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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| East Balkan | LSE:EBP | London | Ordinary Share | GB00B0QB4K42 | ORD EUR0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 6.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2019 to May 2024
TIDMEBP
RNS Number : 9330K
East Balkan Properties PLC
29 August 2012
EAST BALKAN PROPERTIES plc
INTERIM REPORT
FOR THE SIX MONTH PERIOD ENDED 30 JUNE 2012
East Balkan Properties plc ("EBP" / "Company" / "Group"), an Isle of Man registered company for commercial property investments in the Balkan region, announces today its unaudited results for the six month period ended 30 June 2012.
Highlights for the Interim Period
Financial
-- Net Asset Value per share of EUR 0.38, unchanged from 31 December 2011 (30 June 2011: EUR 0.39)
-- Pre-tax loss of EUR 0.71 million (30 June 2011: EUR 3.6 million profit) -- Total comprehensive income of EUR 0.4 million (30 June 2011: EUR 3.6 million) -- Total assets of EUR 89.2 million (31 December 2011: EUR 89.4 million) -- Total liabilities of EUR 35.5 million (31 December 2011: EUR 36.2 million)
-- Gearing ratio of 36.7% on total capital of EUR 53.7 million (31 December 2011: 37.3% gearing on EUR 54.6 million)
-- Group cash balance of EUR 2.8 million (31 December 2011: EUR 2.6 million) -- Administrative expenses of EUR 0.43 million (30 June 2011: EUR 0.58 million)
Strategic
-- Further incremental cost reductions achieved -- Stable cash balance over period, sustaining working capital position -- Asset performance stable despite continued weak markets -- Asset disposals stalled due to absence of commercial mortgage financing in the region
Commenting on the interim results, James Ede-Golightly, non-executive chairman of EBP, said:
"During the interim period we made further progress in stabilising the working capital position of EBP; however, our strategy of realising value through asset disposals has stalled due to the acute shortage of acquisition financing for the investors still active in the region.
While asset level performance was generally stable in the first half, we continue to see distress within the tenant base. As a result, our continued focus is on sustaining performance at each asset to defend shareholder value.
The Board is considering whether it is in the best interests of the Company to remain an AIM quoted company, or whether to delist."
For further information please contact:
IOMA Fund and Investment Management Ltd
Graham Smith
grahams@iomagroup.co.im
Tel: +44 1624 681 250
Michael Uhler
michael.uhler@ebp-plc.com
Tel: +49 172 183 3194
Westhouse Securities Limited
Nomad and Broker
Richard Johnson/ Antonio Bossi
Tel: +44 20 7601 6100
A copy of the interim report is available on the Company's website, www.ebp-plc.com
Chairman's Statement
Summary & Outlook
During the first half of 2012, East Balkan Properties plc benefited from its continued focus on cost control and working capital. Cash balances at the Group level have been maintained over the interim period due to in part to an escrow provision release of EUR135,000 and a dividend receipt from associates of EUR280,000. In the second half of the year, until EBP achieves asset sales or receives a distribution from an associate holding, cash balances are expected to decline. No further reductions in administrative costs are expected under the current structure. The board is considering whether it is in the best interests of shareholders for the Company to remain quoted on AIM. One consideration is that if the Company were to cancellation from trading on AIM, then further incremental cost savings would be feasible. An AIM cancellation would not alter the board's intention to seek asset disposals and return cash to shareholders.
Asset performance was stable over the period though we see no signs that conditions are improving. The Company is experiencing continued pressure on rents upon lease renewal, and in some instances concessions are being requested within the contractual lease term. New lease activity is limited and very competitive. In this environment our asset management focus is on sustaining operating cash flows while also extending average lease duration.
The Company will be in refinancing discussions for both Equest Logistics Center and the Domenii / Cartex office portfolio during the second half of 2012. Our expectations are for more restrictive commercial terms and limited maturities to allow for an orderly marketing and sales process in 2013. The Group working capital position is such that the Company is unable to provide either additional capital support or collateral support to individual SPVs; however, we are working constructively to sustain and realise value from each portfolio asset on a standalone basis.
