Preliminary Results
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Date: |
11 May 2011 |
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On behalf of: |
Carpathian PLC ("Carpathian", the "Company" or the "Group") |
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Embargoed until: |
0700hrs |
Carpathian PLC
Preliminary results for the year ended 31 December 2010
Carpathian PLC (AIM: CPT), the commercial property investment company focused on retail properties within Central and Eastern Europe, today announces its preliminary results for the year ended 31 December 2010.
Financial Highlights
- Profit after tax of €15 million (2009: loss after tax of €104.5 million)
- Earnings per share of 6.5 euro cents for the year (2009: loss per share of 45 euro cents)
- Net Asset Value per share of 39.1 euro cents (32.6 euro cents as at 31 December 2009)
- Adjusted loss after tax* of €0.2 million (2009: adjusted profit after tax of €3.5 million)
- Net rental income of €22.2 million (2009: €27.5 million)
- Total cash of €26.8 million as at 31 December 2010 (as at 31 December 2009: €39.9 million) and €38.9 million as at 31 March 2011
- Group uncommitted cash of approximately €19.1 million as at 31 March 2011, equating to approximately 8.2 euro cents per share
- The non-core Plaza portfolio of four shopping centres and the Antana logistics warehouse in Hungary met the criteria for derecognition from the Group's consolidated financial statements and were no longer consolidated as of 31 March 2010 and 30 June 2010 respectively. The consolidated profit on derecognition of these non-core investments was €5.3 million.
*Adjusted profit and loss after tax and adjusted earnings per share exclude fair value, deferred tax, disposal, derecognition and foreign exchange adjustments
Operational Highlights
- In line with the Company's revised business strategy, four property sales were completed within the core portfolio representing 88% of its year end valuation as described below.
- The sale of the Agrokor portfolio of six supermarkets in Croatia completed on 1 December 2010. As announced on 24 November 2010, the portfolio was sold for a total consideration of €45 million plus a small adjustment for net working capital. After repayments to Erste Bank and transaction costs, approximately €3.5 million was realised before any corporate taxation from the sale, of which approximately €1.1 million is to be retained for six months to cover the purchaser against any liabilities arising through misrepresentations by the vendor.
- As announced on 9 March 2011, three out of the four properties in the Blue Knight portfolio of assets in Poland have been sold for a gross consideration of €40.2 million. The initial net equity amount realised and to be transferred from Poland to the Company from the partial Blue Knight sale will be approximately €7.6 million. The financing bank, Deutsche Pfandbriefbank ('DPB') retained approximately €9.4 million in addition to the allocated loan amount of approximately €22 million to cover an additional loan repayment against the fourth property in Gdansk of €7.9 million and the Babilonas shopping centre of €0.9 million as agreed during the DPB debt restructuring in June 2009 and a further €0.6 million loan repayment agreed in connection with obtaining their consent for the corporate restructuring which is intended to deliver substantial tax benefits to the Group.
- The Promenada shopping centre in Warsaw, Poland has been sold for a gross consideration of €169.5 million as announced on 6 May 2011. This price was subject to a net deduction of €1 million arising principally from payments for insurance and modification of the of the trademark license. An escrow account has been established of €0.6 million, the majority of which is expected to be recovered within six months from closing. Carpathian also expects to receive additional consideration of €1.5 million as and when the VAT is reimbursed to the purchaser. The total bank debt and related fees payable to DPB is approximately €108.1 million, which includes a loan repayment of €0.9 million against the Gdansk property and an additional €2.3 million against the Babilonas shopping centre in Lithuania and a further €0.2 million repayment in relation to the corporate restructuring. The initial net closing payment was €59.8 million, while the net equity to be realised from the sale after transaction costs is approximately €58 million to €59.5 million depending on the receipt of the additional VAT consideration as described above.
- The single tenanted property in Slupsk, Poland was sold for a consideration of €0.75 million on 18 April 2011. The property had no external debt and the net equity proceeds after transaction costs are approximately €0.7 million.
- The last remaining asset of the Blue Knight portfolio - Osowa shopping centre in Gdansk - is under offer with the Preliminary Sale Agreement signed, as announced on 31 March 2011. The centre is being sold for a consideration of €34.5 million and is subject to a €3 million retention based on resolving questions related to the occupancy permit. The transaction is anticipated to close by the end of May 2011.
- Other core properties of Carpathian such as the Macromall Centre and Satu Mare development land in Romania are in varying phases of sales processes.
- In line with the conclusions of the Strategic Review completed in January 2010, the Board intends to distribute the cash received from asset sales to shareholders. Assuming the above transactions proceed as contemplated, the Board intends that the Company should distribute at least 5 euro cents per share by 30 September 2011. In addition, a further and more substantial distribution is intended to be made towards the end of the fourth quarter of this year.
- A new portfolio management agreement has been in place from 1 March 2010 with a fixed termination date of 31 December 2011, designed to incentivise the property investment adviser to focus on delivering the Company's revised strategy of maximising shareholder value in the short to medium-term in addition to achieving significant administrative cost savings for the Company.
- The Board of Carpathian has changed the designation of Babilonas Shopping Centre in Lithuania from a non-core to a core investment property based on the improvement of the overall asset performance in 2010 and the pre-agreed debt repayments amounting to a total of €3 million to be made from the sale proceeds of the Blue Knight portfolio and Promenada Shopping Centre in 2011.
- As announced on 7 May 2010, a new financing structure and debt arrangement was put in place which permitted completion of the prime city centre retail scheme in Riga, Latvia. As a result, this project is now open and trading although it is currently underperforming and may require further capital investment to attract key tenants.
- Carpathian disposed of certain subsidiaries holding the non-core developments of Arad Shopping Centre and Cluj development land and the Romanian development management platform to related parties for a nominal sum as announced on 23 March 2010. In addition, Carpathian disposed of the non-core Plaza portfolio in Hungary to the financing bank of MKB Zrt. in Hungary on 19 April 2011.
Rory Macnamara, Non-executive Chairman of Carpathian, said:
"During 2010 and this year, we have made substantial steps towards the successful completion of our value realisation programme from the core portfolio in line with the revised strategy of the Company. We are also within the targets set for minimising administrative expenses and optimising overall tax liabilities from the sales.
"As a result, we are able to announce an intention to distribute at least a further 5 euro cents per share by 30 September 2011, and are aiming to make a further and more substantial distribution before the end of 2011. We will continue to maintain only the cash levels within the Group needed to meet essential operational requirements and future termination costs."
-Ends-
Enquiries:
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Carpathian PLC |
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Rory Macnamara, Non-executive Chairman |
Via Redleaf Polhill Communications |
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CPT LLP |
020 7529 6413 |
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Paul Rogers/Balazs Csepreg |
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Collins Stewart Europe Limited |
020 7523 8350 |
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Bruce Garrow |
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Redleaf Polhill Communications |
020 7566 6700 |
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Alicia Jennings/Anna Dunkin |
Notes to Editors
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Carpathian was created in 2005 for the purpose of investing in Central and Eastern European commercial real estate. |
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Carpathian's primary focus is on shopping centres, supermarkets and retail warehousing in Croatia, the Czech Republic, Hungary, Poland, Romania, Lithuania and Latvia. |
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Carpathian was admitted to trading on AIM in July 2005. |
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CPT LLP is the Property Investment Adviser to Carpathian. CPT LLP owns 100% of Carpathian Asset Management Limited ("CAM"). CAM, which was previously owned as to 50% by the Company, became fully externalised when the Company and CPT LLP implemented the new portfolio management agreement on 1 March 2010. CAM, together with its parent undertaking, CPT LLP, is responsible for managing the core portfolio of assets and transactions within Central and Eastern Europe.
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Chairman's Statement
I am pleased to report that during 2010, the Company made substantial progress towards achieving its business objectives of realising value from its core portfolio while reducing operating expenses as far as possible as set out in its Strategic Review completed in January 2010.
During this period our investment market in Central Europe continued its slow recovery from the wider economic crisis, with Poland remaining the strongest economy within the region.
Financial results
In 2010, the Group's net rental and related income was €22.2 million (2009: €27.5 million). This is in line with our expectations, and the variance from 2009 was driven by the derecognition of the non-core assets of the Plaza portfolio and the Antana retail warehouse in Hungary as described below.
The adjusted loss after tax excluding any fair value, deferred tax, disposal, derecognition and foreign exchange movements, for the year was €0.2 million, compared to an adjusted profit of €3.5 million for the same period a year earlier. The main contributors to this decrease are the corporate restructuring costs of the Polish portfolio and due diligence costs relating to future sales. These costs combined with the reduced net rental and related income resulted in a net profit before tax of €0.6 million. In addition, the Group had a net tax credit balance of €1 million in 2009, arising from a refund in respect of prior years, while the tax expense for 2010 is approximately €0.8 million.
The adjusted earnings per share are nil euro cents (2009: adjusted earnings of 1.5 euro cents).
Profit after tax is €15 million for the year, while the Group generated a loss of €104.5 million during 2009. Earnings per share are 6.5 euro cents (2009: negative earnings per share of 45 euro cents).
The disposal of the non-core Atrium JV developments of Arad Shopping Centre and the Cluj development land in Romania in March 2010 resulted in an accounting profit of €23.1 million following the elimination of debt less asset value from the balance sheet.
During 2010, the Plaza portfolio of four shopping centres and the Antana logistic warehouse (all located in Hungary) were derecognised as at 31 March 2010 and 30 June 2010 respectively from the Group's consolidated financial statements. The economic risks and rewards of the ownership of these assets are no longer within the Group. The profit realised from the derecognition of the Plaza portfolio was €8.9 million, while the loss on the derecognition of the Antana asset was €3.6 million.
Administrative expenses in 2010 were €6 million (2009: €5.4 million). The administrative expenses for the year included one-off items relating to the sold and derecognised assets, and corporate restructurings of approximately €0.6 million. The restructuring of various group companies is expected to deliver substantial reductions in corporate income tax liabilities from the sales of the core property portfolio.
The expenses relating to the Property Investment Adviser decreased from €6.4 million in 2009 to €4.1 million in 2010 - below the maximum amount set out by the Property Management Agreement. This expense is allocated substantially within property operating expenses in the consolidated statement of comprehensive income (or consolidated profit and loss statement).
The Group's net asset value per share is 39.1 euro cents as at 31 December 2010 (as at 31 December 2009: 32.6 euro cents) based on the latest independent property valuations as at 31 December 2010. This valuation has remained materially the same as the previous year end valuation on a like-for-like basis.
Total Group cash as at 31 December 2010 was €26.8 million (as at 31 December 2009: €39.9 million) and €38.9 million as at 31 March 2011. The Group's uncommitted cash position as at 31 March 2011 was approximately €19.1 million equating to approximately 8.2 euro cents per share. The previously reported uncommitted cash position was €15.1 million as at 13 August 2010. The increase is due mainly to the completed sales of three of the assets from the Blue Knight portfolio.
The Group's consolidated debt position was €221.3 million (as at 31 December 2009: €364.8 million), a decrease of €143.5 million from a year before. Further detail on the Group's debt facilities can be found in the Property Investment Adviser's Report.
The deferred tax expense for the year amounts to €5.5 million (2009: €3.0 million credit). This mainly arises from expenses accrued on the Promenada property and the Blue Knight portfolio both located in Poland. Deferred tax is provided on the excess of the fair values of the investment properties over their corresponding tax base values. Whilst fair values have not changed materially during the year as described above, the excess has increased as a result of the tax depreciation.
Key achievements for the year and post year-end events
In line with the priorities set out in the Strategic Review, the Company has disposed of four core investment assets and portfolios representing approximately 88% of the overall value of the core investment portfolio as at 31 December 2010. We are also in an advanced stage of completing the sale of the last core investment property of Gdansk in Poland, and the sale of Macromall Centre in Romania is in a due diligence phase with a buyer identified and non-refundable deposit paid.
The total headline price for the assets sold was approximately €257 million against the independent valuation of approximately €260 million as at 31 December 2010.
The sale of the Agrokor portfolio of six supermarkets in Croatia was completed on 1 December 2010. As announced on 24 November 2010, the portfolio was sold for a total consideration of €45 million plus a small adjustment for net working capital. After repayments to Erste bank and transaction costs, approximately €3.5 million was realised before any corporate taxation from the sale of which approximately €1.1 million will be retained for six months to cover the purchaser against any liabilities arising through misrepresentations by the vendor.
As announced on 9 March 2011, three out of the four properties in the Blue Knight portfolio of assets in Poland have been sold for a gross consideration of €40.2 million. The initial net equity amount realised and to be transferred from Poland to the Company from the partial Blue Knight sale will be approximately €7.6 million. The financing bank, Deutsche Pfandbriefbank ('DPB') retained approximately €9.4 million in addition to the allocated loan amount of approximately €22 million to cover an additional loan repayment against the fourth property in Gdansk of €7.9 million and the Babilonas shopping centre of €0.9 million as agreed during the DPB debt restructuring in June 2009 and a further €0.6 million loan repayment agreed in connection with obtaining their consent for the corporate restructuring which is intended to deliver substantial tax benefits to the Group.
