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| Date/Time | Headline | Source |
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| 16-11-09 | RNS |
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RNS Number : 4900C Atlas Estates Ltd 16 November 2009
UNAUDITED QUARTERLY RESULTS FOR THE NINE AND THREE MONTHS TO 30 SEPTEMBER 2009 16 November 2009 Atlas Estates Limited, the Central and Eastern European ("CEE") property investment and development company, today reports interim results for the nine and three months ended 30 September 2009. Financial summary
Operational summary
Commenting, Quentin Spicer, Chairman of Atlas, said: "In this quarter the Company has achieved a significant milestone with the completion of the construction of its Platinum Towers residential development in Warsaw. The twin towers are over 22 floors and are situated alongside the Hilton Hotel which was completed by the Company in 2007, as part of a unique development in the city. The development has 396 quality apartments including 16 penthouses, and a piazza with commercial area to be let. Our next development, Capital Art Apartments stage 2, is on track for completion prior to the end of the year. Economic and lending conditions remain difficult following the banking crisis. The Polish economy remains the only European economy forecasting growth in 2009, and likely to be one of the strongest performing economies in the coming years as a result of EU funding to support infrastructure developments. Poland remains our major market and therefore the Company is well positioned to benefit from the strength of this economy and any future recovery in demand in the region". For further information contact:
Nahman Tsabar - Chief Executive Officer Michael Williamson - Chief Financial Officer
David Floyd Rachel Rees
ATLAS ESTATES LIMITED
CONDENSED CONSOLIDATED QUARTERLY REPORT
THIRD QUARTER 2009 Atlas Estates Limited BNP Paribas House 1 St Julians Avenue St Peter Port Guernsey GY1 1WA Company number: 44284
Contents Page
15 Property portfolio information 17 Interim Condensed Consolidated Financial Information 23 Selected Notes to the Interim Condensed Consolidated Financial Information
Financial Highlights
investment properties
sale
shareholders
from operating activities
activities
activities
cash
sale
associated with assets
classified as held for sale
attributable to equity holders of the Company
(eurocents)
share (EUR)
I am pleased to report the unaudited financial results for Atlas Estates Limited ("Atlas" or "the Company") and its subsidiary undertakings ("the Group") for the nine and three months ended 30 September 2009. The Company, in its interim results as reported on 14 August 2009, highlighted the very tough market conditions seen in the CEE region for the first half of 2009. The CEE markets have seen improvements in the third quarter of 2009. However we are cautious about prospects for a full scale recovery and continue to monitor the markets closely and to put in place the appropriate measures to ensure the stability of the Group. This includes continuing to reduce costs without damaging operational effectiveness and ensuring our major development projects are completed on time and within budget. In this quarter we completed the construction of the Platinum Towers residential development in Warsaw and received the permit to hand over apartments to our clients. The effect on lending capabilities of the banks following the credit crunch remains a key issue for the CEE region and a lack of access to capital is a continuing risk to business. Management works closely with the banks on its facilities. In addition to the completion of the Platinum Towers, the Group is expected to complete its second major project for 2009, the Capital Art Apartments stage 2 developments, by the end of 2009. These constructions have been dependent upon access to finance and the support of two major banks has been vital. The progression of the business has been adversely affected by falling property valuations and the instability in the economies in the CEE region. In response the banks that previously financed growth in the CEE region are seeking to reduce their exposure and the funding for new business projects or construction is virtually non existent. In this environment the Company's objectives have been to retain cash for investment, to realise value from disposals and to apply strong cost control throughout and ensuring projects are completed on time and within budgets. Quarter 3 Reported Results The third quarter results continue to reflect many of the factors reported on in the interim results, including the fall in asset valuations and the effect of depreciating CEE currencies relative to the Euro. The continuing depreciation of CEE currencies into 2009 reflected the weak economic environment in the region. However, in the third quarter there has been stabilisation and appreciation, but exchange rates still remain substantially weaker than in 2008. The fall in value of the functional currencies has resulted in foreign exchange losses of EUR3.0 million in the income statement (2008: gain of EUR5.2 million) and EUR4.1 million (2008: gain of EUR5.9 million) in reserves for the nine months ended 30 September 2009. Of the loss in the income statement, EUR2.3 million (2008: gain EUR3.5 million) is unrealised. It has arisen on monetary assets and liabilities denominated in foreign currencies, for example bank loans, which are translated at the rates prevailing on the balance sheet date. Financing, Liquidity and Forecasts The Group, as previously reported, has been in discussions with its banks and has refinanced loans attributable to several of its properties. Negotiations have been difficult, due to the issues being faced by international banks and falling asset values. The Group has been successful in obtaining a waiver for one banking covenant breach in 2008 and continues to negotiate with lenders (who have not withdrawn their facilities) in respect of others. It has also refinanced or extended many of its loans, as detailed below in the notes to the financial information. The Company has simultaneously engaged in negotiations with other lenders. The Group has reported a loss before taxation for the nine months ended 30 September 2009 and a change in net asset value as at 30 September 2009. The Directors consider that although prospects are generally improving, the outlook presents significant challenges in terms of the markets in which the Group operates, with the effect of fluctuating exchange rates in the functional currencies of the Group and the availability of bank financing for the Group adding to the instability. The sale of the group's interests in Slovakia, described in more detail below, will significantly improve the Group's overall cash position and reduce its borrowings after the period end. The Group's forecasts and projections have been prepared taking into account the economic environment and its challenges and mitigating factors. These forecasts take into account reasonably possible changes in trading performance, potential sales of properties and the future financing of the Group. While there will always remain some inherent uncertainty within the aforementioned cash flow forecasts, the Directors have a reasonable expectation that the Company and the Group will have adequate resources to continue in operational existence for the foreseeable future. Accordingly they continue to adopt the going concern basis in preparing the condensed consolidated quarterly financial information for the nine and three months ended 30 September 2009, as set out in note 1 to the condensed consolidated quarterly financial information. Investing Policy The Company actively invests in a portfolio of real estate assets across a range of property types throughout Central and Eastern Europe (CEE). The Company targets countries within the CEE which possess attractive investment fundamentals including political and economic stability, strong GDP growth and low inflation. The Company may also make investments in countries which attract increasing foreign direct investment from being part of, or from being expected to join, the EU. The Company shall not invest in states of the former USSR. The Company makes investments both on its own and, where appropriate, with joint venture partners in residential, industrial, retail, office and leisure properties in order to create an appropriately balanced portfolio of income-generating properties and development projects. There are no set restrictions on either sector or geographical spread of investments within the Company's stated investment region. The Company may employ leverage to enhance returns on equity although the extent of such leverage will vary on a property by property basis. Wherever possible, the Directors intend to seek financing on a non-recourse, asset by asset basis. The Company has no set limit on its overall level of gearing, however it is anticipated that the Company shall employ a gearing ratio of up to 75 per cent of the total value of its interest in income-generating properties within its property portfolio. The Company seeks to provide Shareholders with an attractive overall return through a combination of income and long term appreciation of the Company's assets. The Board recognises that the current state of the credit markets and general downturn in the CEE economies in which the Company invests have had a negative effect on the overall value of the Group's portfolio, causing a decline in the Company's net asset value per share. In order for the Company to achieve its long term investing policy, the Board's short term investment strategy for 2009 and 2010 is cash focussed with new development activity in relation to parts of its portfolio being selectively deferred but with current active projects displaying good sales being progressed on time and on budget and being brought to a conclusion to achieve intended returns. No dividends are expected to be paid in the short term. Disposal of interests in Slovakia Atlas announced on 3 November 2009 that it had signed an agreement for the sale of its entire investment interests throughout Slovakia (the "Slovakia Portfolio"), comprising 3 sites: 1 in Bratislava and 2 in Kosice, which were held in a joint venture in which Atlas had a 50 per cent interest. The Group realised EUR8 million in net proceeds from the sale of the Slovakia Portfolio. The combined impact of ceasing to consolidate its share of debt in the joint venture and the receipt of the cash consideration has reduced the Group's overall debt by some EUR20.5 million pending any reinvestment of the cash proceeds. The Board intends to utilise the net proceeds to fund the development of the Group's remaining assets, with particular focus on the assets located in Warsaw, Poland, where the Group has a strong presence and is likely to realise value from development activity within the next two to three years. This contrasts with the projects in Slovakia, which would have required the investment of large amounts of capital with returns arising in the long term. Net Asset Value ("NAV") and Adjusted Net Asset Value ("Adjusted NAV") In the nine months to 30 September 2009, NAV per share, as reported in the condensed consolidated quarterly financial information that has been prepared in accordance with International Financial Reporting Standards ("IFRS"), has decreased by 26.4% to EUR2.71 per share from EUR3.68 at 31 December 2008. An independent valuation of the entire property portfolio is carried out on a semi-annual basis by Cushman & Wakefield and Colliers International acting as independent experts. This assessed the total value added during the financial year and is included in the basis for the Property Manager's performance assessment and fee calculations. The change in value of the development land holdings over their book cost reflects the latent value within the project, which is over and above the book cost. Profit is taken upon completion of the project and when the risks and rewards of ownership of an apartment or property are transferred to the client.
