa community, situated between two other Sistema-Hals developments (Landschaft and Gorki-8). The development is located on the Rublevo-Uspenskoye Highway (10-17 km from the MKAD ring road), on an area obtained by Gorki-8 Ltd. (a subsidiary of Sistema-Hals) totalling 61 hectares. Sistema-Hals has issued a commercial paper worth RUB 3,781,000,000 to finance the purchase of the land.

Conference call

Sistema-Hals will host a conference call today (10 December) at 5.00 PM Moscow local time, 14.00 PM London local time and 9.00 AM New York local time to present and discuss these results. Participants may dial into the call on the following numbers:

Participant Telephone Number:            +44 (0)20 7138 0835

PIN: 2259417

The webcast of  Sistema-Hals'  first nine months 2007 results conference call will be available both live and for replay purposes on December 10, 2007 beginning at 9 AM (Eastern US) / 2 PM (London) / 5 PM (Moscow)., on  the Company`s web site http://www.sistema-hals.ru in the "Investor relations" section.

Appendices:

  • 1. Consolidated balance sheets as of December 31, 2006 and June 30, 2007 according to US GAAP
  • 2. Consolidated profit and loss statements for the first half of 2007 and the first half of 2006 according to US GAAP
  • 3. Non-GAAP financial measures

 

 

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