The Promenada shopping centre in Warsaw, Poland has been sold for a gross consideration of €169.5 million as announced on 6 May 2011. This price was subject to a net deduction of €1 million arising principally from payments for insurance and modification of the trademark license. An escrow account has been established of €0.6 million, the majority of which is expected to be recovered within six months from closing. Carpathian also expects to receive additional consideration of €1.5 million as and when the VAT is reimbursed to the purchaser. The total bank debt and related fees payable to DPB is approximately €108.1 million, which includes a loan repayment of €0.9 million against the Gdansk property and an additional €2.3 million against the Babilonas shopping centre in Lithuania and a further €0.2 million repayment in relation to the corporate restructuring. The initial net closing payment was €59.8 million, while the net equity to be realised from the sale after transaction costs is approximately €58 million to €59.5 million depending on the receipt of the additional VAT consideration as described above.
The single tenanted property in Slupsk, Poland was sold for a consideration of €0.75 million on 18 April 2011. The property had no external debt and the net equity proceeds after transaction costs are approximately €0.7 million.
The last remaining asset of the Blue Knight portfolio - Osowa shopping centre in Gdansk - is under offer with the Preliminary Sale Agreement signed, as announced on 31 March 2011. The centre is being sold for a consideration of €34.5 million and is subject to a €3 million retention based on resolving questions related to the occupancy permit. The transaction is anticipated to close by the end of May 2011.
The cash realised from the above and forthcoming sales will need to be repatriated from the asset owning companies in the respective jurisdictions to Carpathian PLC. We have been progressing a corporate restructuring in order to facilitate this repatriation and optimise the corresponding tax liabilities in all of our jurisdictions. This process requires several months to complete - so far progress made is in line with our plans.
The Babilonas Centre in Lithuania has been reclassified from a non-core to a core asset from 1 April 2011 based on the improvement of overall performance in 2011 and the pre-agreed debt repayments amounting to €3 million to be made following the sales of the Blue Knight portfolio and Promenada Shopping Centre as described above.
Our development joint venture relating to the Riga shopping centre in Latvia has a new financing structure and debt arrangement as announced on 7 May 2010. This project is now completed, open and trading. This retail scheme is currently underperforming and may require further capital investment to attract key tenants.
Carpathian also sold certain subsidiaries holding the non-core developments of Arad Shopping Centre and Cluj development land and the Romanian development management platform to related parties for a nominal sum as announced on 23 March 2010. All debt obligations of approximately €51.7 million encumbering these non-core development assets were taken on by the acquirer. In addition, Carpathian disposed of the non-core Plaza portfolio in Hungary to the financing bank of MKB Zrt. in Hungary on 19 April 2011.
These sales transactions and derecognitions enable the Company to focus on the remaining core investment and development assets and further reduce administrative and management costs. The analysis of the individual asset performance can be found in the Property Investment Adviser's report.
The new portfolio management agreement was signed on 1 March 2010 and expires on 31 December 2011 with the Company's Property Investment Adviser, CPT LLP. This agreement incentivises the existing management team to achieve higher short-term returns to shareholders through performance related compensation in relation to the realisation of the Company's core portfolio of assets.
Dividend
In line with the business plan set by the Strategic Review in January 2010, the Company intends to distribute the cash received from asset sales to shareholders. Based on the progress made following the above transactions and the transfer of the net proceeds through various jurisdictions to the holding company, Carpathian intends to distribute at least 5 euro cents per share by 30 September 2011. In addition, the Company aims to make a further and more substantial distribution before the end of 2011. However, the Board needs to further define the liquidity requirements for the Company and the remainder of the core portfolio before the amount can be finally determined.
Note on going concern
The Board continues to focus on value preservation and realisation of its remaining core investment portfolio together with reduction of its cost base, in order to maximise cash returns to shareholders.
The Board has reviewed a detailed cash flow and underlying assumptions for the period until the end of 2012, which projects that the Group and Company have adequate resources for that period.
During that period the Company must focus upon its operational efficiencies and maintain income streams, with the intention of returning cash from asset sales to shareholders (with distributions planned to be made shortly after the receipt of significant proceeds), having due regard to the requirement to maintain sufficient liquidity within the Group to successfully execute its business plan.
All investment properties continue to generate positive cash flows, with cash sweeps operating in favour of the banks. Marketing of the properties continues, but in the event that sales are not achieved by 31 December 2011 there is nothing to currently suggest that the facilities will not be extended.
In the view of the Board and its Property Investment Adviser, the Company's remaining core investment and development portfolio retain enduring equity value. A number of assets are subject to sustainable loan facilities and the Group has cash reserves that may be used prudently to maintain the asset base.
Since 31 December 2010 the Group has repaid €136.8 million of its bank loans.
The Group is also exposed to a number of risks, including interest rate risk, currency risk, market risk, credit risk and liquidity risk.
The Board has overall responsibility for establishment and oversight of the Group's risk management framework. It oversees how management monitors compliance with the Group's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.
The Group's risk management policies are established, in conjunction with the Property Investment Adviser, to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities.
The Directors recognise that these circumstances represent an uncertainty that casts doubt upon the Group's and Company's ability to continue as a going concern. However after making suitable enquiries and based upon the factors described above and in particular the agreements with its lending banks, as described in the review of debt financing contained in the Property Investment Adviser's Report, the Directors have a reasonable expectation that the Group and Company have adequate resources to continue their operations for at least the next 18 months. For these reasons, the Directors continue to adopt the going concern basis in preparing the Annual Report and financial statements.
Board change
Mr Andrew Shepherd resigned as a Non- executive Director of Carpathian with effect from 1 April 2010.
Other corporate matters
At the Annual General Meeting held on 6 August 2010, the Company adopted new Articles of Association, which provides for the creation of new share classes. This allows the Board to issue such shares in separate tranches in respect of future return of cash. Each Shareholder (save for certain Shareholders who will only be able to elect for the dividend option) shall be afforded the opportunity to elect to receive each material return of cash in one of two ways (share buyback or dividend), as further described in the circular dated 14 July 2010 which convened that Annual General Meeting. A copy of this circular is available for download from the Company's website: www.carpathianplc.com
Rory Macnamara
Chairman
10 May 2011
Property Investment Adviser's Report
Overview
The majority of our current investment markets in Central and Eastern Europe ('CEE') emerged from recession in 2010, including Hungary and Lithuania.
Each of the CEE economies is projected to have positive economic growth in 2011. The strongest economy is expected to be Poland (3.7%), while Romania is projected to be the weakest (1.5%).
On the employment front, Latvia and Lithuania are suffering from high unemployment levels - 20% and 18%, respectively - which continue to hinder overall economic growth in those countries. The remaining investment countries such as Poland, Hungary, and Romania have unemployment rates in line with the overall Euro area average of 10%. (Source: IMF)
Property transaction volumes in CEE during the first three quarters of 2010 saw significant increases over the same period in 2009 as investors began to rethink the risks inherent in some of these markets. Poland has emerged in 2010 as the number one destination for investment in CEE, with volumes up over 200% from 2009. (Source: CBRE)
The central theme of institutional investors is to target quality core products and capital cities. This is unlikely to broaden in the near future.
Portfolio valuation as at 31 December 2010 was independently carried out by Colliers International UK plc. This overall portfolio valuation showed a marginal increase of approximately 1% over the previous portfolio valuation as at 31 December 2009 (like-for-like basis). Valuations in Poland increased by approximately 8% from the previous year end, most of which occurred at the Promenada shopping centre in Warsaw due to the sale price coming in €13.5 million higher than last year's valuation figure. All properties that were under offer as at 31 December 2010 have their offer price shown as their year end valuation.
Key events
Our key objective during 2010 was to start to realise value from the core portfolio as agreed by the Board in the Strategic Review completed at the beginning of 2010.
As also described in the Chairman's statement, four property sales transactions were completed within the core portfolio representing 88% of its year end valuation as described below. In addition, the non-core developments of Arad Shopping Centre and Cluj development land, and the Romanian development management platform were sold. 2010 also saw the derecognition of the Plaza portfolio and the Antana property.
The core portfolio sales were all completed generating equity above the minimum thresholds defined by the outcome of the Strategic Review.
More recently in 2011, the Babilonas shopping centre has been reclassified as a core asset with the Board's approval. This is the combined result of better asset performance and loan repayments amounting to €3 million from the sale proceeds of the Promenada shopping centre and the Blue Knight portfolio.
Property management fees charged to the Group by the Property Investment Adviser fell by approximately 36% to €4.1 million for the year ending 31 December 2010 as compared to €6.4 million a year before. This is within the thresholds defined by the new portfolio management agreement agreed in 1 March 2010. This agreement has a fixed termination date of 31 December 2011.
More detail can be found regarding the above transactions in the Chairman's Statement and the portfolio overview below.
Portfolio Overview
Set out below are the key parameters of the portfolio together with the year end valuation figures.
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CORE PORTFOLIO Investment properties 31 Dec 2010 |
Country |
Gross Lettable Area (sqm) |
Loan amount 31 Dec 2010 €'000 |
NOI 31 Dec 2010 €'000 |
Valuation 31 Dec 2010 €'000 |
Status |
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Gdansk-Osowa |
Poland |
13,167 |
20,597 |
2,864 |
34,500 |
Under Offer |
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Lodz-Tulipan |
Poland |
9,589 |
15,292 |
2,400 |
32,200 |
Sold - Mar 11 |
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Sosnowiec - Centrum |
Poland |
2,162 |
2,796 |
354 |
2,750 |
Sold - Mar 11 |
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Torun-Kometa |
Poland |
1,961 |
3,823 |
604 |
7,250 |
Sold - Mar 11 |
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Promenada |
Poland |
53,472 |
103,235 |
10,520 |
171,000 |
Sold - May 11 |
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Biedronka |
Poland |
1,220 |
- |
93 |
750 |
Sold - Apr 11 |
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Macromall |
Romania |
7,748 |
- |
90 |
2,500 |
Under Offer |
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Total |
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89,319 |
145,743 |
16,925 |
250,950* |
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* 31 Dec 2009 valuation (€'000): €234,500
All of the above properties with the exception of Biedronka and Macromall are financed by DPB with a loan expiry date of 31 December 2011.
The second table shows a summary of the key performance indicators of the core investment portfolio as at 31 December 2010. This includes the Agrokor portfolio, which was sold as at 1 December 2010.
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CORE PORTFOLIO Investment properties - 31 December 2010 |
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Weighted average lease expiry |
4.16 years |
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Voids by rental value / % |
€677k / 3% |
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Lease expiries within 1 year (value / no. of leases) |
€2,023k / 89 |
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NOI growth over the last 12 months |
(2)% |
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Number of leases |
412 |
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Year to date income collection |
97% |
The third table shows the core development assets.
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CORE PORTFOLIO Development properties 31 Dec 2010 |
Country |
Land Size (sqm) |
GLA (sqm) |
Lender |
Valuation 31 Dec 2010 €'000 |
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Baia Mare - Land |
Romania |
125,238 |
50,517 |
Equity only |
3,000 |
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Satu Mare - Land |
Romania |
26,759 |
32,112 |
Equity only |
2,100 |
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Total |
151,997 |
82,629 |
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5,100 |
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The NOI in the core portfolio has decreased by 2% due to a loss of €0.4 million of income from the Macromall property in Romania. The top 10 tenants in the core portfolio represent 23% of the total rent paying an annual sum of €4.3 million for the year 2010. The remaining 77% is comprised of 393 tenants paying approximately €14.1 million gross rent per annum.
The Polish properties maintained a steady NOI unchanged from the prior year. The Polish assets were the largest contributors to core NOI in 2010, representing 79% of the total. Within the Polish portfolio, Promenada contributed the most, with an annual NOI in 2010 of €10.5 million, or 50% of core NOI. The Croatian portfolio had an NOI of €4.3 million, which increased 1% over the previous year (after adjusting for its sale in November 2010). The weighted average lease length of the core portfolio is 4.2 years, which is an improvement from 3.5 years at 31 December 2009. This is partly due to the derecognition of Antana, which had a large number of tenants on short-term leases.
The foremost asset of the core portfolio, Promenada, experienced solid growth for the third straight year. NOI increased €0.5 million to €10.5 million, as a result of lease renewals at rents far exceeding previous levels. On target with previously stated expectations, the contracted rental income of the centre is now in excess of €12 million per annum.
As mentioned in the Chairman's Statement, Promenada was sold to a subsidiary of Atrium European Real Estate in May 2011, for a headline figure of €169.5 million subject to a €1.5m top up after recovery of VAT. This price was subject to a net deduction of €1 million arising principally from payments for insurance and modification of the of the trademark license. An escrow account has been established of €0.6 million, the majority of which is expected to be recovered within six months from closing. The net equity to be realised from the sale after transaction costs is approximately €58 to €59.5 million depending on the receipt of the additional VAT consideration as described above.
