Probus Estates PLC
19 December 2005
Probus Estates PLC
('Probus Estates' or the 'Company')
Preliminary results for the year ended 31 December 2004
Chairman's statement
Results
Turnover for the year was €7.3 million, including sales of €3.4 million at
Casino de Mallorca in the period up until its sale in April 2004. The remaining
turnover represents rental income in the Netherlands and sales of units at Santa
Ponsa in Mallorca.
The Group incurred an operating loss of €2.0 million (2003 €44.7 million loss).
The overall Group loss after tax was €17.4 million (2003 €54.6 million loss).
Review of major events
The sale of Casino de Mallorca in April 2004 was reported in the Chairman's
Statement in the Annual Report for 2003. Since then there have continued to be
occasional sales of units at Santa Ponsa. There has been no progress on the
development of Can Vinyes and various discussions have taken place concerning
its sale, but no binding contract has yet been agreed.
Financial position
The Company's financial position continues to be extremely difficult. The
Company's shares have been suspended from trading since 23 June 2005 due to the
Company's inability to issue its annual accounts within the timescale set out in
the AIM Rules.
As I reported last year, the Group is able to service its bank debt in the
Netherlands using rental income from its Dutch properties, and its bank debt in
Spain using sale proceeds from the retail development at Santa Ponsa. The Group
is not currently in a position to repay its debt to Uni-Invest, the major
creditor, on which it is in default.
The Directors are aware of possible third-party interest in an acquisition of
Uni-Invest's position of debt and equity in the Company, but they are also aware
that Uni-Invest is entitled to enforce the charges it has on the Group's
properties and that Uni-Invest will not wait indefinitely to recover the debt
due to it. As previously reported, the Standstill Agreement which was entered
into with Uni-Invest expired on 30 June 2004. Since then the Company has relied
on Uni-Invest's forbearance, but recently the Board has been under increasing
pressure from Uni-Invest to conclude sales of the Group's assets.
The Directors have no control over any discussions that Uni-Invest may have with
third parties and cannot therefore predict the timing, or the likely outcome, of
such discussions. If Uni-Invest's position was taken over by a third party, it
would be the expectation of the Directors that the Company would be
recapitalised and its financing structured on a more long term basis. However,
if these, or any other, discussions do not have a favourable outcome, and if and
when sales of the remaining assets are concluded, any proceeds after
satisfaction of secured bank borrowings will be paid to Uni-Invest, and the
Company and its subsidiaries are likely to be placed in liquidation. For this
reason, the Directors have written down all assets to the value which they
believe is recoverable in the near future, but they recognise that the valuation
of the development land at Can Vinyes is dependent on future cooperation with
the local authority, and that is difficult to assess.
Under the AIM Rules, the interim results of the company for the six months ended
30 June 2005 were due to be released by 30 September 2005. The Directors expect
that the annual report and accounts will be posted to shareholders on 22
December 2005 and that the interim results will be released before the end of
this week. On announcement of the interim results, the Directors will request
that the suspension of the shares from trading on AIM is lifted.
Hans R Junge Chairman and Chief Executive
19 December 2005
Group profit and loss account
for the year ended 31 December 2004
Year ended Year ended Year Year ended Year ended Year
31 December 31 December ended 31 December 31 December ended
2004 2004 31 2003 2003 31
Before Exceptional December Before Exceptional December
exceptional Items 2004 Exceptional Items 2003
items Total Items Total
Notes €000 €000 €000 €000 €000 €000
Turnover
Continuing operations 3,951 - 3,951 6,205 - 6,205
Discontinued 3,368 - 3,368 13,710 - 13,710
operations
7,319 - 7,319 19,915 - 19,915
Cost of sales (3,052) (51) (3,103) (15,949) (35,236) (51,185)
Gross profit/(loss) 4,267 (51) 4,216 3,966 (35,236) (31,270)
Administrative (1,268) (4,941) (6,209) (2,895) (10,577) (13,472)
expenses
