TIDMABL
RNS Number : 1749N
Ablon Group Limited
30 August 2011
FOR IMMEDIATE RELEASE 30 August 2011
ABLON GROUP LIMITED
HALF YEAR RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2011 (UNAUDITED)
ABLON Group Limited ("ABLON" or "the Company" and, together with
its subsidiaries, the "Group"), a leading real estate owner and
developer in Central Europe, today announces its results for the
six months ended 30 June 2011 in accordance with IFRSs as adopted
by the EU.
HALF YEAR 2011 HIGHLIGHTS
-- Successful rights issue to raise EUR9.9 million before
expenses.
-- Total equity increased by EUR13.4 million as a result of the
rights issue and comprehensive income for the period.
-- Revenue at EUR15 million (H1 2010: EUR17.1 million, H2 2010:
EUR13.6 million). Revenue in all segments grew compared to H2 2010,
but did not reach H1 2010 levels due to much slower residential
sales of the Viva Residence apartments (37 units handed over in H1
2010: 10 in H1 2011).
-- Loan to equity ratio improved by 7.7 percentage points in the
half-year to 94.1% as at 30 June 2011 (31 December 2010:
101.8%)
-- Adjusted net asset value per share of EUR2.57 or LIR2.33 as
at 30 June 2011 (EUR3.10 or GBP2.67 as at 31 December 2010), due to
the dilutive effect of the rights issue.
-- The Company's shares were admitted to the Standard Listing of
the Official List on 1 July 2011 and trading on the AIM Market of
the London Stock Exchange was cancelled on the same date
chairman's statement
Alex Borrelli, Chairman of ABLON, commented:
"ABLON has made several important steps over the past six months
to place the Group in a favourable position to deliver increasing
value for our shareholders over the medium term.
ABLON completed a fully subscribed rights issue in May 2011, the
net proceeds from which have strengthened the Group's balance sheet
and provided additional working capital headroom.
The Group opened its third retail project in Budapest, the
Europeum Shopping Centre on 14 April 2011. The handover of this
project also marked the completion of the Group's first mixed use
site development as the Marriott Courtyard Hotel opened in the
upper floors of this building in 2010.
The rights issue raised the number of shares in public hands
enabling the Company to complete a Standard Listing on the Official
List of the UK Listing Authority and admission to trading on the
London Stock Exchange's main market for listed securities. The
Company's shares were admitted to the Official List on 1 July 2011
and trading on the AIM Market of the London Stock Exchange was
cancelled on the same date.
We believe that the move to the Official List will raise the
profile and public awareness of the Company so that it will be
better placed to achieve improved visibility and liquidity in its
issued share capital. We also believe that this move will provide
access to a wider audience of investors, as well as give the
Company greater flexibility with regard to listing on other EU
exchanges and, therefore, potential access to additional pools of
capital in the future.
We are pleased to have commenced the construction of the
Karolkowa Business Park in Warsaw. The A-class office complex will
be the Group's first project to enter the construction phase for
three years and its first in Poland.
The current economic environment still bears the hallmark of the
financial crisis, but we are increasingly aware of niche
opportunities in the markets in which we operate. We continue to
monitor potential development opportunities within our land bank in
the office, residential, logistics and retail segments that will
enable ABLON to deliver further growth and generate increasing
value for our shareholders."
