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Probus Estates PLC (PBE)

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Friday 03 May, 2002

Probus Estates PLC

Final Results

Probus Estates PLC
3 May 2002


                               PROBUS ESTATES PLC

                      ('Probus Estates' or 'the Company')


            Preliminary Results for the Year Ended 31 December 2001


Probus Estates, which invests in commercial and leisure developments in
Continental Europe, today announces its preliminary results for the year ended
31 December 2001.

*          Turnover of €21.8 million (2000: €6.8 million)

*          Operating profit of €0.26 million (2000: operating loss of €0.74
           million)

*          Retained loss for the year of €1.99 million (2000: €0.82 million),
           partly due to costs associated with new projects

*          Three acquisitions of commercial and development property

*          Continued search for further acquisitions, now limited to revenue
           producing properties with positive cashflow



Lars-Erik Magnusson, Chairman of Probus Estates, commented:



'2001 was disappointing but we have much higher hopes for the current year.  We
would expect to generate trading profits as we sell off units at Santa Ponsa.
There is also scope for a better performance from the casino.  We therefore
believe we are taking all steps necessary to achieving increased shareholder
value.'



                                                                      3 May 2002



ENQUIRIES:


Probus Estates PLC
Lars-Erik Magnusson, Chairman               Tel: 00 31 20 669 7032
Patrick Browning, Finance Director          Tel: 020 7479 7020

College Hill                                Tel: 020 7457 2020
Archie Berens                               Email: [email protected]
Claire Mansford                             Email: [email protected]





                               PROBUS ESTATES PLC



              Preliminary Results for Year ended 31 December 2001



                              CHAIRMAN'S STATEMENT



Results



The Group has decided to publish its accounts in euros, which we believe to be
more meaningful as the great majority of our assets and liabilities are
denominated in this currency.  Turnover for the year was €21.8 million, a
substantial increase over 2000 (€6.8 million).  The Group achieved an operating
profit of €0.26 million, compared to an operating loss of €0.74 million in the
previous year. However, the results show a loss for the year after tax of
€1,993,000 (2000: €822,000 loss).  This was partly due to costs associated with
new projects, both actual and abortive, and partly due to the adverse trading
conditions in Mallorca in the second half of the year following the coach
drivers' strike on the island and the events of 11th September.



Review of major events



Last year I indicated that we needed to grow by acquisition.  Accordingly, we
made three acquisitions during the year.  The acquisition of a retail and
residential development at Santa Ponsa, Mallorca, was included in the last
Annual Report as a subsequent event.  This development is now nearing completion
and is looking very impressive.



In July 2001 we acquired a further commercial property at Dordrecht in the
Netherlands.  We now have five commercial properties in the Netherlands and we
are looking to make similar acquisitions.



In December 2001 we acquired 2 million square metres of land, part of which is
scheduled for development, at Gava, near Barcelona.  This project has excellent
potential for profit, although it is in the very early stages of its
development.



Corporate strategy



Our objectives remain unchanged, in that we are still investing in property and
leisure assets.  During the last year the emphasis has shifted to development as
opposed to investment, but we would expect any acquisitions this year to be
investment based and income and cash flow producing, as there is a limit to how
much development a group our size can undertake.  We continue to look for
acquisitions, particularly where they can be achieved through the issue of new
shares.



Board changes



Since the year end, Mr Paolo De Pol has resigned from the Board.  As announced
at the time, we are reviewing the future structure of the Board, which may
depend on transactions later this year.  In the meantime I have taken on the
role of Chief Executive as a temporary measure.



Outlook



The results of 2001 were disappointing but the outlook for 2002 is much more
promising.  We expect to sell a significant proportion of the units at Santa
Ponsa, thereby generating trading profits.  We shall also be working hard to
improve the results at the casino with more innovative marketing.  We are
continuing our discussions with the local authorities on planning consent for a
hotel at the casino site and on the possible opening of branch casinos in other
parts of Mallorca.  These are very positive steps which should lead to increased
value for shareholders.