The Adjusted NAV per share, which includes valuation gains net of deferred tax on development properties held in inventory and land held under operating lease, but not recognised at fair value in the balance sheet, has not been included. The Directors consider that it is more prudent and appropriate to wait until the independent valuation is undertaken at 31 December 2009, as since the last independent valuation at 30 June 2009 there has continued to be significant expenditure on the development properties and significant changes in the markets for development properties.
In many of the markets throughout the CEE region, gross domestic product ("GDP") levels are in decline, with an overall regional decline of 4% forecast for 2009. Poland remains one of the most resilient economies in Europe and is forecasting growth of between 0% and 1% in GDP. Romania, which required EUR20 billion of IMF financial support, is forecasting a fall in GDP of between 6% and 8% this year. Hungary has also received EUR15 billion of IMF financial support this year and is forecasting a fall in GDP of 6% in 2009. The Slovakian economy is forecast to decline by between 4% and 6% in terms of GDP in 2009. These weak economic conditions have arisen alongside the slump in foreign investment and bank finance to the region. Credit has become very restricted and there is no liquidity in the market. As a result, investment and development activity in the real estate market is in decline. The Company has continued to adopt a prudent approach to investments and seeks to reduce the risks associated with its portfolio. In the longer term the Company remains committed to its strategy of investment in this region, as we believe that the markets will continue to offer growth rates ahead of those to be offered in the more developed markets in Western Europe. The Company has benefited in prior years from the growth in these markets. It is now experiencing a reversal in these markets, but, as in any cyclical business, it is important investors and management are able to take a longer term view. This will allow the Company to benefit from the next positive stage in the property and economic cycle. Risks and uncertainties The Board and the Property Manager continually assess and monitor the key risks of the business. The principal risks and uncertainties that could have a material impact on the Group's performance for the rest of the financial year 2009 are summarised in the Property Manager's Report on pages 13 and 14 below. Prospects As Atlas has previously reported during the current year, the global economic crisis has had a very significant impact on the economies and prospects in the CEE region. Many economies in the region are experiencing a decline in GDP, as access to funding has become restricted and any investment has been put on hold. For 2009 it is unlikely that the economies in the CEE region will recover and the Group has positioned itself for this situation. There have been improvements in sales demand in recent months in Warsaw, as Poland confirms its position as the most resilient market in Europe. For 2010 and beyond there have been forecasts of stabilisation and recovery for certain markets in the CEE region, in particular for Poland. However it is difficult to forecast the timing of the recovery without more certainty on how the financial crisis in the global markets resolves itself. Therefore the directors and management of Atlas continue to adopt a prudent and measured approach to investment. Atlas has achieved significant progress with its two key developments in Warsaw since the announcement of the half year results to 30 June 2009 and is benefitting from cash in-flows as apartments are sold. When combined with the cash proceeds due from the recent sale of its Slovakian interests, the Group's current and projected cash flows are expected to provide the Group with the cash resources to unlock the value of selected further projects in Poland. I would like to take the opportunity to thank my fellow board members, the directors and staff of the Property Manager and our team of advisors for their loyal support and effective management, particularly under the current difficult conditions. Quentin Spicer
CHAIRMAN
16 November 2009
In this report we present the operating results for the nine and three months ended 30 September 2009. Atlas Management Company Limited ("AMC") is the Property Manager appointed by the Company to oversee the operation and development of its portfolio and advise on new investment opportunities. As at 30 September 2009, the Company held a portfolio of 23 properties comprising 12 investment properties of which eight are income yielding properties and four are held for capital appreciation, two hotels and nine development properties. Disposal of interests in Slovakia As highlighted in the Chairman's Statement on page 5 on 3 November 2009 Atlas signed an agreement for the sale of its entire investment interests throughout Slovakia (the "Slovakia Portfolio"), comprising 1 site in Bratislava and 2 sites in Kosice. This will reduce the portfolio of assets by three properties going forward and ends the Company's current interests in Slovakia. Portfolio valuation and valuation methods An independent valuation of the entire property portfolio is carried out on a semi-annual basis by independent valuation experts. Independent valuations may also be performed when a new property is acquired. The most recent valuation was performed at 30 June 2009 by two independent real estate advisors, Cushman and Wakefield and Colliers International. Management has used the 30 June 2009 valuations in the financial statements at 30 September 2009. These valuations are applied to property, plant and equipment and investment property. Markets and Key Properties Poland This is the major market of operation for the Group, with 75% of its portfolio located in Poland, excluding the recently disposed of assets in Slovakia. The Polish economy is outperforming the rest of the region with positive GDP growth forecast for 2009. The currency has weakened in 2009 and there are forecasts of a recovery in the economy in 2010 and 2011. Property valuations in 2009 have fallen by 10% to 15%, as a result of restricted credit. This has impacted the Group's asset valuations in 2009. Hilton Hotel, Warsaw The Hilton Hotel in the Wola district of Warsaw is a prestigious asset. The CEE region and the hotel market across Europe have been adversely impacted by the global economic downturn. The third quarter is the weakest quarter for occupancy rates, but we have seen rates in line with third quarter 2008. For the Hilton Hotel, occupancy rates for the first nine months of 2009 were at 62% compared to 69% in the first nine months of 2008. Management have undertaken measures to mitigate the effect of lower occupancy rates, through cost controls and operating margins have been maintained in the hotel operation at 29% to 30% in the nine months to 30 September 2009. Platinum Towers The Platinum Towers development, located adjacent to the Hilton was completed in the third quarter in line with budget and according to schedule. A permit to commence the hand over of apartments was obtained and this process has started. There will be sales recognition in quarter 4 2009, but the majority of sales will be recognised in 2010. This is a significant milestone for the Group and the twin tower development provides 396 apartments and a retail and piazza area on the ground and first floors. This residential development alongside the Hilton Hotel will provide a unique development in the city. It is planned to build an office tower in the future, which will enhance the attractiveness of this site. Pre-sales of 30 apartments were concluded in the first nine months of 2009. In total, pre-completion apartment sales are at 359 (apartments sold subject to completion). This development has been successfully completed with the support of the bank Raiffeisen and close cooperation between AMC management, the general contractor and architects. Capital Art Apartments The Capital Art Apartments development in Warsaw is a significant development in the Wola district of Warsaw close to the city centre. It is a three stage development which will release 739 apartments in the city with parking and amenities, including retail facilities. This project is being developed in three stages. The first stage was completed in the fourth quarter of 2008. The second stage is in the process of completion and is forecast for completion at the end of 2009. It is currently on track in terms of timelines and cost. Sales of 99 apartments were recognised as income for the first time in 2008. In the first nine months of 2009, a further 106 apartment sales have been recognised as income. Revenue recognised in the first nine months of 2009 was EUR11.2 million and for the fourth quarter of 2008 was EUR13.0 million. The Company has sold to date 205 out of 219 apartments in stage 1, with a further 12 apartments in stage 1 to complete and 167 apartments out of 300 apartments in stage 2 having been pre-sold. Other properties in Poland The Group's portfolio also contains valuable land assets in Warsaw, for which it is acquiring zoning and permits for further development. There are two properties in Warsaw known as Zielono and Cybernetyki, which the Company would like to develop, subject to access to appropriate finance. The land on the Wola site alongside the Hilton and the Platinum Towers office development has received approvals to extend the proposed office building to 32 floors. This is a significant milestone in the development options for this site. The Group also owns two investment properties in Poland. The Millennium Plaza, Warsaw is a major tower property in the city. It has had difficult trading conditions with a declining retail and office market in 2009. It has unoccupied space and has seen rental prices decline. The Sadowa office building, in Gdansk has had no significant changes in occupancy. Hungary In Hungary, the Group portfolio comprises seven properties, all of which are located in Budapest. Five are income producing assets, including the Ikarus Business Park. It is anticipated that some of these properties may be redeveloped in the future. GDP forecasts for the Hungarian economy indicate a decline of 6% in 2009 and it has suffered adversely from the global credit crisis and lack of liquidity available for development projects. As a result, Atlas has stopped development activity and, on its income yielding assets, has experienced client losses and pricing pressures. The weak economy has adversely affected rentals at the Ikarus Business Park with a loss of clients and downward pressure on rental levels. These clients have included suppliers to the automotive industry. The Group continues to actively market the vacant space in its properties in difficult market conditions. Cost control measures have been undertaken. The Atrium Homes development property is a two-stage development. The construction of stage 1 has been delayed due to current economic conditions. Romania The Group's portfolio contains three properties in Romania, including the Golden Tulip Hotel and two significant land banks. The Romanian economy is forecast to decline