Following an extensive marketing effort for both ELC and Glorient, we signed letters of intent with credible counterparts and agreed to acceptable enterprise valuations; however, both offers were subject to financing that was ultimately unobtainable due to lending policies in the region. The Company will continue to explore exit alternatives for these assets.
Portfolio Review
EBP's portfolio (excluding cash deposits and other working capital in the holding companies) as at 30 June 2012 can be summarised as follows:
Hot Features
Premium
NAV
Project Use Country Ownership Contribution
------------ -------------- ---------- ---------- --------------
Glorient 13 Land/ EUR36.1
Portfolio 35 Retail Bulgaria 40% million
Equest EUR8.8
Logistics 3 Warehouses Romania 100% million
Domenii EUR(1.0)
/ Cartex 4 Offices Romania 100% million
2 shopping
Malls malls Romania 49% EUR nil
6 Land / Mostly EUR8.3
Other 2 Retail Serbia Various million
------------ -------------- ---------- ---------- --------------
In an effort to improve the appeal of Glorient and to support its largest tenant, Technomarket, Glorient signed new 10 year leases (expirations in 2022) involving 20 stores and 4 related properties in exchange for modest rent concessions. The Company believes these changes will help support capital values and make Glorient easier to finance in the event of a sale. The portfolio carried mortgage debt of 11.8 million at 30(th) June 2012. While funding options in Bulgaria are limited, the Company is in the process of exploring alternatives with its partner for a partial refinancing of the portfolio.
Prime Property Advisers (an affiliate of Knight Frank) sourced two bidders for Equest Logistics Center. After a major new lease commitment failed to complete, the preferred bid was withdrawn citing a lack of available finance for assets which had not yet reached stabilized occupancy. The Company expects to remarket ELC in 2013 and is striving to make real gains in both occupancy and net rental levels. The Company is aiming for a meaningful capital recovery, though given market conditions, we cannot estimate the timing of completion. Cash flow remains stable and all debt service obligations have been met.
At the Directors' asset valuation of EUR 25.1 million at 30 June 2012, Equest Logistic SRL contributes EUR 8.8 million to Group NAV.
Within the Bucharest office portfolio, refinancing negotiations with Deutsche Pfandbriefbank AG continue. The Company expects to finalize a minor term extension to allow for an orderly marketing of the buildings during 2013. Since the probability of recovery of any meaningful equity for shareholders is minimal, sales proceeds are expected to be used to repay the bank debt. Operationally, the portfolio is stable with an attractive mix of tenants and lease expires. Marketing will be handled by a local broker.
At the Directors' asset valuation of EUR 13.0 million at 30 June 2012, Domenii Imobiliare SRL and Cartex Construct SRL reduce Group NAV by EUR 1.0 million.
EBP retains a 49% interest in Vitantis Shopping Center, Bucharest and Moldova Mall, Iasi. As neither asset contributes to Group NAV due to high debt levels, this ownership is held primarily to ensure some continuity of ownership until the bank decides on an exit strategy. The Directors place limited value on these holdings as at 30 June 2012 though the Company has legitimate release consent claims due to a late stage equity payment which could be recovered in the event of a sale.
The Group's holdings in Serbia consist of three land holdings and two small retail shops. These assets contribute EUR 6.8 million to Group NAV. These assets are for sale though our agents have not yet developed any credible offers.
The Company also holds a 36.8% interest in two Slovakian land parcels, and a 70% interest in a land plot in Ploesti, Romania.
Financial Results
NAV is EUR 0.38 per share - no change from EUR 0.38 per share at 31 December 2011.
The Directors carried out a valuation of the property assets at 30 June 2012, and this valuation of EUR46.69 million showed a decline of EUR0.86 million from 31 December 2011. In addition, the Directors carried out a valuation of Glorient's properties, and the Company's 40% share showed a decline of EUR0.63 million over the same period.