-ends-
SUMMARY CONSOLIDATED INCOME STATEMENT
For the six months
in thousands of Euros ended
30 Jun 2011 30 Jun 2010
Gross rental income 8,347 8,692
Service charge income 3,291 2,729
Residential sales income 1,592 5,284
Hotel income 1,790 369
Revenue 15,020 17,073
------------ ------------
Cost of rental and service charge (3,822) (2,751)
Residential cost of sales (1,116) (3,684)
Hotel expense (2,147) (883)
Cost of sales (7,085) (7,318)
------------ ------------
Gross profit 7,935 9,755
------------ ------------
Net valuation gain/ (loss) (14,250) 11,180
Inventory provision (608) 754
Impairment of property plant and equipment 0 4,133
Sales and administrative expense (2,697) (3,116)
Other income/(expense) 8 212
Net operating profit / (loss) (9,612) 22,918
------------ ------------
Net financing income/(expenses) 6,235 (17,615)
Profit / (loss) before income tax (3,377) 5,303
------------ ------------
Tax 1,063 (1,641)
Profit/ (loss) for the period (2,314) 3,662
------------ ------------
Basic earnings/(losses) per share
(euro) (0.02) 0.03
Diluted earnings/(losses) per share
(euro) (0.02) 0.03
------------ ------------
Summary Consolidated Statement of Financial Position
in thousands of Euros 30 Jun 2011 31 Dec 2010
Non-current assets 487,924 483,552
Current assets 26,280 24,332
Total assets 514,204 507,884
------------ ------------
Total equity 248,633 235,192
------------ ------------
Non-current liabilities 186,905 187,521
Current liabilities 78,666 85,171
Total liabilities 265,571 272,962
------------ ------------
Total equity and liabilities 514,204 507,884
------------ ------------
Summary CONSOLIDATED Statement OF CASH FLOWS
For the six months
in thousands of Euros ended
30 Jun 2011 30 Jun 2010
Net cash generated from/ (used in)
operating activities 907 (2,164)
Net cash (used in) investing activities (2,141) (4,082)
Net cash from/ (used in) financing
activities 3,633 (2,140)
Effect of exchange rate fluctuations 108 220
Net increase/ (decrease) in cash and
cash equivalents 2,507 (8,166)
------------ ------------
For further information, please contact:
ABLON Group Limited Kristof Skwarek
Tel. +36 1 225 6600
Religare Capital Markets
James Pinner / Derek Crowhurst (Financial Adviser)
Tel. +44 (0)20 7444 0800
Daniel Briggs (Joint Corporate Broker)
Tel. +44 (0)20 7444 0500
ING Wholesale Banking
(Joint Corporate Broker)
Nathalie Bachich de Recina
Tel. +44 (0)20 7767 8362
Buchanan Communications
(Financial PR)
Tim Thompson / Richard Darby / Gabriella Clinkard
Tel. +44 (0)20 7466 5000
NOTES TO EDITORS
About ABLON Group Limited
Founded in 1993 in Budapest (Hungary), ABLON and its
subsidiaries (together the "ABLON Group") has properties at 34
locations, of which there are 15 completed projects, 1 project
shortly to enter the construction phase and 23 development projects
in Budapest, Prague, Bucharest, Warsaw and Gdansk. Its portfolio
comprises a diversified mix of office, residential, retail,
logistics and hotel developments valued at EUR574 million by
external independent appraisers (GVA and King Sturge), as at 31
December 2010. The ABLON Group had, as at 31 December 2010, 201,150
square metres of existing and income generating office,
residential, hotel, retail and logistics assets (at 15 locations)
in Budapest and Prague, with a significant development land bank
comprising a further 1,234,800 square metres (at 24 locations) in
Budapest, Prague, Bucharest, Warsaw and Gdansk. ABLON's shares are
traded on the Main Market of the London Stock Exchange under the
ticker 'ABL'.
DIRECTORS' REPORT
The Directors' Report is prepared under the Companies (Guernsey)
Law, 2008 as amended.
Operational Review
Budapest
The Europeum Shopping Centre opened on 14 April 2011 and
occupancy of this project reached 91% by the end of June (70%
pre-leased as at 31 December 2010). This increase was the major
contributor to the improvement in Budapest total occupancy, which
stood at 67% as at 30 June 2011 (65% as at 31 December 2010). The
Budapest- based expected annualised gross rent improved to EUR15.2
million (EUR14.7 million as of 31 December 2010).
Prague
At the end of June 2011, the total Prague occupancy was 91% (96%
as at 31 December 2010), while expected annualised gross rent was
unchanged at EUR2.7 million. In the residential development, 10
units were delivered to buyers during the six months ended 30 June
2011, compared to 37 in the corresponding period in 2010. As at 30
June 2011, 72 units had been sold out of a total of 162.