this year in the range 6% to 8%. This contrasts with the high levels of GDP growth seen in recent years. IMF funding has been provided to support the economy. Forecasts are uncertain as presidential elections are taking place in late 2009 and there is uncertainty if IMF financing conditions will be met. As a result, property values have taken a dramatic fall in 2009. In difficult trading conditions, occupancy rates at the Golden Tulip for the nine months have fallen to 57% in 2009 compared to 64% in 2008. The Group has also undertaken cost control measures to mitigate the current loss of business at the hotel operation. Bulgaria The Group holds one rental property in Sofia. This office building has had no significant changes in tenancies during the period. GDP is forecast to decline by 6% in 2009 and expectations are that the downturn will continue and that IMF funding support will be required. Financial Review With the credit crunch and economic downturn, financial control and tight control of costs and spending have become vital and of even greater importance to the business. As a result corporate governance and financial reporting systems are operated to the highest standards. The continual monitoring of the territories, analysing the economics of the region and the key measures of the sectors in which the Group operates are vital to ensure that it does not become over exposed to, or reliant on, any one particular area. AMC evaluates the risks and rewards associated with a particular country, sector or asset class, in order to optimise the Company's return on investment and therefore the return that the Company is able to deliver to shareholders over the longer term. Loans As at 30 September 2009, the Company's share of bank debt associated with the portfolio of the Group was EUR263 million (30 June 2009: EUR252 million; 31 December 2008: EUR248 million; 30 September 2008: EUR250 million). The increase in debt has arisen principally from the utilisation of construction loans in the development of the Platinum Towers and Capital Art Apartments properties in Warsaw. Total facilities were EUR290 million (30 June 2009: EUR285 million; 31 December 2008: EUR290 million; 30 September 2008: EUR290 million). Loans and valuations for those periods in which valuations were undertaken may be analysed as follows based on the 30 June 2009 and 31 December 2008 valuations and foreign exchange prevailing on 30 September 2009 and 31 December 2008:
construction
sale
The valuations in the table above differ from the values included in the consolidated balance sheet as at 30 September 2009 and 31 December 2008 due to the treatment under IFRS of land held under operating leases and development property. Loans maturing within one year have decreased to EUR146.4 million at 30 September 2009 (excluding those classified as held for sale) from EUR150.5 million at 30 June 2009; EUR95.7 million at 31 December 2008 and EUR31.5 million at 30 September 2008. The change has arisen from the natural ageing of debts and from the reclassification of four loans with breaches at 30 September 2009. Two of these loans, totalling EUR67.1 million, were in breach at 31 December 2008 and were also classified as bank loans and overdrafts due within one year or on demand at 31 December 2008. The Group received a written covenant waiver from its lender during the three months ended 31 March 2009 for the 2008 breach on its debt service coverage ratio on the Millennium and the lender will continue to extend the EUR63.1 million facility. The other two breaches at 30 September 2009 relate to the non payment of interest on loans, for loans totalling EUR25.0 million. The banks have been made aware of all these breaches and have not asked for repayment of the loans. Cash at bank and in hand was EUR9.9 million at 30 September 2009 (30 June 2009: EUR11.7 million; 31 December 2008: EUR15.3 million; 30 September 2008: EUR21.8 million). The gearing ratio is 199%, based upon net debt as a percentage of equity attributable to shareholders and is 67% based upon net debt as a percentage of total capital (net debt plus equity attributable to equity holders).
Review of the Nine and Three Months Ended 30 September 2009 and Valuation of Assets Review of the nine and three months ended 30 September 2009
administrative expenses
administrative expenses %
administrative expenses
administrative expenses % Revenues Total revenues for the nine months ended 30 September 2009 were EUR33.6 million compared to EUR30.0 million for the nine months ended 30 September 2008. The Group's principal revenue streams are property rental income, sales from its hotel operations, and income from the sale of the residential apartments that the Group develops. As the Group maintains a diversified portfolio of real estate investments, seasonality or cyclicality of yielded income or results is also highly diversified. The available portfolio of assets for lease, the systematic execution and sale of residential projects and the geographical reach of the Group's portfolio has, to a significant extent, resulted in stable levels of income being earned. Total revenues include EUR11.2 million relating to residential sales on Capital Art Apartments stage 1, where pre sold apartments have been handed over to clients. Total revenues are EUR22.0 million for income yielding assets including hotels compared to EUR29.7 million for the nine months ended 30 September 2008. This decline represents EUR5.7 million due to the effect of depreciating currencies in the region and EUR2.0 million from weaker trading as a result of the economic decline in the CEE region. Development Properties As of 30 September 2009, the Group had contracted to construct 521 apartments with a total value of EUR68.9 million at its Platinum Towers and Capital Art Apartments projects in Warsaw. By 30 September 2009, 205 apartments had also been completed and sold at the Capital Art Apartments project. The Atrium Homes project in Budapest has been delayed, due to the lack of access to finance. Many of the preliminary contracts on the Atrium Homes developments are from foreign investors and they have expressed an interest in transferring their contracts to the Group's developments in Warsaw, which will be completed this year, while some of the preliminary contracts have been cancelled and deposits returned. Following the completion of construction works on stage 1 at Capital Art Apartments in the fourth quarter of 2008, the Group is continuing to recognise revenue on its development properties. These buildings include 219 apartments, of which 217 have been pre-sold to date. As mentioned above, by 30 September 2009, 205 of these apartments had been handed over to purchasers, with the full price of the apartment received by the Group. As a result, in accordance with the Group's accounting policy, the revenue and associated costs of these apartment sales are recognised in the income statement. Revenue of EUR11.2 million and gross profit of EUR0.6 million have been recognised on the sales of the 106 apartments delivered for stage 1 of Capital Art Apartments during the nine months ended 30 September 2009. Income Producing Assets Revenue from income producing assets has decreased to EUR10.0 million for the nine months ended 30 September 2009, from EUR13.5 million for the same period of 2008. The decrease includes the effect of depreciating currencies in the region of EUR2.4 million. The operational variance in the nine months of 2009 is a decrease of EUR1.1 million. Hotels Revenue from the Group's two hotels (the Warsaw Hilton and the Golden Tulip, Bucharest) decreased to EUR11.9 million for the nine months ended 30 September 2009 from EUR16.2 million for the corresponding period of 2008. The decrease includes the effect of depreciating currencies in the region of EUR3.4 million. The operational variance in the quarter is a decrease of EUR0.9 million. This decrease highlights the effect of the global economic crisis on business travel and conferencing. However, the revenue shortfall has been mitigated to some extent by cost reduction and improved controls. The Hilton in Warsaw has seen occupancy rates lower than for the equivalent period in 2008, with occupancy levels at 62% in 2009 compared to 69% in the first nine months of 2008. The hotel's revenues are enhanced by income from the conferencing and banqueting facilities, together with the high quality Holmes Place fitness centre and the casino. The hotel is regarded as an ideal venue for corporate events in Central and Eastern Europe, with competitive room rates being offered in comparison to other countries in the region. For example, on 25 February 2009, the hotel hosted the Financial Times' Central & Eastern European Property Conference, which attracted more than 1,000 delegates. Occupancy rates at the Golden Tulip Hotel in Bucharest, Romania for the nine months have fallen to 57% in 2009 compared to 64% in 2008 in difficult trading conditions. Cost of operations Cost of operations was EUR22.4 million in the nine months ended 30 September 2009, of which EUR10.6 million relates to the cost of construction of the apartments sold at Capital Art Apartments during the period. Cost of operations for the first nine months of 2008 was EUR17.9 million, in which there were no costs relating to apartment sales. The resultant decline of EUR6.1 million in costs not relating to apartment sales between 2008 and 2009 includes the effect of depreciating currencies in the region of EUR3.6 million. The underlying cost of operations has decreased by EUR2.5 million, reflecting cost savings implemented by management. Administrative expenses A key focus has been overhead costs. A number of cost reduction measures have been undertaken, including the change of auditors, benchmarking of costs, reducing headcount and negotiating new supplier contracts. As a result we can report that administrative expenses were EUR8.1 million compared to EUR11.8 million in the first nine months of 2008. This decline of EUR3.7 million includes the effect of depreciating currencies in the region of EUR0.9 million. The underlying administrative expenses have decreased by EUR2.8 million, reflecting extensive cost savings implemented by management and the effect of reduced management fees. Other operating income and expenses Other operating income and expenses are items that do not directly relate to the day-to-day activities of the Group. Such items include: income and expenses for items that are recharged to contractors and other suppliers at cost; penalty interest income and expenses; and other such items. Provisions totalling EUR4.9 million have been included, reflecting impairment on the carrying value of assets versus independent valuations. In addition the Group has made a provision for the loss expected to be made on the assets held for sale (the Slovakia Portfolio) in the amount of EUR5.8 million. Finance income and costs The income statement includes finance costs of EUR7.5 million for the nine months ended 30 September 2009, compared with EUR10.2 million in 2008. The decrease in external debt finance resulted from the reduction in EURIBOR and other inter-bank lending rates.. Foreign exchange The results for the first nine months of 2009 have been adversely impacted by the ongoing effects of the depreciating currencies in the Central and Eastern European markets. For the Company's investments in Poland, its major market, the Polish Zloty has depreciated by 1.2% from the 31 December 2008 rate of exchange to 30 September 2009 rate of exchange. The fall in value of the functional currencies has resulted in foreign exchange losses of EUR3.0 million in the income statement (2008: gain of EUR5.2 million) and EUR4.1 million (2008: gain of EUR5.9 million) in reserves for the nine months ended 30 September 2009. A summary of exchange rates by country for average and closing rates against the presentational currency as applied in the financial statements are set out below.