Lars-Erik Magnusson

Chairman and Chief Executive





3 May 2002





                               PROBUS ESTATES PLC



              Preliminary Results for Year ended  31 December 2001



                              REVIEW OF OPERATIONS



GRAN CASINO MALLORCA



Results



Having started the year well, the final outturn for the casino was
disappointing, with drop down by 5.4% to €47.6 million.  The second half was
badly affected by a series of external events.  In June, the coach drivers'
strike in Mallorca attracted adverse publicity and discouraged tourists from
coming to the island.  The Balearic Government's announcement of a 'tourist tax'
was not well received.  Even though it only amounted to €1 per person per night,
it attracted a lot of controversy and discouraged German tourists in particular
from coming to Mallorca.  Spanish tourists were inhibited by a series of strikes
by Iberia and tourism generally suffered from the terrorist attacks of 11
September.  The result of all of this was that the casino drop was down in the
second half of the year by 11% on the preceding year.  Despite this, the casino
remained profitable and spend per capita on the gaming tables increased from
€400 in 2000 to €419 in 2001.



Although total gaming income was lower than expected, the income from slot
machines continued to increase.  By the end of 2001, the number of slot machines
in operation had increased to 81 from 69.  As in previous years, the number of
slot machines has been reduced since the start of the new year (to 71), in order
to reduce the gaming tax payable during a part of the year that normally sees
lower activity.  The increase in the number of slot machines that took place in
the later part of 2001 was largely in the newly refurbished lobby.



Visitors



In terms of visitor numbers, Gran Casino Mallorca continues to be ranked third
in Spain, behind Madrid and Barcelona.  Visitor numbers fell in 2001 by 6.7%.
It is interesting to note that other Spanish casinos also suffered from a fall
in visitor numbers during 2001, with an average reduction of 9.0%.



Calaxada



Calaxada, which runs the Paladium show and is responsible for all the non-gaming
activities, continued to be loss making in 2001.



Improvements



Casino lobby

In order to accommodate more slot machines and also to present a more welcoming
entrance, particularly when the gaming hall is closed, the lobby of the casino
was completely redesigned and refurbished during 2001.  This has allowed the
slot machine area to be opened during the afternoon.  While this has not
attracted significant numbers during the week, it has proved popular at the
weekends, when regular clients are sometimes invited to a buffet lunch at the
casino.  Because of the fixed gaming tax on slot machines, any increase in play
has a disproportionate effect on gaming win.



Private gaming room

The private gaming room, where the tables require higher stakes, has not proved
particularly successful, mainly because of its location.  Work is therefore
currently ongoing to move it to the existing restaurant area, where it will be
more accessible.  The restaurant will be moved so that it can be entered without
going through the gaming room, while still providing access to the gaming room
for any guest wishing to go there.



Multi-player slot machines

Multi-player slot machines, which have eight seats but are only taxed as though
they were three machines, have been approved in principle but the casino is
still waiting for the National Gaming Commission to arrange laboratory tests.
Such machines could be used for blackjack, roulette or horse racing and their
introduction will be considered as soon as they are permitted.



Closed circuit television system

In 2001 we installed a new CCTV system in the gaming areas with the capacity to
record and monitor all the gaming tables, reception, cash desk and slot areas.
Many of the cameras that were used in the old CCTV set up have been linked into
the new system to increase vigilance in the back of house areas and service
entrances.





Banqueting and Functions



The Gala Room

The Gala Room was refurbished during 2001, which resulted in lost banqueting
income as we could not market the room for functions.  For 2002 the concept has
been changed and from June it will be used for dinner cabaret style
entertainment.



The Formula 1 Room

This room was also refurbished during the latter part of 2001.  The room is now
available for weddings and events and may shortly be relaunched under a
different name.



Trebol

This hall is being turned into an a la carte restaurant.  It is adjacent to the
gaming room and it will be used for both private dining and group entertaining.





Publicity



Chenoa

Chenoa, who was until recently a lead singer in the Paladium show at the Casino,
was one of the contestants in Operacion Triunfo.  This is a very popular
television show in Spain, similar to Pop Idol in the UK.  Chenoa reached the
final, gaining immense popularity, but was beaten by a system of phone-in votes.
  Chenoa's success received national coverage in the popular press, radio,
television and magazines; any time Chenoa appeared, so did Casino Paladium with
excerpts from the show.