The Blue Knight portfolio's performance remained stable in 2010. 20 of 28 expiring leases were renewed, representing 16% of total rent. Those renewals achieved rental levels 6% above previous levels. The weighted average lease length of the Blue Knight properties was 4.1 years, which is unchanged from a year ago.
As announced on 9 March 2011, three out of the four properties of the Blue Knight portfolio in Poland have been sold for a gross consideration of €40.2 million. The initial net equity amount realised and to be transferred from Poland to the Company from the partial Blue Knight sale will be approximately €7.6 million.
The Osowa property in Gdansk is also under offer with a preliminary sale agreement executed as announced on 31 March 2011, and the transaction is anticipated to close by the end of May 2011. The centre is being sold for a consideration of €34.5 million and is subject to a €3 million retention based on resolving questions related to the occupancy permit.
We successfully completed the sale of the Slupsk property in Poland for a price of €0.75 million in April 2011.
We also announced earlier that on 1 December 2010, Agrokorwas sold to W.P. Carey for a headline price of €45 million. The net equity to be returned to shareholders is approximately €3.5 million.
The cash realised from the above and forthcoming sales will need to be repatriated from the asset owning companies in the respective jurisdictions to Carpathian PLC. We have been progressing a corporate restructuring in order to facilitate this repatriation and optimise the corresponding deferred tax liabilities in all of our jurisdictions. This process requires several months to complete and so far the progress made is in line with our plans.
The Macromall Shopping Centre, in Brasov, Romania has been hit hard by severe economic conditions in the Romanian economy as a whole. Income has dropped approximately 80% due to increased voids, poor rent payment, and rental rebates or rent-free periods granted to tenants in financial difficulty. This property is also being marketed for sale together with the core development land sites in Romania.
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CORE PORTFOLIO Investment property Non Consolidated Investment |
Country |
Gross Lettable Area (sqm) |
Lender |
Loan amount 31 Dec 2010 €'000 |
Loan Expiry |
Valuation 31 Dec 2010 €'000 |
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Galleria Riga |
Latvia |
30,005 |
Nordea |
60,927* |
Jun-17 |
44,350 |
*Note that as at 31 Dec 10 the €60.9 million debt includes a €1 million short-term overdraft facility. In addition to the stated loan amounts, there is debt to our joint venture partner of €4.4 million, and a two year zero coupon swap of €1.4 million p.a. with the option to extend for another two years. Potential total indebtedness assuming fully drawn loan facilities and maximum swap term is €70.9 million.
Galleria Riga Shopping Centre in downtown Riga, Latvia opened in October 2010. The newly built centre comprises six floors of retail, a restaurant floor and a roof terrace with restaurants and an ice rink. Anchor tenants include Rimi, NS King, Pizza Italia, and Future Invest.
The centre opened with 72% of floor space let of which 40% was trading. By March 2011 the leasing had achieved 74% occupancy, of which 55% was trading and a further 19% signed but not yet open. An additional 1% was under offer.
The achieved NOI to date has been significantly below forecasts due to a combination of vacancy (leading to shortfalls on running and marketing costs) and achieved rents and retailer turnover being below forecasts. The NOI is forecast to increase in the second year of operation as turnover only rents convert to minimum base rents and occupancy continues to grow.
The centre's tenant mix needs improvement by major fashion retailers offering affordable products. Prior to opening, the retailers' strategy was observe the trading performance first or demand substantial landlord contributions upfront. Since opening, there has been further interest from some international brands and discussions are progressing.
The Riga property is not consolidated in the year end results as the owning company is a joint venture partnership and Carpathian PLC does not have majority management control.
|
NON-CORE PORTFOLIO Investment properties 31 Dec 2010 |
Country |
Gross Lettable Area (sqm) |
Lender |
Loan amount 31 Dec 2010 €'000 |
Loan Expiry |
Valuation 31 Dec 2010 €'000 |
|
MID portfolio |
Czech R/ Hungary |
45,370 |
DPB |
53,570 |
Dec-11 |
53,150 |
|
Babilonas** |
Lithuania |
22,429 |
DPB |
22,925 |
Dec-11 |
25,000 |
|
Total |
|
67,799 |
|
76,495 |
|
78,150* |
* 31 Dec 2009 valuation (€'000): €75,000
** The property was moved to the core portfolio from 1 April 2011.
|
NON-CORE PORTFOLIO Investment properties |
|
|
Weighted average lease expiry |
6.89 years |
|
Voids by rental value / % |
€212k / 3% |
|
Lease expiries within 1 year (value / no. of leases) |
€916k / 73 |
|
NOI growth over the last 12 months |
(4)% |
|
Year to Date income collection |
98% |
|
NON-CORE PORTFOLIO Investment properties |
Country |
Gross Lettable Area (sqm) |
Number of Leases |
Voids as % of Total Rental Value |
NOI 31 Dec 2010 €000's |
|
MID portfolio |
Czech R/ Hungary |
45,370 |
34 |
1% |
4,757 |
|
Babilonas** |
Lithuania |
22,219 |
130 |
5% |
1,889 |
|
Total |
|
67,589 |
164 |
3% |
6,646 |
** The property was moved to the core portfolio from 1 April 2011.
In 2010, the non-core assets were reduced considerably due to derecognition of the Plaza portfolio and the Antana Logistics Park. Remaining among the non-core assets are the MID portfolio - consisting of two centres in Czech Republic and two in Hungary - and the Babilonas Centre in Lithuania.
All these properties have full cash sweeps in place to repay the outstanding loans to the financing banks. The properties' cash flows are covering direct management costs but not contributing to the net operating income of the Company.
Among the non-core assets, the top 10 tenants pay €5.2 million, or 73% of the total rent, while the remaining 27% is paid by 152 tenants with combined gross rental income of €2 million per annum.
The MID properties in Czech Republic and Hungary experienced an NOI increase of 3.5% to €4.8 million per annum. Otherwise, no material changes occurred in 2010, although in Hungary there is still pressure from tenants to grant rent reductions.
Babilonas centre in Lithuania improved noticeably in 2010. New centre management helped increase rent collection significantly from 82% in 2009 to 96% in 2010. A number of tenants were granted temporary rent concessions and turnover top-ups in return for settling their arrears. The majority of these concessions are due to expire in 2011, the tenant's rent affordability has improved which makes it unlikely that the rebates will be extended.
A new tenant, New Yorker took over a 960 sqm retail unit in October 2010 and has been trading very well since its opening. This in turn is helping to bring in tenants for the remaining vacant space. The goal of stabilising NOI has been achieved and an increase of 5% to 10% in 2011 is attainable.
Footfall at the centre was down by 4% from 2009, but is up 35% from 2008 and 46% from 2007.
Valuation of the centre has increased 11% from €22.5 million to €25 million, reflecting an increased NOI expectation in 2011 due to expiring rent rebates and decreasing vacancy. The centre has been reclassified from a non-core to a core asset from 1 April 2011 based on the improvement of overall performance in 2011 and the pre-agreed debt repayments amounting to €3 million to be made from the sales proceeds of the Blue Knight portfolio and Promenada Shopping Centre as described above.
The Antana Logistics Park was de-recognised in June 2010 and is no longer included in the financial results.
Carried interest
CPT LLP, the Company's Property Investment Adviser, is entitled to a sales fee of 0.5% of the gross property sale value (including debt but as reduced by certain retentions and warranty claims) for each asset within the core portfolio that is sold, rising to a maximum of 1.0% if no other brokers or agents are engaged on the sale. The sales fee is conditional on equity value being released for the benefit of the Company as part of any disposal and cash received on disposals being made available for distribution to shareholders. Additionally, any payment of the sales fee is pro rata to cash available for return to shareholders arising from the sale on a 50:50 basis until the entire sales fee has been paid in full. If the Portfolio Management Agreement is terminated on a takeover, a fixed fee of €0.7 million will become payable in lieu of any further sales fees. In the event that the core properties are disposed of at their values included in the Statement of Financial Position at 31 December 2010 without any material tax becoming payable, the total sales fee payable is estimated to be €1.3 million.
CPT LLP is also entitled to receive a capital performance payment, based upon actual cash available for return to shareholders. CPT LLP will receive 10% of any return above a distribution available to shareholders in excess of a 17.25 euro cents per share hurdle and 25% of any returns available to shareholders above a 34.5 euro cents per share hurdle. However, to avoid the capital performance payment reducing the 34.5 euro cents per share hurdle below this level following payment, the effective hurdle is set at 36.4 euro cents per share in order to accommodate any capital performance payment. Such capital performance payment shall be payable in cash but accumulated and deferred until the earlier of (i) the completion of the sale of the core portfolio and (ii) the termination of the Portfolio Management Agreement. In the event that the core properties are disposed of at their values included in the Statement of Financial Position at 31 December 2010 without any material tax becoming payable, the total capital performance payment payable is estimated to be €8.0 million.
Please note that the above fees are estimates and their final value could be lower or higher depending on the outcome of future events.
Paul Rogers
Managing Partner
CPT LLP
10 May 2011
Report of the Independent Auditors, KPMG Audit LLC
to the members of Carpathian plc
We have audited the financial statements of Carpathian plc for the year ended 31 December 2010 which comprise the Group and Company Statements of Comprehensive Income, the Group and Company Statements of Financial Position, the Group and Company Statements of Cash Flows and the Group and Company Statements of Changes in Equity and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs).
This report is made solely to the Company's members, as a body. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and Auditor
As explained more fully in the Directors' Responsibilities Statement set out on page 14, the Directors are responsible for the preparation of financial statements that give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements.
Opinion on the financial statements
In our opinion the financial statements:
· give a true and fair view of the state of the Group's and Parent Company's affairs as at 31 December 2010 and of the Group's profit for the year then ended; and
· have been properly prepared in accordance with IFRSs.