Operating profit/
(loss)
Continuing operations 1,755 (4,992) (3,237) 3,009 (45,813) (42,804)
Discontinued 1,244 - 1,244 (1,938) - (1,938)
operations
2,999 (4,992) (1,993) 1,071 (45,813) (44,742)
Loss on disposal of - (8,323) (8,323) - -
discontinued
operations
Profit/(loss) on 2,999 (13,315) (10,316) 1,071 (45,813) (44,742)
ordinary activities
before interest and
tax
Interest receivable 10 - 10 31 - 31
Interest payable (6,738) - (6,738) (7,799) - (7,799)
Loss on ordinary (3,729) (13,315) (17,044) (6,697) (45,813) (52,510)
activities before
taxation
Taxation (331) - (331) (2,120) - (2,120)
Loss for the year (4,060) (13,315) (17,375) (8,817) (45,813) (54,630)
Loss per share, basic 2 - - (2.9c) - (9.7c)
and diluted
Group balance sheet
as at 31 December 2004
31 31
December December
2004 2003
€000 €000
Fixed assets
Intangible assets
Goodwill - 8,029
Tangible assets
Investment properties 25,504 30,445
Freehold land and buildings - 23,022
Plant and equipment 2 4,098
25,506 65,594
Current assets
Stock - 87
Development properties 4,186 4,989
Development land 16,450 16,501
Debtors 1,290 2,151
Cash at bank and in hand 74 831
22,000 24,559
Creditors - amounts falling due within one year (53,870) (73,943)
Net current liabilities (31,870) (49,384)
Total assets less current liabilities (6,364) 16,210
Creditors - amounts falling due after more than one year
Convertible loan notes (11,850) (11,850)
Other creditors (22,377) (26,623)
(34,227) (38,473)
Net liabilities (40,591) (22,263)
Capital and reserves
Called up share capital 65,502 65,502
Share premium account 34,118 34,118
Profit and loss account (140,211) (121,883)
Equity shareholders' deficit (40,591) (22,263)
Company balance sheet
as at 31 December 2004
31 31
December December
2004 2003
€000 €000
Fixed assets
Investments in subsidiary undertakings 15,975 21,421
15,975 21,421
Current assets
Debtors 3,409 21,475
Cash at bank and in hand 13 1
3,422 21,476
Creditors - amounts falling due within one year (50,054) (57,369)
Net current liabilities (46,632) (35,893)
Total assets less current liabilities (30,657) (14,472)
Creditors - amounts falling due after more than one year
Convertible loan notes (11,850) (11,850)
Net liabilities (42,507) (26,322)
Capital and reserves
Called up share capital 65,502 65,502
Share premium account 34,118 34,118
Profit and loss account (142,127) (125,942)
Equity shareholders' deficit (42,507) (26,322)
Other Group primary statements
for the year ended 31 December 2004
Group statement of total recognised gains and losses
Year ended Year ended
31 31
December December
2004 2003
€000 €000
Loss for the year (17,375) (54,630)
Deficit arising on revaluation of investment properties - (315)
Currency translation differences (953) 233
Total recognised gains and losses relating to the financial year (18,328) (54,712)
Group reconciliation of movements in shareholders' deficit
Year ended Year ended
31 31
December December
2004 2003
€000 €000
Loss for the year (17,375) (54,630)
Currency translation differences (953) 233
Deficit arising on revaluation of investment properties - (315)
Increase in share capital - 810
Premium arising on issue of shares - 33
Net increase in shareholders' deficit (18,328) (53,869)
Opening equity shareholders' (deficit)/funds (22,263) 31,606
Closing equity shareholders' deficit (40,591) (22,263)
Group cash flow statement
for the year ended 31 December 2004
31 31
December December
2004 2003
€000 €000
Net cash inflow from operating activities 3,956 4,792
Returns on investments and servicing of finance
Interest received 10 31
Interest paid (1,633) (3,982)
Net cash outflow from returns on investments (1,623) (3,951)
and servicing of finance
Taxation
Corporation tax paid (93) (20)
Capital expenditure
Proceeds from sale of tangible fixed assets - 108
Purchase of other tangible fixed assets - (168)
Net cash outflow from capital expenditure - (60)
Acquisitions and disposals
Sale of subsidiaries 13,309 -
Net cash inflow from acquisitions and disposals 13,309 -
Cash inflow before financing 15,549 761
Financing
Issue of ordinary share capital - 843
Loans repaid (14,162) (2,375)
Net cash outflow from financing (14,162) (1,532)
Increase/(decrease) in cash in the year 1,387 (771)
Notes
1. The financial information set out above does not constitute the Group's
statutory accounts for the years ended 31 December 2004 or 31 December
2003, but is derived from those accounts.