Current rate
Closing rates
Average rates
The above demonstrates the continuing weakening in the underlying currencies during the first nine months of 2009, as the effects of the global financial crisis spread further into the CEE region. Slovakia entered the Euro zone in January 2009. The large foreign exchange losses in the income statement represent exchange losses on bank loans denominated in Euros, which are recorded in the local functional currencies of the individual group companies and then translated into Euros for consolidated financial reporting presentational purposes only. Other than as detailed above, there were no factors or events that significantly impacted the nine months ended 30 September 2009. Net Asset Value The Group's property assets are categorised into three classes, when accounted for in accordance with International Financial Reporting Standards. The recognition of movements in value from each category is subject to different treatment as follows:
AMC fee The Property Manager's basic and performance fees are determined by the Adjusted NAV. For the nine and three months to 30 September 2009 the basic fee payable to AMC was EUR3.2 million and EUR1.1 million respectively (EUR4.29 million and EUR1.43 million, respectively, to 30 September 2008). No accrual has been made for the performance fee because no reliable estimate can be made. This is because the performance measures are determined at year end and are subject to material changes resulting from the external valuations. Ongoing activities During the first nine months of 2009, the Company continued to identify ways by which it can generate added value through the active management of its yielding asset portfolio. It has also continued to crystallise the value of development projects by the pre-selling of apartments under construction and by the completion of development property in the course of construction. The property portfolio is constantly reviewed to ensure it remains in line with the Company's stated strategy of creating a balanced portfolio that will provide: future capital growth; the potential to enhance investment value through active and innovative asset management programmes; and the ability to deliver strong development margins. The management team continuously monitors the territories in which the Company is invested, analysing the economics of the region and the key measures of the sectors in which it operates to ensure that it does not become over-exposed to, or reliant on, any one particular area. At the same time, it evaluates the risks and rewards associated with a particular country, or sector, in order to maximise return on investment and therefore the return to shareholders. A key management objective is controlling and reducing construction costs and schedules at its development projects, particularly in the light of global variations in commodity prices and the increase of labour costs in the region. Another key objective is the refinancing of the portfolio, the securing of construction loans and the evaluation of various fund raising opportunities. Financial management, operational management and material risks The Company has completed three years as a quoted company and is now a dual-listed entity in Warsaw and London. As a result, it is continually improving and developing its financial management and operational infrastructure and capability in order to meet the requirements of a dual listing. Finance reporting and controlling teams have been established in each territory of operation and are supervised by an experienced company finance department. Experienced operational teams are in place in each country and a central operational team and investment committee monitor and control investments and major operational matters. As part of the structural review and in the light of the global economic environment these operating structures are under continuous assessment to provide the most optimal operating structures given the current environment. We continue to enhance our internal control and reporting procedures and IT systems in order to generate appropriate, timely management information for the ongoing assessment of the Company's performance. For this quarter's results we have continued to use the Group's financial reporting system. This was implemented 12 months previously and has been successfully utilised in five successive quarters group reporting. It has provided the Company with more robust reporting systems and improved financial management and control. It is intended to extend this system into other business areas including management reporting, business planning and forecasting. As a result the Company will have a fully integrated financial reporting and management reporting system. Global Economic Conditions The Board and AMC closely monitor the effect on the business of the current global economic conditions and take steps to mitigate any adverse impact on the business. The main financial risks that have affected the Company in 2009 have been the effect of the global liquidity crisis on the Company's ability to access capital and to realise value from property disposals and the weakening in the economies in the CEE region. This has been demonstrated in the rapidly weakening exchange rates of countries in the region. The markets have experienced reduction in demand for new apartments in Poland and Hungary, where we have projects under construction and transactions are taking longer to reach completion. We have been advising the Board on a regular basis with respect to financial performance and the effect of external factors on the business. The Board, through AMC, also regularly review construction costs and the effect on development project profits, particularly given the global variations in commodity prices and the increase of labour costs in the CEE region. The Company is constantly seeking ways to control costs and minimise increases. Financing and liquidity Management is experiencing a change in the approach and requirements of lenders for financing in the CEE region, due to the global banking crisis and weaknesses in the economies in the CEE region. This has resulted in increasing pressure on covenants and the lenders seeking increasing margins, and an increase in levels of required pre-sales on development projects. Negotiation and completion of financing is also taking longer than previously experienced. Although there has been negative news with respect to the willingness of banks in the CEE region to finance projects, AMC's management team, through its strong relationship management and connections, has been able to secure financing opportunities in the region. However, the management team see this as a major risk to the ongoing development of the Company and as a result are devoting significant resource to the management of banking relationships and the monitoring of risk in this area. Despite the difficult conditions in the financial markets the Company has been able to refinance part of its portfolio and secured loans for the construction phase of its development projects. Cash is managed both at local and head office levels, ensuring that rent collection is prompt, surplus cash is suitably invested or distributed to other parts of the Group as necessary and balances are held in the appropriate currency. The allocation of capital and investment decisions are reviewed and approved by local operational management, by the executive team, the central finance and operational teams, by the investment committee of AMC and, finally, by the Board of the Company. This approach provides the Company with a strong risk management framework. Where possible, the Company will use debt facilities to finance the various projects. These facilities will be secured at appropriate times, depending on the nature of the asset - yielding or development. As at 30 September 2009 the Company's share of bank debt associated with the portfolio stood at EUR263.2 million, with cash at bank and in hand of EUR9.9 million. The gearing ratio is 199%, based upon net debt as a percentage of equity attributable to shareholders and is 67% based upon net debt as a percentage of total capital (net debt plus equity attributable to equity holders). We are refinancing properties where valuations have increased, thereby releasing equity for further investment. Currency and foreign exchange Foreign exchange and interest rate exposures are continually monitored. Foreign exchange risk is largely managed at a local level by matching the currency in which income and expenses are transacted and also the currencies of the underlying assets and liabilities. Most of the income from the Company's investment properties is denominated in Euros and our policy is to arrange debt to fund these assets in the same currency. Where possible, the Company looks to match the currency of the flow of income and outgoings. Some expenses are still incurred in local currency and these are planned for in advance. Development of residential projects has created receipts largely denominated in local currencies and funding facilities are arranged accordingly. "Free cash" available for distribution within the Company is identified and appropriate translation mechanisms put in place. Conclusions AMC's key strategic objective is the maximisation of value for the Company's shareholders, which it continues to work towards, despite a more challenging economic backdrop. Its teams located across its network of regional offices are very experienced in the active management of investment and development property and provide the Company with a great deal of valuable local market knowledge and expertise. Excellent progress has been made on our two key development projects in Warsaw, Platinum Towers and Capital Art Apartments. The new debt facilities secured during 2008 and extended into 2009 have provided the additional funding required to progress developments through to completion. The successful completion of the Platinum Towers development in Warsaw on time and to budget is a proud milestone for the Company. The Company's key objectives in the current economic climate remain the minimisation of financial risks, optimising cash retention and operational effectiveness and enhancing the Group's liquidity, which will enable it to continue its portfolio of developments. The Company has a portfolio of strong underlying assets and a development pipeline which offers the potential to deliver shareholder value, the combination of which allows us to look forward with confidence.