KPMG Audit LLC
Chartered Accountants
Heritage Court
41 Athol Street
Douglas
Isle of Man IM99 1HN
10 May 2011
|
|
|
|
|
|
|
|
|
|
Consolidated Statement of Comprehensive Income
|
|
|
|
|
|
|
|
|
for the year ended 31 December 2010 |
|
|
|
|
|
|
|
|
|
|
2010 |
2010 |
2010 |
2009 |
2009 |
2009 |
|
|
Note |
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
|
Gross rental income |
4 |
30,659 |
- |
30,659 |
36,266 |
- |
36,266 |
|
Service charge income |
|
11,287 |
- |
11,287 |
12,872 |
- |
12,872 |
|
Service charge expense |
|
(13,688) |
- |
(13,688) |
(15,742) |
- |
(15,742) |
|
Property operating expenses |
|
(6,482) |
- |
(6,482) |
(7,768) |
- |
(7,768) |
|
Other property income |
5 |
420 |
|
420 |
1,921 |
- |
1,921 |
|
Net rental and related income |
|
22,196 |
- |
22,196 |
27,549 |
- |
27,549 |
|
|
|
|
|
|
|
|
|
|
Changes in fair value of investment property |
10 |
- |
7,872 |
7,872 |
- |
(56,722) |
(56,722) |
|
|
|
|
|
|
|
|
|
|
Profit / (loss) on derecognition of investment properties |
|
- |
5,296 |
5,296 |
- |
(14,053) |
(14,053) |
|
|
|
|
|
|
|
|
|
|
Profit / (loss) on disposal of investment properties |
|
- |
21,574 |
21,574 |
- |
(1,500) |
(1,500) |
|
|
|
|
|
|
|
|
|
|
Impairment of goodwill |
11 |
- |
1,011 |
1,011 |
- |
(3,817) |
(3,817) |
|
|
|
|
|
|
|
|
|
|
Impairment of other investments |
12 |
- |
(11,372) |
(11,372) |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
Impairment of loans receivable |
13 |
- |
(2,000) |
(2,000) |
- |
(32,332) |
(32,332) |
|
|
|
|
|
|
|
|
|
|
Changes in fair value of derivative assets and liabilities |
|
- |
(3,896) |
(3,896) |
- |
(436) |
(436) |
|
|
|
|
|
|
|
|
|
|
Net foreign exchange gain / (loss) |
|
- |
1,553 |
1,553 |
- |
(1,209) |
(1,209) |
|
|
|
|
|
|
|
|
|
|
Administrative expenses |
6 |
(5,974) |
- |
(5,974) |
(5,422) |
- |
(5,422) |
|
|
|
|
|
|
|
|
|
|
Net operating profit / (loss) before net financing expense |
|
16,222 |
20,038 |
36,260 |
22,127 |
(110,069) |
(87,942) |
|
|
|
|
|
|
|
|
|
|
Financial income |
7 |
325 |
- |
325 |
572 |
- |
572 |
|
Financial expense |
7 |
(15,963) |
- |
(15,963) |
(20,124) |
- |
(20,124) |
|
Changes in fair value of interest rate swaps |
7 |
- |
647 |
647 |
- |
(1,029) |
(1,029) |
|
Net financing expense |
|
(15,638) |
647 |
(14,991) |
(19,552) |
(1,029) |
(20,581) |
|
Net profit / (loss) before tax |
|
584 |
20,685 |
21,269 |
2,575 |
(111,098) |
(108,523) |
|
|
|
|
|
|
|
|
|
|
Tax (expense) / credit |
8 |
(774) |
(5,474) |
(6,248) |
968 |
3,089 |
4,057 |
|
|
|
|
|
|
|
|
|
|
Profit / (loss) for the year and total comprehensive income for the year |
|
(190) |
15,211 |
15,021 |
3,543 |
(108,009) |
(104,466) |
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
Equity holders of the Company |
9 |
|
|
15,032 |
|
|
(104,417) |
|
Non-controlling interest |
9 |
|
|
(11) |
|
|
(49) |
|
Basic and diluted earnings per share for profit / (loss) attributable |
|
|
|
|
|||
|
to the equity holders of the Company during the year |
|
|
|
|
|||
|
(expressed as cents per share) |
|
|
|
|
|
|
|
|
Basic earnings per share |
9 |
|
|
6.5 c |
|
|
(45.0) c |
|
Diluted earnings per share |
9 |
|
|
6.5 c |
|
|
(45.0) c |
|
Company Statement of Comprehensive Income
|
|
|
|
|
for the year ended 31 December 2010 |
|
|
|
|
|
|
2010 |
2009 |
|
|
Note |
€'000 |
€'000 |
|
|
|
|
|
|
Revenue |
|
- |
- |
|
|
|
|
|
|
Changes in fair value of derivative assets and liabilities |
|
(4,003) |
(386) |
|
|
|
|
|
|
Impairment of investment in subsidiaries |
|
94,930 |
(95,466) |
|
|
|
|
|
|
Loss on disposal of investments |
|
(28,958) |
(275) |
|
|
|
|
|
|
Net foreign exchange gain |
|
431 |
935 |
|
|
|
|
|
|
Administrative expenses |
6 |
(1,938) |
(2,009) |
|
|
|
|
|
|
Net operating profit / (loss) before net financing income |
|
60,462 |
(97,201) |
|
|
|
|
|
|
Financial income |
7 |
21,566 |
22,629 |
|
|
|
|
|
|
Net financing income |
|
21,566 |
22,629 |
|
|
|
|
|
|
Net profit / (loss) before tax |
|
82,028 |
(74,572) |
|
|
|
|
|
|
Tax expense |
8 |
- |
- |
|
|
|
|
|
|
Profit / (loss) for the year and total comprehensive income for the year |
|
82,028 |
(74,572) |
|
Consolidated Statement of Changes in Equity |
|
|
|
|
|
|
|
for the year ended 31 December 2010 |
|
|
|
|
|
|
|
GROUP |
Note |
Share Capital |
Share Premium |
Non-Controlling Interest |
Retained Earnings |
Total |
|
|
|
|
|
|
|
|
|
Balance as at 1 January 2009 |
|
3,383 |
263,935 |
60 |
(76,748) |
190,630 |
|
Total comprehensive income for the year |
|
|
|
|
|
|
|
Loss for the year |
|
- |
- |
- |
(104,466) |
(104,466) |
|
|
|
|
|
|
|
|
|
Transactions with owners recorded directly to equity |
|
|
|
|
|
|
|
Dividends declared |
22 |
- |
- |
- |
(10,466) |
(10,466) |
|
Loss allocation to non-controlling interest |
|
- |
- |
(49) |
49 |
- |
|
Share premium release |
|
- |
(173,520) |
- |
173,520 |
- |
|
Redenomination of share capital |
18 |
(1,062) |
1,062 |
- |
- |
- |
|
Balance as at 31 December 2009 |
|
2,321 |
91,477 |
11 |
(18,091) |
75,718 |
|
|
|
|
|
|
|
|
|
Balance as at 1 January 2010 |
|
2,321 |
91,477 |
11 |
(18,091) |
75,718 |
|
Total comprehensive income for the year |
|
|
|
|
|
|
|
Profit for the year |
|
- |
- |
- |
15,021 |
15,021 |
|
|
|
|
|
|
|
|
|
Transactions with owners recorded directly to equity |
|
|
|
|
|
|
|
Profit allocation to non-controlling interest |
|
- |
- |
(11) |
11 |
- |
|
Balance as at 31 December 2010 |
|
2,321 |
91,477 |
- |
(3,059) |
90,739 |
|
|
|
|
|
|
|
|
|
Company Statement of Changes in Equity |
|
|
|
|
|
|
for the year ended 31 December 2010 |
|
|
|
|
|
|
COMPANY |
Note |
Share Capital €'000 |
Share Premium €'000 |
Retained Earnings €'000 |
Total €'000 |
|
|
|
|
|
|
|
|
Balance as at 1 January 2009 |
|
3,383 |
263,935 |
(109,899) |
157,419 |
|
Total comprehensive income for the year |
|
|
|
|
|
|
Loss for the year |
|
- |
- |
(74,572) |
(74,572) |
|
|
|
|
|
|
|
|
Transactions with owners recorded directly to equity |
|
|
|
|
|
|
Dividends declared |
22 |
- |
- |
(10,446) |
(10,446) |
|
Redenomination of share capital |
18 |
(1,062) |
1,062 |
- |
- |
|
Share premium release |
|
- |
( 173,520) |
173,520 |
- |
|
Balance as at 31 December 2009 |
|
2,321 |
91,477 |
( 21,397) |
72,401 |
|
|
|
|
|
|
|
|
Balance as at 1 January 2010 |
|
2,321 |
91,477 |
(21,397) |
72,401 |
|
Total comprehensive income for the year |
|
|
|
|
|
|
Profit for the year |
|
- |
- |
82,028 |
82,028 |
|
Balance as at 31 December 2010 |
|
2,321 |
91,477 |
60,631 |
154,429 |
|
Statements of Financial Position |
|
|
|
|
|
|
As at 31 December 2010 |
|
|
|
|
|
|
|
|
2010 |
2010 |
2009 |
2009 |
|
|
Note |
Group |
Company |
Group |
Company |
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
|
ASSETS |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Investment property |
10 |
89,250 |
- |
453,226 |
- |
|
Loan to subsidiary |
|
- |
118,700 |
- |
46,755 |
|
Goodwill |
11 |
6,564 |
- |
7,897 |
- |
|
Other Investments |
12 |
- |
- |
7,452 |
- |
|
Loans receivable |
13 |
- |
- |
3,920 |
- |
|
Deferred tax assets |
14 |
618 |
- |
3,925 |
- |
|
|
|
96,432 |
118,700 |
476,420 |
46,755 |
|
Current assets |
|
|
|
|
|
|
Trade and other receivables |
15 |
7,126 |
17,795 |
12,988 |
13 |
|
Assets held for sale |
16 |
237,900 |
- |
- |
- |
|
Loans receivable |
13 |
- |
- |
2,000 |
- |
|
Cash and cash equivalents |
17 |
26,773 |
14,391 |
39,944 |
28,490 |
|
Financial assets |
|
3,823 |
3,820 |
7,825 |
7,823 |
|
|
|
275,622 |
36,006 |
62,757 |
36,326 |
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
372,054 |
154,706 |
539,177 |
83,081 |
|
EQUITY |
|
|
|
|
|
|
Issued capital |
18 |
2,321 |
2,321 |
2,321 |
2,321 |
|
Share premium |
18 |
91,477 |
91,477 |
91,477 |
91,477 |
|
Retained earnings |
|
(3,059) |
60,631 |
(18,091) |
(21,397) |
|
Total equity attributable to equity holders of the parent |
|
90,739 |
154,429 |
75,707 |
72,401 |
|
|
|
|
|
|
|
|
Non-controlling interest |
|
- |
- |
11 |
- |
|
TOTAL EQUITY |
|
90,739 |
154,429 |
75,718 |
72,401 |
|
LIABILITIES |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
Bank loans |
19 |
- |
- |
262,364 |
- |
|
Other payables |
20 |
19,160 |
- |
27,518 |
- |
|
Deferred tax liabilities |
14 |
21,647 |
- |
24,757 |
- |
|
|
|
40,807 |
- |
314,639 |
- |
|
Current liabilities |
|
|
|
|
|
|
Trade and other payables |
20 |
14,812 |
277 |
28,941 |
234 |
|
Bank loans |
19 |
221,308 |
- |
102,414 |
- |
|
Provisions |
21 |
997 |
- |
2,398 |
- |
|
Dividends payable |
22 |
- |
- |
10,446 |
10,446 |
|
Financial liabilities |
|
3,391 |
- |
4,621 |
- |
|
|
|
240,508 |
277 |
148,820 |
10,680 |
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
281,315 |
277 |
463,459 |
10,680 |
|
|
|
|
|
|
|
|
TOTAL EQUITY AND LIABILITIES |
|
372,054 |
154,706 |
539,177 |
83,081 |
|
|
|
|
|
|
|
|
Statements of Cash Flows |
|
|
|
|
|
|
for the year ended 31 December 2010 |
|
|
|
|
|
|
|
|
2010 |
2010 |
2009 |
2009 |
|
|
Note |
Group |
Company |
Group |
Company |
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
|
|
|
|
|
|
|
|
Cash flows from operating activities |
|
|
|
|
|
|
Cash generated from / (used in) operations |
23 |
18,273 |
(30,511) |
18,832 |
(96,699) |
|
Income taxes paid |
|
(1,014) |
- |
398 |
- |
|
Net cash generated from / (used in) operating activities |
|
17,259 |
(30,511) |
19,230 |
(96,699) |
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
Capital expenditure on investment properties |
|
(178) |
- |
(34,929) |
- |
|
Loan receipts from unconsolidated entities |
|
- |
- |
75 |
- |
|
Cash received on disposal of investment property |
|
2,924 |
- |
- |
- |
|
Cash conceded on derecognition |
|
(2,866) |
|
(1,496) |
|
|
Interest received |
|
283 |
3,873 |
571 |
44,219 |
|
Acquisition of subsidiaries |
|
- |
- |
(4,066) |
- |
|
Loan from subsidiary |
|
- |
22,985 |
- |
34,070 |
|
Net cash generated / (used in) investing activities |
|
163 |
26,858 |
(39,845) |
78,289 |
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
New bank loans raised |
|
- |
- |
30,212 |
- |
|
Interest paid |
|
(16,884) |
- |
(22,257) |
- |
|
Repayments of borrowings |
|
(3,263) |
- |
(11,249) |
- |
|
Dividends paid |
|
(10,446) |
(10,446) |
- |
- |
|
Net cash used in financing activities |
|
(30,593) |
(10,446) |
(3,294) |
- |
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents |
|
(13,171) |
(14,099) |
(23,909) |
(18,410) |
|
Cash and cash equivalents at the beginning of the year |
|
39,944 |
28,490 |
63,853 |
46,900 |
|
Cash and cash equivalents at the end of the year |
17 |
26,773 |
14,391 |
39,944 |
28,490 |
ABBREVIATED Notes to the financial statements
1 General information
Carpathian PLC (the "Company") is a company domiciled and incorporated in the Isle of Man on 2 June 2005 for the purpose of investing in the retail property market in Central and Eastern Europe. On 24 July 2009 the Company re-registered as a company governed by the Isle of Man Companies Act 2006 and redenominated the par value of it's ordinary shares from pounds Sterling 0.01 to Euro 0.01.
The consolidated financial statements include the share capital of the Company denominated in Euro. As from 24 July 2009 the share capital was converted from pounds Sterling, based on the exchange rate prevailing on that date.
The Company's registered address is IOMA House, Hope Street, Douglas, Isle of Man IM1 1AP.
The Company was admitted to the AIM of the London Stock Exchange and commenced trading its shares on 26 July 2005. The Company raised approximately £140 million at listing and a further £100 million in May 2007 (before admission costs).
2 Significant accounting policies
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS's") and its interpretations adopted by the International Accounting Standards Board ("IASB"). Details of the accounting policies adopted by the Group can be found in the financial statements.
Basis of preparation
The functional currency of the consolidated financial statements is the Euro as it is the currency of the primary economic environment in which the Group operates.
The Group applies revised IAS1 Presentation of Financial Statements (2007), which became effective as of 1 January 2009. As a result, the Group presents in the consolidated statement of changes in equity all owner changes in equity, whereas non-owner changes in equity are presented in the consolidated statement of comprehensive income.
The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain assets including the revaluation of investment property and financial instruments. The accounting policies have been consistently applied to the results, gains and losses, assets, liabilities and cash flows of all entities included in the consolidated financial statements.
The preparation of financial statements in conformity with IFRS requires the Directors to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various other factors which are believed to be reasonable under the circumstances, and are reviewed on an ongoing basis; they may have a significant impact on the financial statements, and actual results may differ from these estimates. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision effects both current and future years.
The activities of Group are subject to a number of risk factors. The global financial crisis and the deteriorating economic environment in the jurisdictions within which the Group operates have increased the intensity of these risk factors. The Directors, who are advised by professionally qualified external valuers, consider that the future economic outlook presents specific challenges, in terms of the significant reduction in the volume of property transactions in the jurisdictions within which the Group operates, the significant reduction in the availability of loan finance for property transactions in those jurisdictions, enhanced risk of tenant default and the consequent impact on the valuations of the properties held by the Group.