In the six months to 30 June 2012, the Company recorded a pre-tax loss of EUR 0.71 million, compared with a gain of EUR 3.57 million in the same period in the previous year. This gives rise to a loss in earnings per share of EUR 0.01 compared with a gain per share of EUR 0.03 in the same period in the previous year. The swing from profit to loss is partially explained by changes in foreign exchange in Romania. (The Romanian Lei has devalued by 3% against the Euro since 31 December 2011.)
Total comprehensive income, which includes the exchange differences arising on consolidation, cancels out some of the exchange losses referred to above, and is a small positive amount of EUR0.43 million, despite the write-downs of the property assets.
It should be noted that the Group's bank borrowings are in Euros, as are the property valuations, but because the "operational currency" of subsidiaries are in other currencies, the components of the profit or loss is sensitive to exchange rate movements. However, this is largely neutralised in the total comprehensive income and in the balance sheet.
Excluding bad debts and reversals of provisions, administrative costs fell to EUR 0.43 million (first half 2011: EUR 0.58 million). The Company has met its budget estimates though any successful transactions or break costs could influence this result going forward. Further savings are likely to be minimal unless the Company seeks a cancellation from trading on AIM. We estimate that a cancellation could save an additional EUR0.1 million per year.
Going Concern
The Group continues to adopt a going concern basis for the preparation of these financial statements.
The Directors believe the Group will be able to manage its business risks for the foreseeable future despite continued challenging economic conditions. After making enquiries and examining major areas which could give rise to significant financial exposures, the Board has a reasonable expectation that the Company and the Group have adequate resources to continue their operations. The Group has primarily mortgage debt facilities secured at the local company level and without any performance or payment guarantees from the Group. In the event of a financing default, each lender only has recourse to the local company borrower and cannot seek recourse from the Company. In a distress situation, to limit the financial damage to the Group, underperforming assets could be released back to the appropriate lender, or sold for a nominal value.
Now nearly three years into the financial crisis, bank financing remains scarce and most lenders are retreating from the region or are too incapacitated to consider new clients. Our refinancing deadlines are a source of risk for certain assets in the Group. Unfavourable financing terms, in the form of fees or high margins, can erode equity and forced sales in these markets could dampen exit pricing. With no bank alternatives, options may be limited even though all existing subsidiaries have always met their interest and amortization obligations.
With respect to the Company's cash position, the Board has a reasonable expectation that sufficient liquidity will be available to meet on-going expenses from a combination of existing cash reserves, net sales proceeds arising from the disposal program, and from periodic contributions from associates, primarily Glorient. Cash flow from subsidiary operations are less likely to contribute to Group balances following the scheduled refinancings.
Financial Statements
Please refer to the accompanying financial statements and the Notes for the details on the financial position of the Group.
