In line with the severe warning it published earlier this month, Africa-Israel Investments Ltd. (TASE:AFIL) reported a net loss of NIS 1.752 billion for 2015 this morning, and a loss of NIS 1.576 billion for the fourth quarter.
The losses stem from a decline in the value of the assets of AFI Development of NIS 1.733 billion in 2015 because of the continuing negative economic situation in Russia which has depressed the real estate sector in the country. The completion of the sale of the New York Times building in Times Square in New York caused an accounting loss of NIS 384 million which did not affect shareholders' equity.
Profit on leasing and operating assets totaled NIS 536 million in 2015, which compares with NIS 647 million in 2014. The decline arises from the Afimall City mall in Moscow, revenue from which totaled $71.3 million in 2015, down from $107 million in 2014. The sale of the Perdoviza Mall in the Czech Republic in November 2014 and the weakness of the euro against the shekel also contributed to the decline in revenue.
The balance of real estate for investment was NIS 8.5 billion at the end of 2015; the balance of real estate under construction was NIS 2 billion; the balance of buildings for sale (residential projects) was NIS 2.5 billion; and the company's stock of land totaled NIS 1.9 billion.
Africa-Israel CEO Avraham Novogrocki said, "The annual results are indicative of the continuing deterioration in the macro-economic situation in Russia and the impact of this situation on our AFI Development subsidiary, while we continue to act cautiously and consider our steps in accordance with events. Alongside the difficult challenges in Russia, we are encouraged by the fact that the considerable efforts we have invested in business development are bearing fruit at Africa-Israel Properties, Danya Cebus, and Africa-Israel Residences. These companies are showing continued momentum in their businesses, manifest in growth in their activity along with consolidation of their financial strength and dividends to shareholders.
"During the period of the debt settlement it recently signed, the company intends to continue acting on various levels to implement its general business plan, among other things the sale of assets at appropriate prices and generation of positive cash flow that will assist it in meeting its financial obligations and in its continuing efforts to service its debt."
Despite the heavy loss, Africa-Israel Investments chairman and controlling shareholder Lev Leviev drew compensation of NIS 12.4 million in 2015, of which NIS 4.7 million was salary and NIS 7 million was in the form of options. Novogrocki's compensation in 2015 was NIS 2.3 million.
Published by Globes [online], Israel business news - www.globes-online.com - on March 29, 2016
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