Atlas Management Company Limited 16 November 2009
Poland
Hungary
Romania
Bulgaria
INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
CONSOLIDATED INCOME STATEMENT For the nine and three months ended 30 September 2009
investment properties
sale
acquisitions
and (losses) - foreign exchange
taxation
Attributable to:
share - basic (eurocents)
share - diluted (eurocents)
INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the nine and three months ended 30 September 2009
Other comprehensive income:
buildings
adjustments
the period (net of tax)
THE PERIOD
Total comprehensive income
attributable to:
parent Company
INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEET As at 30 September 2009
ASSETS
Non-current assets
Current assets
Current liabilities
Non-current liabilities
EQUITY
Company
INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY As at 30 September 2009
the period
As at 30 September 2009
the period
As at 30 September 2009
the period
differences
the period
period(note 15)
As at 30 September 2008
the year
the year
As at 31 December 2008
INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
CONSOLIDATED CASH FLOW STATEMENT For the nine and three months ended 30 September 2009
operations
operating activities
Investing activities
net of cash acquired
property
and equipment
property, plant and equipment
Net cash used in investing (398) (167) (1,799) (367) activities
Financing activities
partners
minority investors
activities
cash and cash equivalents in the period as a result of cashflows
rates on cash balances
cash and cash equivalents in the period
INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
CONSOLIDATED CASH FLOW STATEMENT - CONTINUED For the nine and three months ended 30 September 2009
the beginning of the period
the end of the period
Cash and cash equivalents
for sale (note 15)
1. Basis of preparation This condensed interim financial information for the nine and three months ended 30 September 2009 has been prepared in accordance with International Accounting Standard No. 34, "Interim Financial Reporting" ("IAS 34"). The financial information has been prepared on a going concern basis and on a historical cost basis as amended by the revaluation of land and buildings and investment property, and financial assets and financial liabilities at amortised cost. Interim financial statements do not contain all information and notes included in annual financial statements; they should therefore be read in conjunction with the audited consolidated financial statements, prepared under IFRS, and notes thereto for the year ended 31 December 2008. The nine month financial results are not necessarily indicative of the full year results. As described in the Chairman's Statement and the Property Manager's Report, the current economic environment remains challenging and the Group has reported a loss before taxation for the nine months ended 30 September 2009 and a significant fall in net asset value as at 30 September 2009. The directors consider that the outlook presents significant challenges in terms of the markets in which the Group operates, the effect of fluctuating exchange rates in the functional currencies of the Group and the availability of bank financing for the Group. As at 30 September 2009 the Group held land and building assets with a market value of EUR444 million, compared to external debt of EUR251 million (both assets and external debt exclude the value of assets held for sale and liabilities associated with them). Subject to the time lag in realising the value in these assets in order to generate cash, this "loan to value" ratio gives a strong indication of the Group's ability to generate sufficient cash in order to meet its financial obligations as they fall due. All land and building assets and associated debts are currently ring-fenced in unique, specific, corporate vehicles. In all cases the market values of the assets held exceed the external debt. This being the case, any repossession by the bank on default of loan terms would clear the outstanding debt and not result in additional finance liabilities for the Company or for the Group. There are also unencumbered assets which could potentially be leveraged to raise additional finance. In the preparation of this condensed interim financial information for the three and nine months ended 30 September 2009, the directors have reclassified four loans totaling EUR92.1 million within the financial statements from non current liabilities to current liabilities as bank loans and overdrafts due within one year or on demand, where covenant breaches or defaults on these loans arose. The banks are aware of the technical breaches and defaults and have not asked for repayment of the loans. Two of these loans, totalling EUR67.7 million, were in breach at 31 December 2008 and were classified as bank loans and overdrafts due within one year or on demand at 31 December 2008. The defaults on the other two loans result from non payment of interest. Loans maturing within one year total EUR146.4 million at 30 September 2009 compared to EUR150.5 million as at 30 June 2009; EUR95.7 million at 31 December 2008 and EUR31.5 million at 30 September 2008. EUR25.0 million of the EUR63.1 million increase from 31 December 2008 relates to the two defaults discussed above. The remaining increase of EUR38.1 million has resulted from the natural ageing of the Group's debt. Discussions are currently in progress with the banks in relation to repayment of certain of these loans. In assessing the going concern basis of preparation of the consolidated interim financial information for the nine and three months ended 30 September 2009, the directors have taken into account the status of current negotiations on loans. These are disclosed in note 14 as part of the bank loans note. The Company has also continued to provide funds to service interest and capital repayments on these loans on behalf of its subsidiary companies. These payments have reduced unrestricted cash resources and may result in the Company and the Group having a shortage of cash resources during the current year. Accordingly, the Company is simultaneously engaged in negotiations with other lenders, pursuing certain asset sales and considering possible financial support from shareholders. The Directors have also taken into account the completion of the disposal of the Group's interests in Slovakia as announced on 3 November 2009. This is discussed in note 15 as part of the assets held for sale. The combined impact of ceasing to consolidate its share of debt in the joint venture and the receipt of the cash consideration has reduced the Group's overall debt by some EUR20.5 million pending any reinvestment of the cash proceeds. The Group's forecasts have been prepared taking into account the economic environment and its challenges and the mitigating factors referred to above. These forecasts take into account reasonably possible changes in 1. Basis of preparation - continued trading performance, potential sales of properties and the future financing of the Group. They show that the Group will have sufficient facilities for its ongoing operations. While there will always remain some inherent uncertainty within the aforementioned cash flow forecasts, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly they continue to adopt the going concern basis in preparing the interim condensed consolidated financial information for the nine and three months ended 30 September 2009. 2. Accounting Policies The accounting policies adopted and methods of computation are consistent with those of the annual financial statements for the year ended 31 December 2008, as described in the annual financial statements for the year ended 31 December 2008. The following standards and interpretations, issued by the IASB or the International Financial Reporting Interpretations Committee ("IFRIC"), are effective for the first time in the current financial year and have been adopted by the Company with no significant impact on its results or financial position. Unless otherwise stated they are applicable from 1 January 2009 and have been endorsed by the European Union:
The following standards and interpretations, issued by the IASB or IFRIC, have not been adopted by the Company as these are not effective for the year 2009. The Company is currently assessing the impact these standards and interpretations will have on the presentation of its results in future periods:
3. Business segments For management purposes, the Group is currently organised into three operating divisions - the ownership and management of investment property, the development and sale of residential property and the ownership and operation of hotels. These divisions are the basis on which the Group reports its primary segment information. Segment information about these businesses for the nine months ended 30 September 2009 and 2008 is presented below:
sale
investment properties
operations
and (losses) - foreign
exchange
545
Tax credit
541
Attributable to
non-controlling interests
equity shareholders
Other segment items
sale
investment properties
operations
and (losses) - foreign
exchange
Tax credit
Attributable to
non-controlling interests
equity shareholders
Other segment items
Segment information about these businesses for the three months ended 30 September 2009 and 2008 is presented below:
sale
investment properties
operations
and (losses) - foreign
exchange
Tax expense
Attributable to
non-controlling interests
equity shareholders
Other segment items
investment properties
operations
and (losses) - foreign
exchange
850
Tax credit
(10)
Attributable to
non-controlling interests
equity shareholders
Other segment items
There are immaterial sales between the operating segments. Unallocated assets represent cash balances and other receivables held by the Company and those of selected sub-holding companies, including related tax balances. Unallocated liabilities include accrued costs within the Company and selected sub-holding companies, including related tax balances.