Passport to the Sun

Passport to the Sun, the popular BBC television programme, featured the Paladium
Show in three of its episodes last year.  Nadia Sawalha, who hosts the
programme, tried her hand at a show rehearsal and discovered how much skill and
practice are needed for the extraordinary acts which are included in the show.



Publicity in 2002

Gran Casino Mallorca and the Paladium Show will be promoted during Spring and
Summer 2002 with campaigns aimed at both tour operators and direct clients, the
latter being a special target as they provide a higher yield.  During early
Summer 2002, Gran Casino Mallorca will appear in a television travel documentary
called 'Alvaro', which will be seen in at least ten countries.  The brand new
show 'Samarcand', which was introduced in April, is already creating a lot of
attention.



Introduction of the euro



The introduction of the euro in Spain on 1st January 2002 went smoothly at the
casino, apart from a shortage of coins in the first few days.  Clients did take
some time to get used to the new currency.  Results were poor in January due to
clients being hesitant to bet in their accustomed fashion as they were
disorientated by the new chip values in euros.  This was also reflected in their
tipping habits.  Since February, however, the majority of clients have adapted
their play to the new currency.



The gaming authority in the Balearics has approved €9 as the maximum slot
machine bet.  This fits well with 9 line machines, and is helpful to the casino,
as the maximum approved in some other regions is only €6.  In recent years the
slot machines have only accepted coins of 50 pts (€0.30) or 100 pts (€0.60).  In
an attempt to increase the play on certain models, as from mid-January 2002 a
minimum bet of €0.20 has been introduced on thirteen of the slots.  So far the
effect has been positive and has stimulated an increased amount of play on these
machines.  The three types of coins in use are now €0.20, €0.50 and €1.



The casino has now increased the minimum stake on the roulette tables from 250
pts to €2.50.  This was long overdue as the minimum stake had remained unchanged
for 20 years.  The minimum stake on blackjack tables has been increased from
1000 pts to €10.  The casino has also applied to be allowed a minimum stake of
€5 on a small number of tables.



Future developments



Beach club

Below the casino there is a beach club.  When the property was acquired by the
Group in 2000, the beach club buildings were very run down and were let for a
modest rental to a tenant who put on evening entertainments during the season.
This under-utilised asset occupies a valuable site as it would be difficult to
find a similar location and obtain planning permission to develop it.  The area
around the casino site has been, and is being, developed with villas and
apartments, few of which have convenient access to the sea.  For these residents
the beach club will be an attractive facility.



Work started in 2001 on a complete redesign and rebuilding of the beach club.
Unfortunately, the work will not be complete for the 2002 season and opening has
therefore been delayed until 2003.  The redeveloped facility will have
restaurants, bars and swimming pools on two or more levels.  Yachts will be able
to moor nearby.  In the evening the approach down from the cliff top will be via
a landscaped ravine with lighting in the trees.  The club will also be suitable
for corporate entertaining.  The completed beach club may be let to an operator
but, whether it is let or operated in-house, it should attract additional
clients to the casino in addition to being a profitable leisure facility in its
own right.



Hotel site

Discussions have been continuing with local planners on a proposal for a new
hotel.  The part of the site previously designated for a hotel is very
constricted and would not allow the construction of a hotel of economic size.
In addition, it would mean the destruction of a green area that it would be
preferable to preserve.  We have therefore prepared proposals for consideration
by the local authority for a hotel on the site of the casino car park.  Parking
would then be underground.  The hotel would be spread over several low rise
buildings, all with a magnificent view over Palma Bay, which would provide 135
suites having a five star plus classification.  This would meet the Balearic
Government's wish to increase the proportion of five star accommodation on
Mallorca.  Such a hotel would appeal to the upper segment of the tourist
industry, to tourists wishing to visit the casino, and to conference business,
for which there is ample space in the existing buildings.



The Group would need to raise finance for the construction of a hotel and this
will be addressed once the necessary planning consent have been obtained.