The financial statements have been prepared on a going concern basis, taking into consideration the level of cash and cash equivalents presently held by the Company. The Directors therefore have a reasonable expectation that the Company will have adequate resources for its continuing operational existence for the foreseeable future, and for these reasons, continue to adopt the going concern basis in preparing the 2010 financial statements.
3 Operating segments
The Group has three reportable segments, as described below, which are the Groups business units. The business units are managed separately because they represent the varying strategic objectives of the Group. For each of these strategic business units the Board reviews internal management accounts on at least a quarterly basis.
The Fund segment comprises the holding companies in Isle of Man and Luxembourg.
Core assets are those which are considered to retain significant enduring equity value, to protect on a prudent basis. All other assets are classified as non-core.
|
|
Consolidated Statement of Comprehensive Income |
2010 |
2010 |
2010 |
2010 |
|
|
|
Fund |
Core |
Non-Core |
Total |
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
|
|
|
|
|
|
|
|
|
Gross rental income |
- |
22,315 |
8,344 |
30,659 |
|
|
Service charge income |
- |
8,469 |
2,818 |
11,287 |
|
|
Service charge expense |
- |
(10,092) |
(3,596) |
(13,688) |
|
|
Property operating expenses |
(3,464) |
(2,318) |
(700) |
(6,482) |
|
|
Other property income |
2 |
307 |
111 |
420 |
|
|
Net rental and related income |
(3,462) |
18,681 |
6,977 |
22,196 |
|
|
|
|
|
|
|
|
|
Changes in fair value of investment property |
- |
4,749 |
3,123 |
7,872 |
|
|
|
|
|
|
|
|
|
Profit on derecognition of investment properties |
- |
- |
5,296 |
5,296 |
|
|
|
|
|
|
|
|
|
Profit / (loss) on sale of investment properties |
(3,499) |
(1,844) |
26,917 |
21,574 |
|
|
|
|
|
|
|
|
|
Impairment of goodwill |
- |
500 |
511 |
1,011 |
|
|
|
|
|
|
|
|
|
Impairment of loans receivable |
- |
- |
(2,000) |
(2,000) |
|
|
|
|
|
|
|
|
|
Impairment of investments in joint ventures |
- |
- |
(11,372) |
(11,372) |
|
|
|
|
|
|
|
|
|
Changes in fair value of derivative assets and liabilities |
(3,877) |
(19) |
- |
(3,896) |
|
|
|
|
|
|
|
|
|
Net foreign exchange gain / (loss) |
(48) |
1,139 |
462 |
1,553 |
|
|
|
|
|
|
|
|
|
Administrative expenses |
(3,158) |
(1,810) |
(1,006) |
(5,974) |
|
|
|
|
|
|
|
|
|
Net operating profit / (loss) before net financing expense |
(14,044) |
21,396 |
28,908 |
36,260 |
|
|
|
|
|
|
|
|
|
Financial income |
139 |
179 |
7 |
325 |
|
|
Financial expense |
(302) |
(10,522) |
(5,139) |
(15,963) |
|
|
Changes in fair value of interest rate swaps |
- |
(31) |
678 |
647 |
|
|
Net financing expense |
(163) |
(10,374) |
(4,454) |
(14,991) |
|
|
|
|
|
|
|
|
|
Net profit / (loss) before tax |
(14,207) |
11,022 |
24,454 |
21,269 |
|
|
|
|
|
|
|
|
|
Current tax |
(78) |
(682) |
(14) |
(774) |
|
|
Deferred tax |
- |
(4,000) |
(1,474) |
(5,474) |
|
|
|
|
|
|
|
|
|
Profit / (loss) for the year and total comprehensive income for the year |
(14,285) |
6,340 |
22,966 |
15,021 |
|
|
Consolidated Statement of Financial Position |
2010 |
2010 |
2010 |
2010 |
|
|
|
Fund |
Core |
Non-Core |
Total |
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
|
|
ASSETS |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
Investment property |
- |
8,350 |
80,900 |
89,250 |
|
|
Goodwill |
- |
6,564 |
- |
6,564 |
|
|
Deferred income tax assets |
- |
538 |
80 |
618 |
|
|
|
- |
15,452 |
80,980 |
96,432 |
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Trade and other receivables |
1,149 |
5,208 |
769 |
7,126 |
|
|
Assets held for sale |
- |
237,900 |
- |
237,900 |
|
|
Cash and cash equivalents |
17,509 |
7,638 |
1,626 |
26,773 |
|
|
Financial assets |
3,821 |
2 |
- |
3,823 |
|
|
|
22,479 |
250,748 |
2,395 |
275,622 |
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
22,479 |
266,200 |
83,375 |
372,054 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
Other payables |
11,809 |
5,312 |
2,039 |
19,160 |
|
|
Deferred income tax liabilities |
- |
20,066 |
1,581 |
21,647 |
|
|
|
11,809 |
25,378 |
3,620 |
40,807 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Trade and other payables |
2,419 |
3,857 |
8,536 |
14,812 |
|
|
Bank loans |
- |
144,884 |
76,424 |
221,308 |
|
|
Provisions |
- |
997 |
- |
997 |
|
|
Financial liabilities |
- |
1,768 |
1,623 |
3,391 |
|
|
|
2,419 |
151,506 |
86,583 |
240,508 |
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
14,228 |
176,884 |
90,203 |
281,315 |
|
|
|
|
|
|
|
|
|
NET ASSETS |
8,251 |
89,316 |
(6,828) |
90,739 |
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued Capital |
|
|
|
2,321 |
|
|
Share Premium |
|
|
|
91,477 |
|
|
Retained Earnings |
|
|
|
(3,059) |
|
|
Total equity attributed to equity holders of the parent |
|
|
|
90,739 |
|
|
|
|
|
|
|
|
|
Non-controlling interest |
|
|
|
- |
|
|
TOTAL EQUITY |
|
|
|
90,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
|
|
Geographical segments |
|
|
|
|
|
||||||||||||||||||||||||
|
|
The Company is incorporated in the Isle of Man but operates in several jurisdictions in mainland Europe. In presenting information on geographical segments revenue is based on geographical location of property. Segment assets are based on the geographical location of the assets. |
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
|
Isle of Man |
Poland |
Hungary |
Czech Republic |
Other jurisdictions |
Total |
|||||||||||||||||||||||
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Revenue |
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Gross rental income |
- |
18,246 |
3,189 |
2,861 |
6,364 |
30,659 |
|||||||||||||||||||||||
|
|
Service charge income |
- |
8,268 |
959 |
787 |
1,273 |
11,287 |
|||||||||||||||||||||||
|
|
Other property income |
- |
309 |
147 |
10 |
(46) |
420 |
|||||||||||||||||||||||
|
|
Total |
- |
26,823 |
4,295 |
3,658 |
7,591 |
42,366 |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Non-current assets |
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Investment property |
- |
750 |
20,900 |
32,250 |
35,350 |
89,250 |
|||||||||||||||||||||||
|
|
Goodwill |
- |
6,422 |
- |
- |
142 |
6,564 |
|||||||||||||||||||||||
|
|
Deferred income tax assets |
- |
468 |
- |
59 |
91 |
618 |
|||||||||||||||||||||||
|
|
Total |
- |
7,640 |
20,900 |
32,309 |
35,583 |
96,432 |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
2010 |
2009 |
|||||||||||||||||||||||
|
4 |
Gross rental income |
|
|
|
|
Group |
Group |
|||||||||||||||||||||||
|
|
|
|
|
|
|
€'000 |
€'000 |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Gross lease payments collected / accrued |
|
|
|
|
30,659 |
36,266 |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
The Group leases out its investment property under operating leases. All operating leases are for terms of 1 - 15 years. |
|||||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||||
|
5 |
Other property income |
|
|
|
|
2010 |
2009 |
|||||||||||||||||||||||
|
|
|
|
|
|
|
€'000 |
€'000 |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Parking revenue |
|
|
|
|
37 |
20 |
|||||||||||||||||||||||
|
|
Penalty interest |
|
|
|
|
44 |
91 |
|||||||||||||||||||||||
|
|
Penalties on early termination of lease agreements |
|
|
|
|
238 |
100 |
|||||||||||||||||||||||
|
|
Ice rink income |
|
|
|
|
64 |
64 |
|||||||||||||||||||||||
|
|
Other property income |
|
|
|
|
117 |
104 |
|||||||||||||||||||||||
|
|
Other corporate income |
|
|
|
|
(80) |
1,542 |
|||||||||||||||||||||||
|
|
|
|
|
|
|
420 |
1,921 |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
6 |
Administrative expenses |
|
|
20010 |
2010 |
2009 |
2009 |
|
||||||||||||||||||||||
|
|
|
|
|
Group |
Company |
Group |
Company |
|
||||||||||||||||||||||
|
|
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
Accounting fees |
|
|
1,122 |
- |
1,021 |
- |
|
||||||||||||||||||||||
|
|
Legal fees |
|
|
765 |
334 |
1,191 |
734 |
|
||||||||||||||||||||||
|
|
Audit fees |
|
|
482 |
211 |
788 |
229 |
|
||||||||||||||||||||||
|
|
Non audit services |
|
|
14 |
14 |
78 |
78 |
|
||||||||||||||||||||||
|
|
Abortive acquisition costs and irrecoverable debts |
|
|
(45) |
- |
131 |
- |
|
||||||||||||||||||||||
|
|
Other administrative expenses |
|
|
751 |
77 |
633 |
91 |
|
||||||||||||||||||||||
|
|
Irrecoverable VAT |
|
|
679 |
- |
170 |
- |
|
||||||||||||||||||||||
|
|
Portfolio management fees |
|
|
577 |
576 |
432 |
432 |
|
||||||||||||||||||||||
|
|
Tax advisory fees |
|
|
157 |
- |
250 |
- |
|
||||||||||||||||||||||
|
|
Consultancy fees |
|
|
803 |
272 |
65 |
- |
|
||||||||||||||||||||||
|
|
Non-executive Directors fees |
|
|
391 |
319 |
312 |
237 |
|
||||||||||||||||||||||
|
|
Custody/trust fees |
|
|
82 |
62 |
85 |
59 |
|
||||||||||||||||||||||
|
|
Public relation fees |
|
|
5 |
- |
4 |
4 |
|
||||||||||||||||||||||
|
|
Bank charges and fees |
|
|
110 |
4 |
121 |
4 |
|
||||||||||||||||||||||
|
|
Nominated advisor fees |
|
|
81 |
69 |
141 |
141 |
|
||||||||||||||||||||||
|
|
|
|
|
5,974 |
1,938 |
5,422 |
2,009 |
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||
|
|
Other administrative expenses include items of a general corporate nature. |
|
|
|
|
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
7 |
Net financing income and expenditure |
|
|
2010 |
2010 |
2009 |
2009 |
|||||||||||||||||||||||
|
|
|
|
|
Group |
Company |
Group |
Company |
|||||||||||||||||||||||
|
|
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
|||||||||||||||||||||||
|
|
Financing income: |
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Interest income from financial institutions |
|
|
325 |
139 |
572 |
392 |
|||||||||||||||||||||||
|
|
Interest income from subsidiary |
|
|
- |
21,427 |
- |
22,228 |
|||||||||||||||||||||||
|
|
Interest income from related party |
|
|
- |
- |
- |
9 |
|||||||||||||||||||||||
|
|
|
|
|
325 |
21,566 |
572 |
22,629 |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Financing expenditure: |
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Net interest expenses on bank borrowings |
|
|
(14,690) |
- |
(19,048) |
- |
|||||||||||||||||||||||
|
|
Finance costs amortised |
|
|
(1,098) |
- |
(966) |
- |
|||||||||||||||||||||||
|
|
Unwinding of unrealised direct issue costs of borrowings |
|
(175) |
- |
(110) |
- |
||||||||||||||||||||||||
|
|
|
|
|
(15,963) |
- |
(20,124) |
- |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Fair value adjustment of interest rate swaps |
|
647 |
- |
(1,029) |
- |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Bank loan interest totaling €nil (2009: €1.4 million) was capitalised on development property. |
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
8 |
Taxation |
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
2010 |
2009 |
|||||||||||||||||||||||
|
|
Recognised in the Statement of Comprehensive Income |
|
|
Group |
Group |
|||||||||||||||||||||||||
|
|
|
|
|
|
|
€'000 |
€'000 |
|||||||||||||||||||||||
|
|
Current tax expense / (credit) |
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Current year |
|
|
|
|
766 |
(168) |
|||||||||||||||||||||||
|
|
Adjustment for prior years |
|
|
|
|
8 |
(800) |
|||||||||||||||||||||||
|
|
|
|
|
|
|
774 |
(968) |
|||||||||||||||||||||||
|
|
Deferred tax credit |
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Origination / (reversal) of temporary differences |
|
|
|
|
5,474 |
(3,089) |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Total tax expense / (credit) in the Statement of Comprehensive Income |
|
6,248 |
(4,057) |
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