4.1 Cost of operations
property
and other costs
expenses
costs
4.2 Administrative expenses
services
and other costs
5. Other operating expenses
fees
period On an individual company basis, an estimate has been made of the effective tax rate for the full year and has been applied to the nine and three month results. 7. Dividends
interim dividend for year ended 31 December 2007 of 16.68 eurocents per ordinary share (2008: nil) On 3 March 2008, the Board announced that it had resolved to pay to shareholders a second dividend of 16.68 eurocents per share ("2007 Dividend") for the year ended 31 December 2007. As approved by shareholders at the AGM on 27 June 2008, the Board offered to shareholders the choice of receiving the whole or part of the 2007 Dividend in new fully paid ordinary shares in the Company instead of cash (the "Scrip Dividend Offer"). The Board received acceptances of the Scrip Dividend Offer from holders of 7,478,694 ordinary shares in the Company, which resulted in the issue of 442,979 new ordinary shares (representing 0.945 per cent of the current issued share capital of the Company, excluding shares held in treasury). These shares have been admitted to trading on AIM and WSE. There were no dividends declared or paid in the three and nine months ended 30 September 2009. 8. (Loss) / Earnings per share Basic loss per share is calculated by dividing the loss after tax attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. The weighted average number of shares at 30 September 2009 was 46,852,014 (30 September 2008: 45,511,409). The total number of potential dilutive shares at 30 September 2009 and 2008 was 5,488,118. The outstanding share warrants exercise price exceeds current market value; therefore the warrants are not dilutive. As a result, diluted earnings per share equals basic earnings per share.
Cost or valuation
Accumulated depreciation
sale and shown in current
assets (note 15)
2008
Cost or valuation
Accumulated depreciation
Cost or valuation
Accumulated depreciation
sale and shown in current
assets
Buildings were valued as at 30 June 2009 by qualified professional valuers working for the company of Cushman & Wakefield, Chartered Surveyors, acting in the capacity of External Valuers. All properties were valued on the basis of Market Value and the valuations were carried out in accordance with the RICS Appraisal and Valuation Standards. For all properties, valuations were based on current prices in an active market. No valuation has been performed at 30 September 2009, as the Group undertakes valuations on a semi-annual basis.
expenditure
sale and shown in current
assets (note 15)
The fair value of the Group's investment property at 30 June 2009 has been arrived at on the basis of valuations carried out at that date by Cushman & Wakefield and Colliers International. The valuations, which conform to International Valuation Standards, were arrived at by reference to market evidence of transaction prices for similar properties. No valuation has been performed at 30 September 2009, as the Group undertakes valuations on a semi-annual basis. The Group has pledged investment property of EUR161.0 million (30 June 2009: EUR154.6 million; 31 December 2008: EUR176.9 million; 30 September 2008: EUR200.2 million) to secure certain banking facilities granted to subsidiaries. Borrowings for the value of EUR113.8 million (30 June 2009: EUR114.5 million; 31 December 2008: EUR116.3 million; 30 September 2008: EUR118.6 million) are secured on these investment properties (note 14). 11. Inventories
properties held for resale
for sale and shown in current
assets (note 15)
EUR10.6 million (30 June 2009: EUR7.2 million; 31 December 2008: EUR10.1 million; 30 September 2008: EURnil) of inventories was released to cost of operations in the income statement during the period. EUR4.9 million (30 June 2009: EUR4.8 million; 31 December 2008: EUR0.8 million; 30 September 2008: EURnil) was recognised in other operating expenses during the period in relation to write-down of inventories. EUR5.8 million (30 June 2009, 31 December 2008, 30 September 2008: EURnil) was recognised as a provision for the value of the development land held in Slovakia. All inventories are held at cost with the exception of EUR50.0 million which are held at net realisable value (30 June 2009: EUR55.4 million, 31 December 2008: EUR2.7 million; 30 September 2008: all inventories held at cost). Bank borrowings are secured on land for the value of EUR82.0 million (30 June 2009: EUR69.7 million; 31 December 2008: EUR75.5 million; 30 September 2008: EUR86.2 million) (note 14). 12. Cash and cash equivalents
Cash and cash equivalents
Included in cash and cash equivalents is EUR6.9 million (30 June 2009: EUR6.6 million; 31 December 2008: EUR7.5 million; 30 September 2008: EUR7.0 million) restricted cash relating to restricted proceeds, security and customer deposits. 13. Cash generated from operations
Adjustments for:
plant and equipment
property plant and equipment
acquisitions charged to the
income statement
investment property
sale
payments
Changes in working capital
and other receivables
and other payables
operations
Current
Bank loans and overdrafts due
within one year or on demand
Non-current
Repayable within two years
Repayable within three to five
years
Repayable after five years
with assets classified as held for sale (note 15)
The bank loans are secured on various properties of the Group by way of fixed or floating charges. All land and building assets and associated debts are currently ring-fenced in unique, specific, corporate vehicles. As of 30 September 2009, four loans totaling EUR92.1 million (at 30 June 2009, four loans totaling EUR92.4 million; 31 December 2008, two loans totaling EUR68.7 million; 30 September 2008: EURnil) have been reclassified from non current liabilities to current liabilities as bank loans and overdrafts due within one year or on demand. This resulted from covenant breaches and defaults on these loans that existed and for which the bank had not given a waiver on the breach of covenant at 30 September 2009 and at 31 December 2008. The banks are aware of the technical breaches and defaults and have not asked for repayment of the loans. Two of these loans, totalling EUR67.1 million, were in breach at 31 December 2008 and were classified as bank loans and overdrafts due within one year or on demand at 31 December 2008. The defaults on the other two loans, totalling EUR25.0 million, result from non payment of interest. Loans maturing within one year total EUR146.4 million at 30 September 2009 (excluding those classified as held for sale) compared to EUR150.5 million as at 30 June 2009; EUR95.7 million at 31 December 2008 and EUR31.5 million at 30 September 2008. EUR25.0 million of the EUR63.1 million increase from 31 December 2008 relates to the two defaults discussed above. The remaining increase of EUR38.1 million has resulted from the natural ageing of the Group's debt. Discussions are currently in progress with the banks in relation to repayment of certain of these loans. The fair value of the fixed and floating rate borrowings approximated their carrying values at the balance sheet date, as the impact of marking to market and discounting is not significant. The fair values are based on cash flows discounted using rates based on equivalent fixed and floating rates as at the end of the period.
The Group has successfully negotiated an extension to its EUR24.9 million loan held within the Slovakian joint venture Circle Slovakia s.r.o. The bank has agreed to extend the loan to March 2010. Financial covenants under the revised loan agreement remain unchanged, but under the new terms three months prepayment of interest is required, calculated and paid quarterly thereafter.