James Ede-Golightly
Non-executive Chairman
28 August 2012
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited) (Unaudited) (Audited)
1 Jan 2012 1 Jan 2011 1 Jan 2011
to to to
30 June 2012 30 June 2011 31 Dec 2011
Note EUR '000 EUR '000 EUR '000
Revenue 2,230 1,789 4,228
Property operating expenses (818) (658) (1,627)
--------------------------------------------------------------- -------------- -------------- -------------
Net rental and related income 1,412 1,131 2,601
--------------------------------------------------------------- -------------- -------------- -------------
Net gain/(loss) from fair value adjustment on property assets 993 261 1,313
Share of profit/(loss) from associate:
Current year profit before fair value adjustment 1,299 1,316 2,108
(Loss)/gain from fair value adjustment on property assets (625) 733 (1,724)
Administrative expenses 4 (292) (580) (1,113)
Operating profit 2,787 2,861 3,185
--------------------------------------------------------------- -------------- -------------- -------------
Finance income 5 95 1,712 436
Finance costs 5 (3,590) (999) (1,536)
--------------------------------------------------------------- -------------- -------------- -------------
(3,495) 713 (1,100)
(Loss)/profit before tax (708) 3,574 2,085
--------------------------------------------------------------- -------------- -------------- -------------
Income tax credit/(expense) - (1) -
--------------------------------------------------------------- -------------- -------------- -------------
(Loss)/earnings for the period (708) 3,573 2,085
--------------------------------------------------------------- -------------- -------------- -------------
Other comprehensive income
Exchange differences on translating foreign operations 1,144 (18) 128
Other comprehensive income for the period 1,144 (18) 128
--------------------------------------------------------------- -------------- -------------- -------------
Total comprehensive income for the period 436 3,555 2,213
--------------------------------------------------------------- -------------- -------------- -------------
(Loss)/earnings per share - basic and diluted 3 (EUR 0.01) EUR0.03 EUR0.01
--------------------------------------------------------------- -------------- -------------- -------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Audited)
30 June 30 June 31 December
2012 2011 2011
Notes EUR '000 EUR '000 EUR '000
ASSETS
Non-current assets
Investment property 6 38,960 39,260 39,772
Other property, plant - 1 -
and equipment
Investment in associates 25,275 26,547 24,882
Loans and receivables 12,179 12,006 12,092
76,414 77,814 76,746
----------------------------- ------ ------------ ------------ ------------
Current assets
Loan receivables - 515 -
Trade and other receivables 2,247 2,659 2,252
Inventory - Land held
for sale 7,729 7,961 7,778
Cash and cash equivalents 2,789 2,570 2,632
12,765 13,705 12,662
----------------------------- ------ ------------ ------------ ------------
Total assets 89,179 91,519 89,408
----------------------------- ------ ------------ ------------ ------------
EQUITY
Share capital 1,400 1,400 1,400
Retained earnings 60,306 62,740 61,014
Translation reserve (8,031) (9,321) (9,175)
Revaluation reserve - (238) -
Total equity attributable
to equity holders of
the parent company 53,675 54,581 53,239
-----------------------------
Minority interest - - -
Total equity 53,675 54,581 53,239
----------------------------- ------ ------------ ------------ ------------
Liabilities
Non-current liabilities
Bank borrowings - 32,636 16,706
Deposits 267 278 276
Other long term loans 1,747 1,956 259
2,014 34,870 17,241
----------------------------- ------ ------------ ------------ ------------
Current liabilities
Trade and other payables 1,375 1,668 1,616
Bank borrowings 32,115 400 15,870
Other loans - - 1,442
33,490 2,068 18,928
----------------------------- ------ ------------ ------------ ------------
Total liabilities 35,504 36,938 36,169
----------------------------- ------ ------------ ------------ ------------
Net equity and liabilities 89,179 91,519 89,408
----------------------------- ------ ------------ ------------ ------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Capital Retained Earnings Translation Reserve Total
EUR '000 EUR '000 EUR '000 EUR '000
Balance at 1 January 2011 1,400 58,929 (9,303) 51,026
------------------------------------------------- -------------- ------------------ -------------------- ---------
Earnings for the period - 3,573 - 3,573
Other comprehensive income:
Exchange differences on translating foreign
operations - - (18) (18)
------------------------------------------------- -------------- ------------------ -------------------- ---------
Total comprehensive income/(loss) - 3,573 (18) 3,555
Balance at 30 June 2011 1,400 62,502 (9,321) 54,581
------------------------------------------------- -------------- ------------------ -------------------- ---------
Balance at 1 January 2011 1,400 58,929 (9,303) 51,026
------------------------------------------------- -------------- ------------------ -------------------- ---------
Earnings for the year - 2,085 - 2,085
Other comprehensive income:
Exchange differences on translating foreign