The tax rate applicable to the Company in the Isle of Man is 0%. The tax expense of €0.8 million (2009: €1.0 million credit) in respect of current profits and adjustments for prior years represents tax charges on rental income arising in other jurisdictions that is subject to corporate income tax in those jurisdictions at rates in the range 16% to 24% and a Municipal Business tax at the rate of 7.5% in Luxembourg. As all current year tax charges arise in jurisdictions outside the Isle of Man, a full tax rate reconciliation of the relationship between the tax expense and accounting profit has not been included within these financial statements. |
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
9 |
Earnings per share |
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
Basic earnings per share |
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
The calculation of basic earnings per share for the year ended 31 December 2010 was based on the profit attributable to Ordinary Shareholders of €15.0 million (2009: loss €104.4 million) and a weighted average number of Ordinary Shares in issue of 232,148,175 (2009: 232,148,175), calculated as follows: |
|||||||||||||
|
|
|
|
|
|
|
2010 |
2009 |
|||||||
|
|
Profit / (loss) attributable to Ordinary Shareholders |
|
|
|
Group |
Group |
||||||||
|
|
|
|
|
|
|
€'000 |
€'000 |
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
Profit / (loss) for the year |
|
|
|
|
15,021 |
( 104,466) |
|||||||
|
|
Non-controlling interest |
|
|
|
|
11 |
49 |
|||||||
|
|
Profit / (loss) attributable to Ordinary Shareholders |
|
|
|
|
15,032 |
( 104,417) |
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
Weighted average number of Ordinary Shares |
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
2010 |
2009 |
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
Shares in issue at 1 January |
|
|
|
|
232,148,175 |
232,148,175 |
|||||||
|
|
Weighted average number of Ordinary Shares |
|
|
|
232,148,175 |
232,148,175 |
||||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
Basic earnings / (loss) per share |
|
|
|
|
6.5 €,c |
( 45.0) €,c |
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
Diluted earnings per share |
|
|
|
|
|
|
|||||||
|
|
The calculation of diluted earnings per share for the year ended 31 December 2010 was based on the diluted profit attributable to Ordinary Shareholders of £15.0 million (2009: loss €104.4 million) and a weighted average number of Ordinary Shares outstanding during the year ended 31 December 2010 of 232,148,175 (2009: 232,148,175), calculated as follows: |
|||||||||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
Profit / (loss) attributed to Ordinary Shareholders (diluted) |
|
|
|
2010 |
2009 |
||||||||
|
|
|
|
|
|
|
Group |
Group |
|||||||
|
|
|
|
|
|
|
€'000 |
€'000 |
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
Profit / (loss) for the year |
|
|
|
|
15,021 |
( 104,466) |
|||||||
|
|
Non-controlling interest |
|
|
|
|
11 |
49 |
|||||||
|
|
Loss attributable to Ordinary Shareholders |
|
|
|
|
15,032 |
( 104,417) |
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
Weighted average number of Ordinary Shares for the purposes of diluted earnings per share |
2010 |
2009 |
|||||||||||
|
|
|
|
|
|
|
Group |
Group |
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
Weighted average number of Ordinary Shares for the purposes of diluted earnings per share |
232,148,175 |
232,148,175 |
|||||||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
Diluted earnings / (loss) per share |
|
|
|
|
6.5 €,c |
( 45.0) €,c |
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
10 |
Investment property and development property |
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
2010 |
2010 |
|
2009 |
2009 |
|
|||||||
|
|
|
Investment |
Development |
2010 |
Investment |
Development |
2009 |
|||||||
|
|
|
property |
property |
Total |
property |
property |
Total |
|||||||
|
|
|
Group |
Group |
Group |
Group |
Group |
Group |
|||||||
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
Balance at 1 January |
421,877 |
31,350 |
453,227 |
522,477 |
28,678 |
551,155 |
|||||||
|
|
Acquisitions through direct access purchases |
- |
- |
- |
6,512 |
- |
6,512 |
|||||||
|
|
Additions |
- |
177 |
177 |
- |
34,927 |
34,927 |
|||||||
|
|
Disposals |
(46,000) |
(27,300) |
(73,300) |
- |
- |
- |
|||||||
|
|
Derecognition of assets |
(46,950) |
- |
(46,950) |
(82,556) |
- |
(82,556) |
|||||||
|
|
Finance lease obligations |
817 |
- |
817 |
( 90) |
- |
(90) |
|||||||
|
|
Movement in fair value |
6,999 |
873 |
7,872 |
(24,467) |
( 32,255) |
(56,722) |
|||||||
|
|
Assets transferred to held for sale |
(252,593) |
- |
(252,593) |
|
|
|
|||||||
|
|
Balance at 31 December |
84,150 |
5,100 |
89,250 |
421,876 |
31,350 |
453,226 |
|||||||
|
|
|
|
|
|
|
|
|
|||||||
|
|
The fair value of the Group's investment and development property at 31 December 2010 has been arrived at on the basis of a valuation carried out at that date by Colliers CRE, qualified independent valuers with recent experience in the location and category of investment property being valued. Fair value represents the amount at which the assets could be exchanged between a knowledgeable, willing buyer and a knowledgeable, willing seller in an arm's length transaction after proper marketing at the date of the valuation. |
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||
|
|
The Group has pledged its investment properties to secure related interest bearing debt facilities granted to the purchasing entities of such properties. |
|
||||||||||||
|
|
|
|
||||||||||||
|
|
Investment properties at an aggregate value of €nil at 31 December 2010 (2009: €174.2 million) are held under long-term lease arrangements which expire at varying dates between 2080 and 2097. |
|
||||||||||||
|
|
On 11 March 2010, the Company disposed of its investments in and loans receivable from Atrium & Arcadom Holdings BV, Carpathian Mastweight Holdings BV, Mastweight Srl, Redwood Investments Srl and SC Cluj Atrium Center SA for nominal consideration. Together, these companies owned the Group's development properties at Arad and Cluj in Romania. The overall accounting profit on disposal was €23.1 million |
||||||||||||||
|
|
|
||||||||||||||
|
|
On 1 December 2010 the Company disposed of it's investment and loans in Poplar d.o.o., Tehnika Centar Samobor d.o.o., Tehnika Sopot d.o.o., Tehnika Nekretnin d.o.o. and Euroviba Spansko d.o.o. Together these companies owned properties in the Agrokor portfolio in Croatia. The overall accounting loss on disposal was €1.5 million |
||||||||||||||
|
|
|
||||||||||||||
|
|
The net assets / (liabilities) disposed of are detailed below: |
||||||||||||||
|
|
|
||||||||||||||
|
|
|
|
|
Agrokor |
Atrium |
Total |
|||||||||
|
|
|
|
|
€'000 |
€'000 |
€'000 |
|||||||||
|
|
|
|
|
|
|
|
|||||||||
|
|
Assets |
|
|
|
|
|
|||||||||
|
|
Investment property |
|
|
46,000 |
27,300 |
73,300 |
|||||||||
|
|
Trade and other receivables |
|
|
461 |
3,573 |
4,034 |
|||||||||
|
|
Cash and cash equivalents |
|
|
268 |
1,576 |
1,844 |
|||||||||
|
|
Total assets |
|
|
46,729 |
32,449 |
79,178 |
|||||||||
|
|
|
|
|
|
|
|
|||||||||
|
|
Liabilities |
|
|
|
|
|
|||||||||
|
|
Bank loans |
|
|
40,119 |
51,723 |
91,842 |
|||||||||
|
|
Trade and other payables |
|
|
589 |
2,322 |
2,911 |
|||||||||
|
|
Other payables |
|
|
- |
946 |
946 |
|||||||||
|
|
Provisions |
|
|
- |
1,500 |
1,500 |
|||||||||
|
|
Deferred income tax liabilities |
|
|
2,680 |
- |
2,680 |
|||||||||
|
|
Total liabilities |
|
|
43,388 |
56,491 |
99,879 |
|||||||||
|
|
|
|
|
|
|
|
|||||||||
|
|
Net assets / (liabilities) |
|
|
3,341 |
(24,042) |
(20,701) |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
In March 2010 MKB bank took control of the Plaza portfolio and has taken the decision to enforce the sale the properties. Since effective control of the companies has been relinquished by Carpathian PLC, a decision has been made to derecognise these assets as of 31 March 2010. The overall accounting profit on disposal was €8.9 million |
|||||||||
|
|
|
|||||||||
|
|
In June 2010 Barclays bank took control of the Antana property and has taken the decision to enforce a sale. Since effective control of the company has been relinquished by Carpathian PLC, a decision has been made to derecognise these assets as of 30 June 2010. The overall accounting loss on disposal was €3.6 million |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The individual statements of financial position of the derecognised entities, at the date of derecognition, are detailed below: |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plaza |
Plaza |
Plaza |
Plaza |
Plaza |
|
|
|
|
|
|
|
Szombat |
Szombathely |
Balaton |
Veszprem |
Soplaza |
|
|
|
|
|
|
|
Properties |
Properties |
Properties |
Plaza |
Properties |
|
|
|
|
|
|
|
Kft |
Kft |
Kft |
Kft |
Kft |
|
|
|
|
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
Investment property |
|
|
|
- |
3,000 |
- |
9,350 |
- |
|
|
|
Trade & other receivables |
|
|
|
14 |
233 |
14 |
511 |
14 |
|
|
|
Cash & cash equivalents |
|
|
|
16 |
60 |
- |
690 |
21 |
|
|
|
Investments in subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
|
|
12,528 |
- |
3,824 |
- |
6,588 |
|||
|
|
Inter-company loans receivables |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,094 |
- |
64 |
1,301 |
137 |
|||
|
|
Total assets |
|
|
|
13,652 |
3,293 |
3,902 |
11,852 |
6,760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
Bank loans |
|
|
|
- |
4,251 |
- |
10,053 |
- |
|
|
|
Trade and other payables |
|
|
|
60 |
461 |
51 |
643 |
46 |
|
|
|
Inter-company loans payable |
|
|
|
|
|
|
|
|
|
|
|
|
|
17,604 |
1,532 |
5,070 |
- |
8,698 |
|||
|
|
Deferred income tax liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
90 |
- |
2,125 |
- |
|||
|
|
Total liabilities |
|
|
|
17,664 |
6,334 |
5,121 |
12,821 |
8,744 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net liabilities |
|
|
|
(4,012) |
(3,041) |
(1,219) |
(969) |
(1,984) |
|
|
|
|
|
|
Plaza |
Plaza |
|
Plaza |
|
|
|
|
|
|
|
Sopron |
Jarrapec |
Plaza |
Zalaegerszeg |
Antana |
|
|
|
|
|
|
Plaza |
Properties |
Pecs 2002 |
2002 |
Larchsilver |
|
|
|
|
|
|
Kft |
Kft |
Kft |
Kft |
Kft |
Total |
|
|
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
€'000 |
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
Investment property |
|
|
8,500 |
- |
12,000 |
100 |
14,000 |
46,950 |
|
|
Trade & other receivables |
|
|
390 |
- |
440 |
- |
95 |
1,711 |
|
|
Cash & cash equivalents |
|
|
607 |
- |
438 |
- |
285 |
2,117 |
|
|
Investments in subsidiaries |
|
|
|
|
|
|
|
|
|
|
|
- |
- |
629 |
- |
- |
23,569 |
||
|
|
Inter-company loans receivables |
|
|
|
|
|
|
|
|
|
|
|
1,266 |
- |
4,635 |
- |
- |
8,497 |
||
|
|
Deferred tax assets |
|
|
- |
- |
- |
- |
593 |
593 |
|
|
Total assets |
|
|
10,763 |
- |
18,142 |
100 |
14,973 |
83,437 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
Bank loans |
|
|
11,105 |
- |
16,635 |
- |
11,356 |
53,400 |
|
|
Trade and other payables |
|
|
755 |
3 |
981 |
- |
200 |
3,200 |
|
|
Inter-company loans payable |
|
|
|
|
|
|
|
|
|
|
|
- |
53 |
1,214 |
969 |
1,549 |
36,689 |
||
|
|
Deferred income tax liabilities |
|
|
|
|
|
|
|
|
|
|
|
1,682 |
- |
3,096 |
512 |
- |
7,505 |
||
|
|
Total liabilities |
|
|
13,542 |
56 |
21,926 |
1,481 |
13,105 |
100,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets / (liabilities) |
|
|
(2,779) |
(56) |
(3,784) |
(1,381) |
1,868 |
(17,357) |
|
|
|
|
|
|
|
|
|
|||||
|
11 |
Goodwill |
|
|
|
|
|||||||
|
|
|
|
|
|
2010 |
2009 |
|
|||||
|
|
|
|
|
|
Group |
Group |
|
|||||
|
|
|
|
|
|
€'000 |
€'000 |
|
|||||
|
|
