OREANDA-NEWS. May 5, 2010. Sistema-Hals (LSE, MICEX, RTS: HALS), a major Russian real estate company, announced its unaudited consolidated financial results for 2009 in accordance with US GAAP.

In April 2009, AFK Sistema signed an agreement to sell the shares of Sistema-Hals to Bank VTB. According to the agreement, in April 2009 VTB acquired from Sistema a 19.5% share in Sistema-Hals for RUB 30 and received a call option to acquire an additional 31.5% share for RUB 30. As a result of this transaction VTB’s ownership amounted to 19.5%. In December, 2009, the option was exercised and VTB increased its share in Sistema-Hals up to 51%.

In April 2009, the share of Sistema in Sistema-Hals’ capital decreased from 69.4% to 19.5% as a result of these transactions. Later, in December 2009 Sistema acquired 8.1% of Sistema-Hals’ treasury shares, and increased its stake in the Group’s capital up to 27.6%.

Key financials for 2009

The consolidated revenue changed from USD 274.6 million in the year ended 31 December 2008 to USD 64.0 million in the year ended 31 December 2009.

The operating expenses increased to USD 428.3 million in 2009 compared to USD 423.2 million in 2008.

OIBDA amounted to a negative value of USD 340.5 million in 2009 as compared with negative value of USD 131.7 million in 2008.

In 2009, the Group recognized an operational loss in the amount of USD 364.3.

The Company recognized a net loss of USD 555.4 million in 2009 in comparison with net loss of USD 381.1 million reported in 2008.

As of December 31, 2009 total assets decreased by 32.6% to USD 1,278.6 million compared to total assets in the amount of USD 1,895.7 million as of December 31, 2008.

The overview of our financial condition and results following below should be looked at together with our consolidated financial reports based on US GAAP and notes thereto.

In May 2009, Sistema-Hals exchanged its share in Mosdachtrest OJSC (assets included land plots and cottages) and Landshaft CJSC (assets included land plots) to Sistema for the amount of USD 37,2 million, these companies together constituted the Asset Management business segment of the Group, for a 100% stake in Lubyanka Development OJSC which owns the Central Detsky Mir building in Moscow. The transaction resulted in a loss from disposal of USD 13,3 million , net of income tax of USD 2,3 million.

In July 2009, the Company sold a 100% stake in Citi-Hals CJSC to Sistema for the amount of USD 1,8 million. This company constituted the Facility Management business segment, which was mainly focused on the management of AFK Sistema Group’s offices, while Sistema-Hals strategy is focused on the development business. The transaction resulted in a loss from disposal of USD 2,2 million, net of income tax of USD 0,4 million.

The financial results of the Asset Management and Facility Management business segments are disclosed in a separate line, discontinued operations, of the audited financial statements for
2009 as a result of terminated activities.

In this connection, the comparable information was adjusted in order to account for discontinued operations, as if the enterprises were retired as of the beginning of the earliest fiscal years mentioned in the reports.

Valuation of Sistema-Hals' share in real estate property and development projects

 

01.01.2010

01.01.2009

Change (%)

Projects in portfolio

76

104

(26.9)

Value of the Company's share in projects
(USD  million)

1,400

2,049

(31.7)

The value of Sistema-Hals' share in properties and projects decreased by 31.7% in the period from January 1, 2009 to January 1, 2010 according to an independent appraisal carried out by Cushman & Wakefield Stiles & Riabokobylko (C&WS&R). C&WS&R determined that the total market value of 100% ownership in 76 projects and properties amounted to USD 1,745 million on January 1, 2010 of which Sistema-Hals' share (after minority interests) amounted to USD 1,400 million.

In its previous report, C&WS&R valued 100% of Sistema-Hals' portfolio of properties and projects at USD 2,576 million as of January 1, 2009, with the share directly owned by the Company valued at USD 2,049 million.

The decrease in the number of projects in the valuation is due to the sale of mostly Mosdachtrest assets.