operations - - 128 128
------------------------------------------------- -------------- ------------------ -------------------- ---------
Total comprehensive income/(loss) - 2,085 128 2,213
Balance at 31 December 2011 1,400 61,014 (9,175) 53,239
------------------------------------------------- -------------- ------------------ -------------------- ---------
(Loss)/earnings for the period - (708) - (708)
Other comprehensive income: -
Exchange differences on translating foreign
operations - - 1,144 1,144
------------------------------------------------- -------------- ------------------ -------------------- ---------
Total comprehensive (loss)/income - (708) 1,144 436
Balance at 30 June 2012 1,400 60,306 (8,031) 53,675
------------------------------------------------- -------------- ------------------ -------------------- ---------
CONSOLIDATED STATEMENT OF CASH FLOW
(Unaudited) (Unaudited) (Audited)
1 Jan 2012 1 Jan 2011 1 Jan 2011
to to to
30 June 2012 30 June 2011 31 Dec 2011
EUR'000 EUR'000 EUR'000
(Loss)/profit for the period (708) 3,574 2,085
-------------------------------------------------------------- -------------- -------------- -------------
Adjustments for:
- share of profit in associate (674) (2,049) (384)
- net gain from fair value adjustment on property assets (993) (261) (1,313)
- finance income (95) (1,436) (712)
- finance costs 3,590 723 1,812
- depreciation of property, plant and equipment - - 2
- bad debts provision - - 383
Changes in working capital:
- (increase)/decrease in receivables (238) 743 166
- (decrease)/increase in payables (241) (192) (592)
Cash inflow from operation 641 1,102 1,447
-------------------------------------------------------------- -------------- -------------- -------------
Finance costs paid (523) (721) (1,202)
Tax paid - (1) -
Net cash inflow from operating activities 118 380 245
-------------------------------------------------------------- -------------- -------------- -------------
Cash flow from investing activities
Dividends from associate 280 - 200
Loans advanced to associates - (30) -
Interest received 95 - 436
-------------------------------------------------------------- -------------- -------------- -------------
Net cash inflow /(outflow) from investing activities 375 (30) 636
-------------------------------------------------------------- -------------- -------------- -------------
Cash flows from financing activities
Repayment of borrowings (458) - (920)
SWAP settlements - (614) (614)
-------------------------------------------------------------- -------------- -------------- -------------
Net cash (outflow) / inflow from financing activities (458) (1,065) (1,534)
-------------------------------------------------------------- -------------- -------------- -------------
Net (decrease)/increase in cash & cash equivalents 35 (715) (653)
-------------------------------------------------------------- -------------- -------------- -------------
Cash & cash equivalents at beginning of year 2,632 3,285 3,285
Foreign exchange gains/(losses) on cash and cash equivalents 122 - -
-------------------------------------------------------------- -------------- -------------- -------------
Cash & cash equivalents at end of year 2,789 2,570 2,632
-------------------------------------------------------------- -------------- -------------- -------------
NOTES TO THE INTERIM REPORT
1. General information
East Balkan Properties plc ("the Company") and its subsidiaries (together "the Group") are a property group with a portfolio of development property and investment property assets in South East Europe.
2. Basis of preparation
This financial information has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union and IFRIC Interpretations. The financial information has been prepared under the historical cost convention. The annual financial statements are prepared in accordance with IFRS as adopted by the European Union.
Except as described below, the accounting policies applied by the Group in these interim consolidated financial statements are the same as those applied by the Group in its consolidated financial statements as at and for the period ended 31 December 2011.
Critical accounting estimates and assumptions
The preparation of condensed consolidated interim financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results for which form the basis of making the judgements about carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates.
The principal risks and uncertainties are consistent with those disclosed in preparation of the Group's annual financial statements for the year ended 31 December 2011.
The Group continues to adopt a going concern basis for the preparation of these financial statements and the Board has a reasonable expectation that sufficient liquidity will be available to meet ongoing expenses from a combination of existing cash reserves, net sales proceeds arising from the disposal program, and cash flow from normal operations.
3. (Loss)/earnings per share
The basic loss per ordinary share is calculated by dividing the net (loss)/earnings attributable to the ordinary shareholders of the Company by the weighted average number of ordinary shares in issue during the year.