Statutory accounts for the year ended 31 December 2003 have been delivered
to the Registrar of Companies. The auditor's report on the 2003 accounts
was unqualified, but did refer to a fundamental uncertainty as to the
ability of the company to continue in existence and as to the possible sale
of the debt and equity interests in the Company. The wording extracted
from the auditor's report is as follows:
'Going concern
'In forming our opinion, we have considered the adequacy of the disclosures
made in note 1 of the financial statements concerning the fundamental
uncertainty over the ability of the company and Group to continue in
existence which is dependent upon the continued availability of existing
financing and further financing becoming available, either from the
existing major creditor, which is also a shareholder in the Company, or
from the purchase of its debt and equity interests in the Company, the
possible sale of which is currently under discussion. In view of the
significance of this uncertainty, we consider that this should be brought
to your attention but our opinion is not qualified in this respect.'
The 2004 statutory accounts will be delivered to the Registrar of Companies
following the Company's annual general meeting. The auditor's report on the
2004 accounts was qualified. The qualification was in respect of a
limitation of scope in relation to the auditors' access to the books and
records of the Spanish subsidiaries sold during the year, but in other
respects was unqualified. The audit report also referred to a fundamental
uncertainty over the company's ability to continue in existence due to the
availability of funding and also a fundamental uncertainty over the
carrying value of certain of the company's assets. The wording extracted
from the auditors' report is as follows:
'Basis of audit opinion
'We planned our audit so as to obtain all the information and explanations
which we considered necessary in order to provide us with sufficient
evidence to give reasonable assurance that the financial statements are
free from material misstatement, whether caused by fraud or other
irregularity or error. However, the evidence available to us was limited
because we had no access to the books and records of the group's Spanish
subsidiaries sold during the year and were therefore unable to obtain
sufficient evidence to be able to form a view on the analysis of the
results from discontinued operations disclosed on the face of the profit
and loss account and in note 2 to the financial statements, and the
resultant loss on disposal of discontinued operations as disclosed on the
face of the profit and loss account.'
'Fundamental uncertainty over going concern
'In forming our opinion, we have considered the adequacy of the disclosures
made in note 1 of the financial statements concerning the fundamental
uncertainty over the ability of the company and group to continue in
existence which is dependent upon the continued availability of existing
financing and further financing becoming available, either from the
existing major creditor, which is also a shareholder in the company, or
from any purchaser of its debt and equity interests in the company, for
which expressions of interest have been received, although formal
discussions have not yet commenced. In view of the significance of this
uncertainty, we consider that it should be brought to your attention but
our opinion is not further qualified in this respect.'
'Fundamental uncertainty over carrying value of land and investments in
subsidiary undertakings
'In addition, in forming our opinion, we have considered the adequacy of
the disclosures made in notes 12 and 9 to the financial statements
concerning the uncertainty over the recoverability of the carrying value of
the development land in Spain, which has been assessed by the directors on
the basis of an indicative offer from a potential purchaser. Until such
time as that or any other sale is completed, there is uncertainty over the
net realisable value of this development land on which it has not proved
possible to obtain planning consent. The carrying value of this land is
also critical in the assessment of the carrying value of investments in
subsidiary undertakings as set out in note 9 to the financial statements.
In view of the significance of this uncertainty, we consider that it should
be brought to your attention but our opinion is not further qualified in
this respect.'
'Qualified opinion arising from limitation in audit scope
'In our opinion the financial statements give a true and fair view of the
state of affairs of the company and the group as at 31 December 2004 and,
except for any adjustments that might have been found to be necessary had
we been able to obtain sufficient evidence concerning the results and loss
on disposal of discontinued operations, of the loss of the group for the
year then ended and have been properly prepared in accordance with the
Companies Act 1985.
'In respect solely of the limitation on our work relating to discontinued
operations, we have not obtained all the information and explanations that
we considered necessary for the purposes of our audit.'
2. Loss per share
Loss per share of 2.9 cents (2003: 9.7 cents) has been calculated on the
basis of a weighted average number of ordinary shares in issue during the
year ended 31 December 2004 of 595,523,083 (2003: 564,286,566) and the loss
after taxation of €17,375,000 for the year (2003: €54,630,000).
3. Dividend
The Directors do not recommend the payment of a dividend.
4. Copies of the annual report and accounts are expected to be posted to
shareholders on 22 December 2005 and will be available for one month from
that date from the registered office of the Company at Fifth Floor, 17
Hanover Square, London W1S 1HU.
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