Branch Casinos

There have been discussions with both the Balearic Government and the Government
of Mallorca on the possibility of opening one or more branch casinos elsewhere
on Mallorca.  If such branch casinos were open in the north or east of the
island they would be more easily accessible than the existing casino and would
appeal to both residents and tourists in the area.  They would be placed in
existing tourist or leisure sites.  Branch casinos would have both gaming tables
and slot machines, but would not include a show hall.



THE BOULEVARD, SANTA PONSA



The Boulevard is a retail and residential development in Santa Ponsa, on the
west side of Mallorca.  It was bought by the Group in April 2001.  Construction
had started the previous year and was due to finish in the second quarter of
2002.  Construction is now substantially complete and the landscaping is
proceeding.    Delivery of the project on time and with a cost overrun of under
1% is a credit to the contractor and to the professional team.



The development is arranged in seven buildings on a long site at the entrance to
Santa Ponsa and adjacent to the approach to three golf courses.  It is highly
visible to anybody going to or from Santa Ponsa.  Most of the buildings are
arranged with retail space on the ground and first floors and residential on the
second floor.  There is in excess of 6,000 square metres of commercial space and
in excess of 1,300 square metres of residential space.



The previous owners had a policy of letting space only.  In September 2001 we
changed this policy to allow for sales of units and, so far, six units have been
sold with others under discussion.  Seven other units have been let.  The
largest space had been let before our acquisition to a supermarket but the
tenant has since decided not to occupy, although they will remain liable for any
shortfall in rent for a period of eight years.  Several possible uses for this
space are under discussion.



Selling prices achieved so far have been in line with our price list, which
values the entire development at approximately €15 million.  Following
completion, and the availability of photographs of the development as built, we
are widening our marketing initiative in order to sell as many of the units as
possible, provided an acceptable price can be achieved.



CAN VINYES



Acquisition



In December 2001, we announced the acquisition of a proposed residential
development project at Gava near Barcelona in Spain.  The total area of the land
acquired was 2 million square metres, of which approximately 549,000 square
metres have been designated for development.  The city of Barcelona is
surrounded by hills and the availability of land for development is limited.
Gava is approximately 20 kilometres south west of Barcelona and the site
includes both hillside and valley on the edge of Parc Natural de Garraf, thereby
preventing any further development above our site.  There is good access by
motorway to Barcelona and also to the international airport.



Proposed development



The proposed development will include approximately 40 villa plots built round a
nine-hole golf course.  It is our intention to create the infrastructure for
these plots and then sell them to others who would construct the villas.  It
will therefore be open to purchasers to design their own villas within
guidelines which will be set for the development as a whole.  The funds raised
from the sale of the villa plots will be used to build three condominium
buildings with approximately 420 condominiums in total.  The speed of
development will depend upon market demand at the time.



Timetable



It is likely to take twelve to eighteen months to complete all the design work
and obtain the necessary planning approvals.  Basic infrastructure work will
therefore not start until 2003, when we would also hope to start the sale of
villa plots.  A three-phased development of condominium buildings will not start
before 2004 at the earliest and sale of the condominium units will be phased
over 2005 to 2007.



Financing



The initial acquisition was largely financed by short-term borrowing and it is
our intention to refinance this over a longer period.



Future revenues



This project will not generate any revenues before 2003 at the earliest.
However, over the life of the project the potential gross revenues, based on
market values of land and condominiums in the area, will be approximately €280
million, which should yield substantial profits.



                         Group Profit and Loss Account

                      For the year ended 31 December 2001




                                                                     Year ended             Year ended
                                                                    31 December            31 December
                                                                           2001                   2000
                                                      Note                 €000                   €000

Turnover
Continuing operations
- ongoing                                                                21,778                  5,524
Discontinued operations                                                       -                  1,233
                                                                         21,778                  6,757
Cost of sales                                                          (17,993)                (4,397)
Gross profit                                                              3,785                  2,360
Administrative expenses                                                 (3,529)                (3,289)

Operating profit / (loss)
Continuing operations
- ongoing                                                                   498                  (740)
- acquisitions                                                            (242)                      -
                                                                            256                  (740)
Discontinued operations                                                       -                  (189)
                                                                            256                  (929)
Profit on disposal of properties - discontinued                               -                    715
operations
Interest receivable                                                         107                    310
Interest payable                                                        (2,350)                  (994)
Loss on ordinary activities before taxation                             (1,987)                  (898)
Taxation                                                                    (6)                      -
Loss on ordinary activities after taxation                              (1,993)                  (898)
Equity minority interest                                                      -                     76
Retained loss for the year                                              (1,993)                  (822)
Loss per share, basic and diluted                      2                (€0.43)                (€0.36)