1 Jan 2012 1 Jan 2011 1 Jan 2011
to to to
30 June 2012 30 June 2011 31 Dec 2011
EUR'000 EUR'000 EUR'000
----------------------------------------------------- -------------- -------------- -------------
(Loss) / earnings attributable to owners of parent (708) 3,573 2,085
Weighted average number of ordinary shares in issue 140,000 140,000 140,000
Basic (loss) / earnings per share (EUR 0.01) EUR0.03 EUR0.01
----------------------------------------------------- -------------- -------------- -------------
The Company has no dilutive potential ordinary shares; the diluted gain or loss per share is the same as the basic gain or loss per share.
4. Administration expenses
1 Jan 2012 1 Jan 2011 1 Jan 2011
to to to
30 June 2012 30 June 2011 31 Dec 2011
EUR'000 EUR'000 EUR'000
------------------------------- -------------- -------------- -------------
Audit fees and other 30 64 104
Management fees - 32 66
Other professional expenses 111 189 337
Directors' fees 58 66 124
Other administration expenses 227 229 479
Bad debts - - 383
Reversal of provision* (134) - (380)
Total 292 580 1,113
------------------------------- -------------- -------------- -------------
*The provision was set up as part of the sale process of City Centre Sofia in 2009 in order to cover potential warranty claims to the extent that it has been agreed with the purchaser of City Center Sofia that no warranty claims are due, the provision has been reversed.
5. Finance income and finance costs
Finance income and finance costs include all finance-related income and expenses. The following amounts have been included in the statement of comprehensive income line for the reporting periods presented:
1 Jan 2012 1 Jan 2011 1 Jan 2011
to to to
30 June 2012 30 June 2011 31 Dec 2011
EUR '000 EUR '000 EUR '000
-------------------------------------------- -------------- -------------- -------------
Interest on short-term bank deposits 6 13 30
Other finance income 89 89 406
Fair value movement on interest rate swaps - 276 276
Net foreign exchange gains - 1,058 -
-------------- -------------- -------------
Finance income 95 1,436 712
-------------------------------------------- -------------- -------------- -------------
Interest expense on borrowings (511) (659) (1,202)
Net foreign exchange losses (2,911) - (483)
Bank charges (136) (11) (32)
Other finance expenses (32) (53) (95)
Finance costs (3,590) (723) (1,812)
-------------------------------------------- -------------- -------------- -------------
6. Property assets
Fair values of the Group's property assets at the half year are determined by the Directors. At 30 June 2012 and 30 June 2011 Directors' valuations were based on their best estimate of market value. At 31 December 2011 Directors' valuations were based on valuations prepared for each individual property asset by independent professionally qualified valuers.
The carrying value and fair value of the Group's property assets in the balance sheet are summarised as follows:
30 June 2012 30 June 2011 31 December 2011
EUR'000 EUR'000 EUR'000
--------------------- -------------- -------------- ------------------
Investment property 38,960 39,260 39,772
Land held for sale 7,729 7,961 7,778
46,689 47,221 47,550
--------------------- -------------- -------------- ------------------
At 30 June 2012 the Group holds two investments that are accounted for as associates: Glorient BG and IBN SRO. The investment in IBN SRO was provided against in full. The Group's share of net assets of Glorient at 30 June 2012 is EUR 25.6 million (31 December 2011: EUR 24.9 million) which represents 40% of Glorient.
At 30 June 2012, the Group also held EUR 12.2 million as loan receivables from associates, of which EUR10.8 million was from Glorient. These loans are unsecured.
7. Net assets value per share
30 June 2012 30 June 2011 31 December 2011
EUR'000 EUR'000 EUR'000
------------------------------------------------------- -------------- -------------- ------------------
Net assets attributable to owners of the parent 53,675 54,581 53,239
Number of ordinary shares outstanding at 30 June 2012 140,000 140,000 140,000
Net Asset Value EUR0.38 EUR0.39 EUR0.38
------------------------------------------------------- -------------- -------------- ------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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