The Polish subsidiary Zielono Sp. z o.o. had a land loan due to expire on 31 March 2009 of EUR2.9 million. The lender has agreed to extend the facility to 31 December 2009. Financial covenants under the revised loan agreement remain unchanged, but under the new terms approximately six months prepayment of interest is required. Management are in negotiation with a second bank to provide a construction loan. The Polish subsidiary Atlas Estates (Kokoszki) Sp. z o.o. is still in negotiation concerning terms for the extension of its EUR8.4 million facility. In the current discussions and negotiations the bank has offered to extend the loan to 30 September 2011. Bank loans are denominated in a number of currencies and bear interest based on a variety of interest rates. An analysis of the Group's borrowings by currency:
Bank loans and overdrafts - 30
September 2009
2009
December 2008
September 2008 15. Assets classified as held for sale and directly associated liabilities On 3 November 2009 Atlas signed an agreement for the sale of its entire investment interests throughout Slovakia (the "Slovakia Portfolio"), comprising 1 sites in Bratislava and 2 sites in Kosice. The Group realised EUR8 million in net proceeds from the sale of the Slovakia Portfolio. It is anticipated that the net proceeds will be utilised to fund the development of the Group's remaining assets, with particular focus on the assets located in Warsaw, Poland, where the Group has a strong presence and is likely to realise value from development activity within the next two to three years. This contrasts with the projects in Slovakia, which would have required the investment of large amounts of capital with returns arising in the long term The assets and liabilities directly associated with this sale were separately classified as of 30 September 2009. EUR5.8 million (30 June 2009, 31 December 2008, 30 September 2008: EURnil) was recognised as a provision for the value of the development land held in Slovakia. The major classes of assets and liabilities held for sale were as follows:
classified as held for sale Comparatives in the balance sheet relate to Millennium Plaza in Warsaw, Poland.
The Other Reserves column included in the Consolidated Statement of Changes in Equity includes the Group's Revaluation Reserve, Other Distributable Reserve and Other Reserves. The Revaluation Reserve includes amounts relating to revaluation of properties and the related deferred tax. The Other Distributable Reserve includes amounts relating to cancellation of share premium, shares bought back and cancelled or held in Treasury, and dividends paid. The Other Reserves includes exchange adjustments and the related deferred tax. The Group's Revaluation Reserve and Other Reserves represent unrealised gains and losses and therefore are not distributable.
(c) Key management compensation
directors The Company has appointed AMC to manage its property portfolio. At 30 September 2009 AMC was owned by the RP Capital Group and RI Limited and RI Holdings Limited. In consideration of the services provided, AMC received a management fee of EUR3.16 million and EUR1.09 for the nine and three months ended 30 September 2009 respectively (EUR4.29 million and EUR1.43 million for the nine and three months ended 30 September 2008 respectively). Under the agreement, AMC are entitled to a performance fee based on the increase in value of the properties over the 12 month period to 31 December 2009. No performance fee has been accrued for the nine and three months ended 30 September 2009 (EURnil for the nine and three months ended 30 September 2008) because no reliable estimate can be made. AMC also received EUR0.18 million and EUR0.08 million for nine and three months ended 30 September 2009 respectively (EUR0.3 million and EUR0.1 million for the nine and three months ended 30 September 2008 respectively) in relation to lease agreements for office space in Poland and Hungary. As of 30 September 2009, EUR2.4 million included in current trade and other payables was due to AMC (30 June 2009: EUR2.2 million; 31 December 2008: EUR1.8 million; 30 September 2008: EUR0.4 million).
(e) Under the loan agreement of 30 October 2006 and Assignment Agreement dated 6 May 2009, Kendalside Limited has extended a loan facility of SKK 340,000,000 (EUR11,285,932) to Eastfield Atlas a.s. (previously Slovak Investment and Development a.s.) for the purpose of covering ongoing investment and business expenses. The loan facility is to be repaid before 31 December 2015, and bears interest at a variable rate equal to the sum of EURIBOR and the lender's margin. As at 30 September 2009 the borrower has drawn the loan facility plus associated interest in the 17. Related party transactions - continued (e) amount of EUR1,065,298 (31 December 2008: SKK 25,681,409 (EUR852,467); 30 September 2008: SKK 25,240,794 (EUR833,112)).
(h) Nagar Kaduri & Zmira Ltd and Shasha Transport Ltd, which are also shareholders in Atlas and Shasha Zrt (previously: Atlas Estates Kaduri Shasha Zrt), have extended loan facilities to Atlas and Shasha Zrt for the purpose of covering ongoing investment and business expenses. The loan facility has no repayment date and bears interest at a variable rate equal to the sum of EURIBOR and the lender's margin. As of 30 September 2009 Atlas and Shasha Zrt has drawn the loan facilities plus associated interest in the amount of EUR1,775,548 (31 December 2008: EUR1,700,271; 30 September 2008: EUR1,652,602). 18. Post balance sheet events The market conditions in which the Company is operating and is seeking the renewal of banking facilities remain difficult and the Company has continued to support its subsidiaries within its limited resources. With the exception of the disposal of investments in Slovakia (see note 15), no specific events have occurred which would require any adjustment to the period end balance sheet. 19. Other items 19.1 Information about court proceedings As of 13 November 2009, the Company was not aware of any proceedings instigated before a court, a competent arbitration body or a public administration authority concerning liabilities or receivables of the Company, or its subsidiaries, whose joint value constitutes at least 10% the Company's equity capital. 19.2 Information about Granted Sureties During the nine months ended 30 September 2009, the Company has not granted any sureties (for loans or credit facilities) or guarantees. 19.3 Financial Forecasts No financial forecasts have been published by the Company in relation to the year ended 31 December 2009.
20.1 Substantial shareholdings As of 13 November 2009, the Company's share register indicates that the following shareholders had a direct or indirect interest in 5% or more of its ordinary share capital:
The Company is aware of the following underlying interests in respect of the above:
As at 13 November 2009, the Company had been notified of the following interests in 5% or more of its ordinary share capital; however, to date, the Company has been unable to tie these to its share register. The Company will continue its efforts to identify these shareholders.
20.2 Directors' share interests There have been no changes to the Directors' share interests during the nine months ended 30 September 2009. No Director had any direct interest in the share capital of the Company or any of its subsidiaries during the nine and three months ended 30 September 2009. One Director (Mr Spicer) acquired a beneficial interest in 14,785 shares in the Company in 2007. 20. Other Items - shareholdings - continued 20.3 Other share interests No changes have occurred in the nine and three months ended 30 September 2009 in the number of warrants issued to managing and/or supervisory persons. 21. Principal subsidiary companies and joint ventures The table below lists the current operating companies of the Group. In addition, the Group owns other entities which have no operating activities. All Group companies are consolidated.
No new subsidiary undertakings were acquired and no investments were made in any additional joint ventures during the period ended 30 September 2009. Two new entities were established, one in Hungary and one in Slovakia. On 26 January 2009 the merger of Atlas Estates (Totleben) EOOD and Immobul EOOD, the Group's two Bulgarian subsidiaries, was successfully completed; the resulting entity is Immobul EOOD. On each of 15 January 2009 and 9 February 2009, the Group acquired an additional 5% of the share capital of its Kokoszki subsidiary, Atlas Estates (Kokoszki) 1 Sp. z o.o., for a total cash consideration of PLN 300,000 (EUR71,046). At 30 September 2009, the Group's holding in Atlas Estates (Kokoszki) Sp. z o.o. was 100%. The percentage holdings are consistent across all periods presented except for Atlas Estates (Kokoszki) Sp. z o.o., which was 100% at 30 September 2009, 100% at June 2009; 90% at 31 December 2008 and 75% at 30 September 2008.