                   Group Balance Sheet as at 31 December 2001




                                                              31 December             31 December
                                                                     2001                    2000
                                                                     €000                    €000

Fixed assets
Intangible assets
  Goodwill                                                         10,330                  10,880
Tangible assets
  Investment properties                                            34,762                  29,498
  Other land and buildings                                         24,724                  24,931
  Other tangible fixed assets                                       3,787                   2,033
                                                                   73,603                  67,342
Investments                                                             -                     451
                                                                   73,603                  67,793
Current assets
Stock                                                                 144                     141
Work in progress                                                   62,522                       -
Debtors                                                             2,715                   1,993
Cash at bank and in hand                                            1,565                   6,949
                                                                   66,946                   9,083
Creditors - amounts falling due within one year                  (52,963)                (31,062)
Net current assets / (liabilities)                                 13,983                (21,979)
Total assets less current liabilities                              87,586                  45,814
Creditors - amounts falling due after more than one
year
Convertible loan note                                            (11,850)                       -
Other creditors                                                  (36,237)                 (5,688)
                                                                 (48,087)                 (5,688)
Net assets                                                         39,499                  40,126

Capital and reserves
Called up share capital                                            63,622                  63,322
Share premium account                                              33,022                  31,671
Revaluation reserve                                                   315                     315
Profit and loss account                                          (57,460)                (55,182)
Equity shareholders' funds                                         39,499                  40,126




                           Group Cash Flow Statement

                      For the year ended 31 December 2001




                                                                     Year ended              Year ended
                                                                    31 December             31 December
                                                                           2001                    2000
                                                                           €000                    €000

Net cash (outflow) / inflow from operating                             (18,595)                  12,746
activities

Returns on investments and servicing of finance
Interest received                                                           107                     300
Interest paid                                                           (2,741)                   (961)
Net cash outflow from returns on investments and
servicing of finance                                                    (2,634)                   (661)

Taxation
Corporation tax paid                                                       (44)                       -

Capital expenditure
Purchase of investment properties                                       (5,264)                (24,479)
Purchase of investments                                                       -                   (498)
Purchase of other land and buildings                                          -                     (6)
Purchase of other tangible fixed assets                                 (2,247)                     (2)
Net cash outflow from capital expenditure                               (7,511)                (24,985)

Acquisitions and disposals
Acquisition of subsidiary undertakings                                 (33,371)                (14,929)
Net cash acquired with subsidiary undertaking                                 -                   1,577
Disposal of subsidiary undertaking                                            -                     889
Repayment of shareholders' loans on acquisition                         (4,884)                       -
Net cash outflow from acquisitions and disposals                       (38,255)                (12,463)

Cash outflow before financing                                          (67,039)                (25,363)

Financing
Issue of ordinary share capital                                           1,653                       -
Loans advanced                                                           59,718                  20,810
Net cash inflow from financing                                           61,371                  20,810

Decrease in cash in the year                                            (5,668)                 (4,553)




Notes



1.              The financial information set out above does not constitute full
accounts within the meaning of section 254 of the Companies Act 1985.  Statutory
accounts for the period ended 31 December 2000 have been delivered to the
Registrar of Companies, with an unqualified auditor's report.  The 2001
statutory accounts will be finalised on the basis of the financial information
presented by the directors in their preliminary announcement and will be
delivered to the Registrar of Companies following the Company's annual general
meeting.



2.              Loss per share



Loss per share of 0.43 (2000: loss per share of €0.36) has been calculated on
the basis of a weighted average number of Ordinary Shares in issue during the
period ended 31st December 2001 of 460,711,530 (2000: 229,962,454) and the loss
after taxation of €(1,993,000) for the year (2000: loss of €(822,000).  There
was no dilution during the year.



3.              Dividend



The Directors do not recommend the payment of a dividend.



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