Cost |
|
|
|
|
|
|
|||||
|
|
Balance at 1 January |
|
|
|
44,091 |
45,977 |
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
Acquisitions through business combinations |
|
|
|
5 |
1,021 |
|
|||||
|
|
Write off through derecognition |
|
|
|
- |
(2,173) |
|
|||||
|
|
Disposals |
|
|
|
(4,706) |
- |
|
|||||
|
|
Purchase price adjustments |
|
|
|
- |
(734) |
|
|||||
|
|
Write off of derecognised goodwill |
|
|
|
(11,281) |
- |
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
Balance at 31 December |
|
|
|
28,109 |
44,091 |
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
Impairment losses |
|
|
|
|
|
|
|||||
|
|
Balance at 1 January |
|
|
|
(36,194) |
(32,377) |
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
Impairment gain |
|
|
|
- |
2,088 |
|
|||||
|
|
Write off through derecognition |
|
|
|
11,281 |
- |
|
|||||
|
|
Write off through disposals |
|
|
|
3,368 |
- |
|
|||||
|
|
Write off non-core goodwill |
|
|
|
- |
(5,905) |
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
Balance at 31 December |
|
|
|
(21,545) |
(36,194) |
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
Carrying amounts |
|
|
|
|
|
|
|||||
|
|
At 1 January |
|
|
|
7,897 |
13,600 |
|
|||||
|
|
At 31 December |
|
|
|
6,564 |
7,897 |
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
Derecognition |
|
|
|
|
|
|
|||||
|
|
In March 2010 MKB bank took control of the cash flow, risks and rewards of the Plaza portfolio. The Group has taken the decision to derecognise the portfolio as all the risks and rewards of ownership are no longer retained by the Group. |
|
||||||||||
|
|
|
|
|
|
|
|
|
|||||
|
|
In June 2010 Barclays bank took control of the cash flow, risks and rewards of the Antana property. The Group has taken the decision to derecognise the portfolio as all the risks and rewards of ownership are no longer retained by the Group. |
|
||||||||||
|
|
|
|
|
|
|
|
|
|||||
|
|
The net effect on goodwill of these derecognitions is €nil as any goodwill on these non-core assets was provided against at 31 December 2009. |
|
||||||||||
|
|
|
|
|
|
|
|
|
|||||
|
|
Goodwill on non-core assets |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
Goodwill on-non core assets has been written off due to the opinion that insufficient sales values will be achieved to recover any goodwill capitalised on non-core assets. |
|
||||||||||
|
|
|
|
|
|
|
|
|
|||||
|
|
Impairment |
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
At acquisition, the purchase price payable in respect of each subsidiary is determined on a basis which usually excludes the amount of deferred tax liabilities relevant to that subsidiary. The determination of deferred tax liabilities is an IFRS requirement, which is not usually obligatory in accordance with accounting standards under which the subsidiary prepares its accounts. The net assets acquired are expected to be higher than the equivalent net assets calculated in accordance with IFRS, adjusted for the deferred tax liability. This difference is classified as goodwill. |
|
||||||||||
|
|
|
|
|
|
|
|
|
|||||
|
|
Half of the deferred tax liabilities of that subsidiary are expected to be ultimately recoverable by the Group upon disposal of the subsidiary. |
|
||||||||||
|
|
|
|
|
|
|
|
|
|||||
|
|
The carrying values of the Group's goodwill are reassessed at least annually or whenever events or changes in circumstances indicate that the carrying values may not be recoverable. For each subsidiary, the amount of goodwill is compared to the relevant deferred tax liabilities. Full provision for impairment is made in cases where the goodwill exceeds the amount of recoverable deferred tax liabilities. No provision is made where goodwill is equal or less than the deferred tax liabilities. |
|
||||||||||
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|||||
|
12 |
Other investments |
|
|
|
2010 |
2009 |
|
|
|
|
|
|
Group |
Group |
|
|
|
|
|
|
€'000 |
€'000 |
|
|
Investment in SIA Patollo: |
|
|
|
|
|
|
|
Balance at 1 January |
|
|
|
7,452 |
7,452 |
|
|
Recapitalisation of loan to cost of investment |
|
|
|
3,920 |
- |
|
|
Impairment of investment |
|
|
|
(11,372) |
- |
|
|
Balance at 31 December |
|
|
|
- |
7,452 |
|
|
|
|
|
|
|
|
|
|
In April 2007 the Group acquired 17.95% of the issued share capital of SIA Patollo. In May 2010 a new shareholders agreement was signed to convert loans made to SIA Patollo to share capital and increase the Company's shareholding to 80%. SIA Patollo undertook the development of the Galleria Shopping Centre in Riga, Latvia which was completed in October 2010. |
|||||
|
|
|
|
|
|
|
|
|
|
The shares continue to confer 50% of the shareholder voting rights, dividend rights and rights upon a winding up. The Group has appointed 2 of the 4 directors to SIA Patollo; certain key decisions require the consent of at least 75% of those directors. |
|||||
|
|
|
|
|
|
|
|
|
|
The investment bears a return of 15% pa. |
|||||
|
|
|
|
|
|
|
|
|
|
The development asset held by SIA Patollo was valued at 31 December 2010 at €40 million (2009: €50 million). There is bank financing on the asset at the year end of €55.8 million (2009: €38.6 million). The loans receivable from SIA Patollo have been impaired in full to ensure that the carrying value of the investment in and loans to SIA Patollo do not exceed the equity in the property. |
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
|||||
|
13 |
Loans receivable |
|
2010 |
2010 |
2009 |
2009 |
|
|
|
|
Group |
Company |
Group |
Company |
|
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
|
|
Non-current assets |
|
|
|
|
|
|
|
Loans to SIA Patollo |
|
- |
- |
3,920 |
- |
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
Loans to SIA Bluebeech |
|
- |
- |
2,000 |
- |
|
|
|
|
|
|
|
|
|
|
The loans to SIA Bluebeech bear interest at 25% pa and are repayable by 5 February 2010. The loans are secured by a first legal charge over that company's property and its shares and are further subject to a guarantee provided by SIA Patollo (secured by a third legal charge over that company's properties). As of 31 December 2010 the loan had been impaired in full. |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans to SIA Patollo |
|
|
|
|
|
|
|
|
|
|
|
2010 |
2009 |
|
|
|
|
|
|
Group |
Group |
|
|
|
|
|
|
€'000 |
€'000 |
|
|
|
|
|
|
|
|
|
|
Balance at 1 January |
|
|
|
3,920 |
27,495 |
|
|
|
|
|
|
|
|
|
|
Recapitalisation to cost of investment |
|
|
|
(3,290) |
- |
|
|
Impairment loss |
|
|
|
- |
(23,575) |
|
|
|
|
|
|
|
|
|
|
Balance at 31 December |
|
|
|
- |
3,920 |
|
|
|
|
|
|
|
|
|
|
Loans to SIA Bluebeech |
|
|
|
|
|
|
|
|
|
|
|
2010 |
2009 |
|
|
|
|
|
|
Group |
Group |
|
|
|
|
|
|
€'000 |
€'000 |
|
|
|
|
|
|
|
|
|
|
Balance at 1 January |
|
|
|
2,000 |
10,757 |
|
|
|
|
|
|
|
|
|
|
Impairment loss |
|
|
|
(2,000) |
(8,757) |
|
|
|
|
|
|
|
|
|
|
Balance at 31 December |
|
|
|
- |
2,000 |
|
|
|
|
|
|
|
|
|
|
The development asset held by SIA Bluebeech was valued at 31 December 2010 at €1.6 million (2009: €2.0 million). The loans receivable from SIA Patollo have been impaired in to ensure that the carrying value of the loans to SIA Bluebeech does not exceed the equity in the property and due to doubts over the recoverability of the loan. |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14 |
Deferred tax assets and liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets & liabilities are attributable to the following items: |
||||||
|
|
|
|
2010 Group |
2010 Group |
2009 Group |
2009 Group |
|
|
|
|
|
Assets |
Liabilities |
Assets |
Liabilities |
|
|
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
|
|
|
|
|
|
|
|
|
|
|
|
Investment property valuation |
|
- |
21,194 |
- |
23,914 |
|
|
|
Interest rate swap valuation |
|
227 |
- |
449 |
- |
|
|
|
Accrued interest payable |
|
389 |
- |
- |
528 |
|
|
|
Tax losses carried forward |
|
2 |
- |
2,796 |
- |
|
|
|
Other temporary differences |
|
- |
453 |
680 |
315 |
|
|
|
|
|
618 |
21,647 |
3,925 |
24,757 |
|
|
|
|
|
|
|
|
|
|
|
|
The following subsidiaries that have recognised deferred tax assets have made losses in either of the years to 31 December 2010 or 31 December 2009 |
||||||
|
|
|
|
|
|
|
2010 |
|
|
|
|
|
|
|
|
Deferred tax |
|
|
|
|
|
|
|
|
Asset |
|
|
|
|
|
|
|
|
€'000 |
|
|
|
|
|
|
|
|
|
|
|
|
Stringybark SIA |
|
|
|
|
801 |
|
|
|
Grand Investments Sp. z.o.o. |
|
|
|
|
67 |
|
|
|
Mulga UAB |
|
|
|
|
32 |
|
|
|
S.C. Lanobis S.R.L. |
|
|
|
|
100 |
|
|
|
Carpathian Eta Kft |
|
|
|
|
13 |
|
|
|
|
|
|
|
|
1,013 |
|
|
|
|
|
|
|
|
|
|
|
|
Realisation of deferred tax assets is dependent on profits on the sale of investment properties. Expiry of these assets is expected to tie in with the anticipated sale of assets by December 2011. |
||||||
|
|
|
|
|
|
|
|
|
|
|
The movement in deferred tax in the year comprises: |
|
|
2010 |
2009 |
||
|
|
|
|
|
|
Group |
Group |
|
|
|
|
|
|
|
€'000 |
€'000 |
|
|
|
|
|
|
|
|
|
|
|
|
Net balance at 1 January |
|
|
|
20,832 |
23,859 |
|
|
|
Origination and (reversal) of temporary differences |
|
|
5,474 |
(3,027) |
||
|
|
Disposals |
|
|
|
(2,680) |
- |
|
|
|
Derecognitions |
|
|
|
(2,597) |
- |
|
|
|
Net balance at 31 December |
|
|
|
21,029 |
20,832 |
|
|
|
|
|
|
|
|
|
|
|
15 |
Trade and other receivables |
|
2010 |
2010 |
2009 |
2009 |
|||
|
|
|
|
Group |
Company |
Group |
Company |
|||
|
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
|||
|
|
|
|
|
|
|
|
|||
|
|
Trade receivables |
|
1,307 |
- |
5,090 |
- |
|||
|
|
Other receivables |
|
5,362 |
- |
6,503 |
- |
|||
|
|
Prepayments |
|
371 |
104 |
810 |
13 |
|||
|
|
Accrued interest on loans |
|
86 |
17,691 |
43 |
- |
|||
|
|
Subsidiary purchase price adjustment receivable |
- |
- |
542 |
- |
||||
|
|
|
|
7,126 |
17,795 |
12,988 |
13 |
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
As at 31 December 2010, trade receivables at a nominal value of € 3.9 million (2009: € 3.8 million) were impaired and fully provided for. Movements in the provision for impairment of receivables were as follows: |
||||||||
|
|
|
|
|
|
|
|
|||
|
|
|
|
2010 |
2010 |
2009 |
2009 |
|||
|
|
|
|
Group |
Company |
Group |
Company |
|||
|
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
|||
|
|
|
|
|
|
|
|
|||
|
|
Balance at 1 January |
|
3,761 |
- |
3,233 |
- |
|||
|
|
Amounts written off during the year |
|
(72) |
- |
(111) |
- |
|||
|
|
Amounts recovered |
|
(284) |
- |
(3) |
- |
|||
|
|
Increase in allowance recognised in Statement of Comprehensive Income |
|
1,282 |
- |
641 |
- |
|||
|
|
Written off on disposal |
|
(781) |
- |
- |
- |
|||
|
|
Balance at 31 December |
|
3,906 |
- |
3,760 |
- |
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
|
At 31 December 2010 and 31 December 2009 the ageing analysis of trade receivables is as follows: |
||||||||
|
|
|
|
|
|
|
|
|||
|
|
|
|
2010 |
2010 |
2009 |
2009 |
|||
|
|
|
|
Group |
Company |
Group |
Company |
|||
|
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
|||
|
|
|
|
|
|
|
- |
|||
|
|
Less than 30 days |
|
620 |
- |
2,565 |
- |
|||
|
|
30-60 days |
|
212 |
- |
660 |
- |
|||
|
|
60-90 days |
|
72 |
- |
499 |
- |
|||
|
|
90-120 days |
|
102 |
- |
352 |
- |
|||
|
|
Greater than 120 days |
|
301 |
- |
1,014 |
- |
|||
|
|
|
|
1,307 |
- |
5,090 |
- |
|||
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|||
|
16 |
Assets held for sale |
|
|
|
|
|
|||
|
|
|
|
|
|
2010 |
2009 |
|||
|
|
|
|
|
|
Group |
Group |
|||
|
|
|
|
|
|
€'000 |
€'000 |
|||
|
|
Non-current assets held for sale |
|
|
|
|
|
|||
|
|
Investment property |
|
|
|
237,900 |
- |
|||
|
|
|
|
|
|
237,900 |
- |
|||
|
|
|
|
|
|
|
|
|||
|
|