SRL
SRL
22. INTERIM CONDENSED NON-CONSOLIDATED FINANCIAL INFORMATION
NON-CONSOLIDATED INCOME STATEMENT For the nine and three months ended 30 September 2009
receivable from subsidiaries
foreign exchange
activities before taxation
22. INTERIM CONDENSED NON-CONSOLIDATED FINANCIAL INFORMATION - CONTINUED
NON-CONSOLIDATED BALANCE SHEET As at 30 September 2009
ASSETS
Non-current assets
Current assets
Current liabilities
EQUITY
share 22. INTERIM CONDENSED NON-CONSOLIDATED FINANCIAL INFORMATION - CONTINUED
NON-CONSOLIDATED STATEMENT OF CHANGES IN EQUITY As at 30 September 2009
the period
September 2009
As at 1 July 2009
the period
the year
2008
the period
22. INTERIM CONDENSED NON-CONSOLIDATED FINANCIAL INFORMATION - CONTINUED
NON-CONSOLIDATED CASH FLOW STATEMENT For the nine and three months ended 30 September 2009
Adjustments for:
payments
Changes in working capital
receivables
and other payables
operating activities
Investing activities
subsidiary undertakings
activities
Financing activities
financing activities
equivalents in the period as a result of cashflows
rates on cash balances
equivalents in the period 22. INTERIM CONDENSED NON-CONSOLIDATED FINANCIAL INFORMATION - CONTINUED
NON-CONSOLIDATED CASH FLOW STATEMENT - CONTINUED
For the nine and three months ended 30 September 2009
the beginning of the period
the end of the period
Cash and cash equivalents
This information is provided by RNS The company news service from the London Stock Exchange END
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RNS Number : 4890C Atlas Estates Ltd 13 November 2009 13 November 2009
ATLAS ESTATES LIMITED Investing Policy Atlas Estates Limited (the "Company") today announces that further to the publication of the new AIM Rules for Companies ("AIM Rules") and the AIM Note for Investing Companies (the "Note"), the Company has reviewed its investing policy as set out in the Company's AIM Admission Document and subsequent prospectus dated 31 January 2008 and is satisfied that its investing policy is compliant with the AIM Rules. For clarity, however, the board of directors of the Company has resolved to re-state its investing policy in the form set out in the Note: Investing Policy "The Company actively invests in a portfolio of real estate assets across a range of property types throughout Central and Eastern Europe (CEE). The Company targets countries within the CEE which possess attractive investment fundamentals including political and economic stability, strong GDP growth and low inflation. The Company may also make investments in countries which attract increasing foreign direct investment from being part of, or from being expected to join, the EU. The Company shall not invest in states of the former USSR. The Company makes investments both on its own and, where appropriate, with joint venture partners in residential, industrial, retail, office and leisure properties in order to create an appropriately balanced portfolio of income-generating properties and development projects. There are no set restrictions on either sector or geographical spread of investments within the Company's stated investment region. The Company may employ leverage to enhance returns on equity although the extent of such leverage will vary on a property by property basis. Wherever possible, the Directors intend to seek financing on a non-recourse, asset by asset basis. The Company has no set limit on its overall level of gearing, however it is anticipated that the Company shall employ a gearing ratio of up to 75 per cent. of the total value of its interest in income-generating properties within its property portfolio. The Company seeks to provide Shareholders with an attractive overall return through a combination of income and long term appreciation of the Company's assets." The Board recognises that the current state of the credit markets and general downturn in the CEE economies in which the Company invests have had a negative effect on the overall value of the Group's portfolio, causing a decline in the Company's net asset value per share. In order for the Company to achieve its long term investing policy, the Board's short term investment strategy for 2009 and 2010 is cash focussed with new development activity in relation to parts of its portfolio being selectively deferred but with current active projects displaying good sales being progressed on time and on budget and being brought to a conclusion to achieve intended returns. No dividends are expected to be paid in the short term.
For further information contact: Company Secretary BNP Paribas Fund Services (Guernsey) Limited Sara Bourne +44 (0)1481 750 858 Nominated Adviser and Broker Fairfax I.S. PLC David Floyd / Rachel Rees +44 (0)20 7598 5368 This information is provided by RNS The company news service from the London Stock Exchange END
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| 03-11-09 | AFX UK Focus |
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LONDON, Nov 3 (Reuters) - Atlas Estates Ltd:
((London Equities Newsroom; +44 20 7542 7717)) (For more news, please click here)
COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. More |
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| 03-11-09 | RNS |
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RNS Number : 8450B Atlas Estates Ltd 03 November 2009 3 November 2009 Atlas Estates Limited Sale of Atlas investments in Slovakia Atlas Estates Limited (the "Company" or "Atlas") has investments in a portfolio of real estate properties in Central and Eastern Europe which are owned by subsidiary companies and joint ventures (the "Group"). The Group's portfolio currently comprises 23 properties including 12 investment properties (of which eight are income yielding properties and four are held for capital appreciation) two hotels and nine development properties. Atlas announces today that it has signed with Pottertry Limited with its seat registered in Cyprus an agreement for the sale of its entire long-term investment interests throughout Slovakia (the "Slovakia Portfolio") comprising a 50 per cent joint venture interest with a local partner (the "Slovakia JV") in three mixed use development sites as described in further detail below. Before the sale, Atlas held an interest of 50 per cent in the Slovakian Portfolio authorising Atlas to 50% of the votes at the general meeting of the entity. The Group will realise EUR8 million in net proceeds from the sale of the Slovakia Portfolio, to be received by the group within 75 days from today. The combined impact of ceasing to consolidate its share of debt in the Slovakia JV and the receipt of the cash consideration will reduce the Group's overall debt by some EUR20.5 million pending any reinvestment of the cash proceeds. The Board intends to utilise the net proceeds of the sale of the Slovakia Portfolio to fund the development of its remaining assets, with particular focus on the assets located in Warsaw, Poland, where the Group has a strong presence and is likely to realise value from development activity within the next two to three years. This contrasts with the Slovakia Portfolio, which would have required the investment of large amounts of additional capital with any potential returns likely to arise in the long term. The assets held by the Slovakia JV are located in Slovakia's capital, Bratislava, and its second largest city, Kosice. The investment in Bratislava comprises 879,000 square metres of land on the outskirts of the city, known as Nove Vajnory. The investments in the centre of Kosice, comprise two sites with a total of 10,000 square metres of developable land. The undeveloped land held by the Slovakia JV has a total book value of EUR56m and related debt and other liabilities of EUR28.6m. Accordingly the net book value attributable to the Slovakia Portfolio is EUR13.7 million, which represents 11 per cent of the Group's net assets as at 30 June 2009. The consideration payable for the Slovakia Portfolio equates to a gross valuation of the Slovakia JV's assets of EUR44.6 million (representing a discount of 20 per cent. to its book value as at 30 June 2009) and lead to a loss on the disposal of EUR5.7 million. The Slovakia JV does not generate any material income or expense apart from interest payable on loans of which amounted to EUR1,955,976 during the year ended 31 December 2008. This is not considered a related party transaction between Atlas and the purchasing party. Atlas recognises this sale as significant for its capital group due to the value of the sale as well as due to the fact that following the sale it will not hold any interest in Slovakia. Quentin Spicer, Chairman of Atlas Estates Limited commented "The Board is pleased to announce the completion of this transaction, as it realises funds tied up in a very difficult market. This will enable the Group to invest in projects to deliver value in the near term and to reduce total debt across the Group."
Further information, please contact:
Michael Williamson
Bourne
This information is provided by RNS The company news service from the London Stock Exchange END
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i've shorted but there seems to be so low volumes and quite a lot of manipulation going on.
When some of the holders realise that this company is in a bit of trouble - Im sure they will all be selling. Main problem is it seems to be held by a group of buddies - there are one and half pages of related party disclosures in the recent statements - with all this money flowing around its not quite that clear whether the shareholder is getting a benefit. Further they are even lending money to minority shareholders - not quite sure at what interest rates this money is being lent at. More | View thread (1) | Respond | Login to Vote up | Login to Vote down |
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Any ideas what is going on with the share price ? Tiny volumes and massive movements in the price. Beware people, I've learnt the hard way, low volume
AIM companies are subject to a lot of nonsense movement and you can lose quite a lot of money quickly. More | View thread (3) | Respond | Login to Vote up | Login to Vote down |
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I'm staying away. Don't understand what they are doing and not impressed with the management actions (delisting.. oh no we're not - selling a major investment - oh no we're not). Commercial real estate looks a suicidal choice at the moment.
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Strange share this one isn't it? went up x4 for nothing.. now dropping like a stone. was kicking myself that I never bought at sub 20p in the end .. if anything this rise and fall has convinced me of the actual merits of the share. I'm waiting to get in again.. probably around 25p. What about you? Do you think sub 20p could be on the cards again?? NN
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