Investment properties at an aggregate value of €164.9 million at 31 December 2010 (2009: €nil) are held under long-term lease arrangements which expire at varying dates between 2080 and 2097. |
||||||||
|
|
|
||||||||
|
|
At 31 December 2010 the Promenada and Blue Knight properties in Poland were classified as held for sale. The properties are held at their fair value of sales price less costs to sell. |
||||||||
|
|
|
||||||||
|
|
The sale of Promenada completed on 5 May 2011. |
||||||||
|
|
|
||||||||
|
|
The sale of three Blue Knight properties completed on 9 March 2011. |
||||||||
|
|
|
||||||||
|
|
The sale of the final Blue Knight property is expected to complete in late May 2011. |
||||||||
|
|
|
||||||||
|
|
No other properties within the Group currently fulfill the criteria of IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations'. |
||||||||
|
|
|
|
|
|
|
|
||||
|
|
The valuation of the Promenada investment property has been adjusted to avoid double-counting of assets and liabilities: |
|||||||||
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
2010 |
2009 |
||||
|
|
|
|
|
|
Group |
Group |
||||
|
|
|
|
|
|
€'000 |
€'000 |
||||
|
|
|
|
|
|
|
|
||||
|
|
Valuation per independent valuer |
|
|
|
- |
150,080 |
||||
|
|
Valuation per sales agreement |
|
|
|
161,790 |
- |
||||
|
|
Finance lease obligations |
|
|
|
3,151 |
17,026 |
||||
|
|
|
|
|
|
164,941 |
167,106 |
||||
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||
|
17 |
Cash and cash equivalents |
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||
|
|
Cash and cash equivalents comprise cash at bank and other short-term highly liquid investments with a maturity of three months or less. |
|||||||||
|
|
|
|
|
|
|
|
||||
|
18 |
Share capital and share premium |
|
|
|
|
|
|
|
Authorised |
|
|
Number of Ordinary Shares of 1 cent each |
|
€'000 |
|
|
|
|
|
|
|
|
|
|
At 31 December 2010 & 31 December 2009 |
|
|
350,000,000 |
|
3,500 |
|
|
|
|
|
|
|
|
|
|
Issued: |
|
|
Number of Shares Issued and Fully Paid |
Share Capital |
Share Premium |
|
|
|
|
|
|
€'000 |
€'000 |
|
|
Ordinary shares of 1c each |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January 2009 |
|
|
232,148,175 |
3,383 |
263,935 |
|
|
Share capital conversion €0.01 for £0.01 24 July 2009 |
|
- |
(1,062) |
1,062 |
|
|
|
Share premium release 24 July 2009 |
|
|
- |
- |
(173,520) |
|
|
Balance at 31 December 2009 |
|
|
232,148,175 |
2,321 |
91,477 |
|
|
|
|
|
|
|
|
|
|
Balance at 31 December 2010 |
|
|
232,148,175 |
2,321 |
91,477 |
|
|
|
|
|
|
|
|
|
19 |
Interest-bearing loans and borrowings |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This note provides information about the contractual terms of the Group's interest-bearing loans and borrowings. |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
2010 |
2010 |
2009 |
2009 |
|
|
|
|
Group |
Company |
Group |
Company |
|
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
|
|
|
|
|
|
|
|
|
|
Bank loans due after more than one year |
|
- |
- |
262,364 |
- |
|
|
Bank loans due within one year |
|
221,308 |
- |
102,414 |
- |
|
|
|
|
221,308 |
- |
364,778 |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The borrowings are repayable as follows: |
|
|
|
|
|
|
|
One demand within one year |
|
221,308 |
- |
102,414 |
- |
|
|
In the second year |
|
- |
- |
66,229 |
- |
|
|
In the third to fifth years inclusive |
|
- |
- |
196,135 |
- |
|
|
After five years |
|
- |
- |
- |
- |
|
|
|
|
221,308 |
- |
364,778 |
- |
|
|
|
|
|
|
|
|
|
|
Less: Amount due for settlement within 12 months (shown under current liabilities) |
|
(221,308) |
- |
(102,414) |
- |
|
|
|
|
|
|
|
|
|
|
Amount due for settlement after 12 months |
|
- |
- |
262,364 |
- |
|
|
|
|
|
|
|
|
|
|
The Group has pledged each of its investment properties and its shares in the special purpose vehicles holding the investment properties to secure related interest-bearing debt facilities granted to the Group for the purchase of such investment properties.
The weighted average cost of debt of the year was 5.49% (2009: 5.14%). |
|
|
|
|
|
|
|
|
|
20 |
Trade and other payables |
|
2010 |
2010 |
2009 |
2009 |
|
|
|
|
Group |
Company |
Group |
Company |
|
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables |
|
5,219 |
106 |
12,261 |
1 |
|
|
Tenant deposits |
|
2,295 |
- |
2,304 |
- |
|
|
Accrued interest |
|
902 |
- |
1,999 |
- |
|
|
Deferred consideration |
|
11,264 |
- |
10,492 |
- |
|
|
Related party payables |
|
8,369 |
- |
8,135 |
- |
|
|
Finance lease |
|
3,151 |
- |
17,026 |
- |
|
|
Tax payable |
|
451 |
- |
211 |
- |
|
|
Accrued expenses |
|
1,930 |
171 |
2,336 |
233 |
|
|
Income received in advance |
|
391 |
- |
1,695 |
- |
|
|
|
|
33,972 |
277 |
56,459 |
234 |
|
|
|
|
|
|
|
|
|
|
Less: Amount due for settlement within 12 months (shown under current liabilities) |
|
(14,812) |
(277) |
(28,941) |
(234) |
|
|
Amount due for settlement after 12 months |
|
19,160 |
- |
27,518 |
- |
|
|
|
|
|
|
|
|
|
|
At 31 December 2010 and 31 December 2009 the ageing analysis of trade payables was as follows: |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
2010 |
2010 |
2009 |
2009 |
|
|
|
|
Group |
Company |
Group |
Company |
|
|
|
|
€'000 |
€'000 |
€'000 |
€'000 |
|
|
|
|
|
|
|
|
|
|
Less than 3 months |
|
13,101 |
277 |
22,559 |
234 |
|
|
3 to 12 months |
|
1,711 |
- |
6,382 |
- |
|
|
1-5 years |
|
7,345 |
- |
17,026 |
- |
|
|
Greater than 5 years |
|
11,815 |
- |
10,492 |
- |
|
|
|
|
33,972 |
277 |
56,459 |
234 |
|
|
|
|
|
|
|
|
|
21 |
Provisions |
|
|
|
2009 |
2009 |
|
|
|
|
|
|
Group |
Group |
|
|
|
|
|
|
€'000 |
€'000 |
|
|
|
|
|
|
|
|
|
|
Provisions at 1 January |
|
|
|
2,398 |
1,710 |
|
|
Increase in perpetual usufruct provision |
|
|
|
99 |
- |
|
|
Decrease in other provisions |
|
|
|
(1,500) |
688 |
|
|
Provisions as at 31 December |
|
|
|
997 |
2,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions include an amount of €1.0 million (December 2009: €0.9 million) relating to the potential excess payable over amounts held on escrow on claims made by a contractor, which is subject to a legal dispute.
Provisions are made on the best estimates of the Directors at the time and are expected to be released within twelve months. |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22 |
Dividends |
|
|
|
2010 |
2009 |
|
|
|
|
|
|
|
€'000 |
€'000 |
|
|
|
|
|
|
|
|
|
|
|
|
Interim dividend |
|
|
- |
10,446 |
||
|
|
|
|
|
|
- |
10,446 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Board has declared an interim dividend of 4.5 cents per share for the year to 31 December 2009, which was paid on 22 January 2010. |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23 |
Notes to the cash flow statement |
|
|
|
|
|
|
|
|
|
|
2010 |
2010 |
2009 |
2009 |
|
|
|
|
|
Group |
Company |
Group |
Company |
|
|
|
Cash generated from / (used in) operations |
Note |
€'000 |
€'000 |
€'000 |
€'000 |
|
|
|
|
|
|
|
|
|
|
|
|
Profit / (loss) for the year |
|
15,021 |
82,028 |
(104,466) |
(74,572) |
|
|
|
Adjustments for: |
|
|
|
|
|
|
|
|
Increase / (decrease) in fair value of financial instruments |
|
2,773 |
4,003 |
(2,659) |
155 |
|
|
|
Unwinding of unrealised direct issue costs of borrowings |
|
1,215 |
- |
(1,230) |
- |
|
|
|
Net other finance income |
|
15,463 |
(21,566) |
19,552 |
(22,629) |
|
|
|
Decrease in fair value of investment property |
14 |
(7,872) |
- |
56,808 |
- |
|
|
|
Provisions |
|
203 |
- |
688 |
- |
|
|
|
Income tax |
12 |
6,428 |
- |
(4,057) |
- |
|
|
|
Impairment of investments and loans receivable |
|
13,372 |
(94,930) |
29,775 |
- |
|
|
|
Impairment of goodwill |
|
- |
- |
5,419 |
- |
|
|
|
Profit on disposal of investment |
|
(28,688) |
- |
14,094 |
367 |
|
|
|
Operating cash flows before movements in working capital |
|
17,915 |
(30,465) |
13,924 |
(96,679) |
|
|
|
Decrease / (increase) in receivables |
|
216 |
(90) |
1,966 |
50 |
|
|
|
Increase / (decrease) in payables |
|
142 |
44 |
2,942 |
(70) |
|
|
|
Cash generated from / (used in) from operations |
|
18,273 |
(30,511) |
18,832 |
(96,699) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24 |
Events after the balance sheet date |
|
|
|
|
|
|
|
|
|
|
|
|
|
On 9 March 2011, the Company disposed of three properties held within the Blue Knight portfolio in Poland for a consideration of €40.2 million. The properties were included in the Consolidated Statement of Financial Position at sales value less costs to sell amounting to €38.3 million. The direct debt repayment to Deutsche Pfandbriefbank ('DPB') from the sales proceeds is approximately €22.8 million including fees. |
||||
|
|
|
||||
|
|
On 5 May 2011, the Company disposed of the property held within the Promenada property in Poland for a consideration of €169.5 million with an additional consideration of €1.5 million as and when the VAT is reimbursed to the buyer. The property was included in the Statement of Financial Position at sales value less costs to sell amounting to €168.2 million. The direct debt repayment to Deutsche Pfandbriefbank ('DPB') from the sales proceeds is approximately €108.1 million including fees. |
||||
|
|
|
||||
|
|
In addition to these transactions, DPB will also hold approximately €8.9 million in escrow against the cross-collaterised indebtedness of the final Blue Knight property and €3.0 million against the separate debt facility relating to the Babilonas property. |
||||
|
|
|
||||
|
|
If the sale of Blue Knight is completed before Carpathian is in a position to repatriate funds from Poland through overseas subsidiaries to the ultimate holding company, DPB's loans will be repaid from those sales proceeds and the escrow amounts will be released to Carpathian. If the sale is not completed at such time, the escrow amounts will be applied to reduce indebtedness secured against the property. |
||||
|
|
|
|
|
|
|
|
|
On 30 March 2011, the Company signed a conditional Preliminary Sale Agreement for the final property held within the Blue Knight portfolio in Poland for a consideration of €34.5 million. The property was included in the Statement of Financial Position at sales value less costs to sell amounting to €31.3 million. €3 million consideration from the purchase price will be retained on an escrow and will become payable to the Company if an occupancy permit amendment is obtained by 31 December 2011. This amount will be reduced to €1.5 million if such amendment is obtained after 31 December 2011, but before 30 June 2012. The transaction is expected to complete by the end of May 2011. |
||||
|
|
|
|
|
|
|
|
|
All of the above properties were classified as assets held for sale at 31 December 2010. |
||||
|
|
|
||||
|
|
On 24 March 2011, the business, assets and liabilities of Gumtree S.a.r.l. and Willow S.a.r.l. were merged with Carpathian Properties S.a.r.l. All entities were subsidiaries of the Company at 31 December 2010 and were included in the consolidated accounts. |
||||
|
|
|
|
|
|
|
|
|
On 18 April 2011, the Company disposed of its Biedronka property in Poland for a consideration of €0.8 million. The property was included in the Consolidated Statement of Financial Position at a valuation of €0.8 million. There is no external debt outstanding on the property. |
||||
|
|
|
||||
|
25 |
Financial Statements |
||||
|
|
|
|
|
|
|
|
|
Copies of the 2010 financial statements will be sent to all shareholders as soon as practical. These documents will be available to the public at the offices of the company: IOMA House, Hope Street, Douglas, Isle of Man, as well as on our website www.carpathianplc.com. |
||||
|
|
|
||||
|
|
|
|
|
|
|
This information is provided by RNS
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