Bucharest
The Group's developments in Bucharest remain on hold until
market conditions improve.
Poland
On 6 July 2011, the Company announced that it had signed a
construction financing contract and would commence the construction
of the Karolkowa Business Park in Warsaw. The A-class office
complex will include 14,900 m2 of office space, 3,400 m2 of retail
space on the ground floor and 260 underground car parking spaces.
Karolkowa Business Park is located within a business park adjoining
Warsaw's Central Business District and is easily accessible by
public and private transportation links, including a new metro
station. Construction will commence in the near future and
completion is expected in the next 20 months.
The Group's other developments in Poland remain on hold until
market conditions improve.
Income Statement review
H1 2011 H2 2010* H1 2010
Gross rental income 8,347 7,844 8,692
Service charge income 3,291 3,146 2,729
Residential sales
income 1,592 1,259 5,284
Hotel income 1,790 1,378 368
15,020 13,627 17,073
-------- --------- --------
*Derived from the audited accounts for the year ended 31
December 2010 and the unaudited interim accounts for the six months
ended 30 June 2010.
Rental activities
Gross rental income was EUR8.3 million for the half-year ended
30 June 2011, representing a decrease of EUR0.4 million, or 4.6%,
from EUR8.7 million generated during the six months ended 30 June
2010. The decrease is due mainly to a falling occupancy at the BC
30 project, where annualised rental income decreased from EUR2.3
million as of 31 December 2009 at 97% occupancy to EUR1.7 million
as at 31 December 2010 with 69% occupancy. The Europeum Shopping
Centre opened in mid-April 2011. The additional revenues from this
project contribute to the growth in gross annualised rental income
as shown in the portfolio summary below but, as it was not
operating for the full period, the additional income had a lower
influence on the rental income in H1 2011. Comparing H1 2011 rental
income to the immediately preceding half-year of H2 2010, there was
an increase of EUR0.5 million, mainly as a result of the newly
opened shopping centre.
Residential activities
Residential income was EUR1.6 million for the six months ended
30 June 2011, compared to EUR5.3 for the half year ended 30 June
2010. The income is attributed to 10 units delivered to buyers at
the Viva Residence project in Prague (H1 2010: 37 units delivered).
Residential cost of sales was EUR1.1 million for the period ended
30 June 2011, compared to EUR3.7 million for the period ended 30
June 2010.
Hotel activities
Marriott Courtyard operations generated hotel sales income of
EUR1.8 million in the first six months of 2011, while the figure
was EUR0.4 million for the six months ended 30 June 2010. In the
comparison period the Marriott Courtyard operated for 2 full months
only, having opened on 26 April 2010. The hotel cost of sales,
which include depreciation, were EUR2.1 million for the period
ended 30 June 2011 (EUR0.9 million for the corresponding period in
2010).
Net loss on fair value adjustment of investment property
Net losses on the fair value adjustment of investment property
for the half-year ended 30 June 2011 were EUR14.3 million, compared
to a net gain of EUR11.2 for the six months ended 30 June 2010. The
main reason for the losses are exchange differences caused by a
4.5% appreciation of the Hungarian Forint from 278.75 HUF/EUR as at
31 December 2010 to 266.29 as at 30 June 2011 compared with the
5.6% depreciation in the first half of 2010 from 270.84 HUF/EUR as
at 31 December 2009 to 286.10 as at 30 June 2010. The 31 December
2010 property valuations were used for the purposes of the current
financial statements.
Valuations of investment properties are denominated in Euros
but, as the functional currencies of the Group's subsidiaries are
the respective local currencies, they are translated into the local
currency. The change in the local currency values of investment
properties is recognised in the income statement on the row of net
change on fair value adjustment. This accounting treatment means
that, even if there is no change in the underlying Euro value of
the investment properties, exchange rate changes will still result
in changes in fair value adjustment. As the majority of assets are
investment properties, these changes can substantially influence
the reported profit of the Group.
Impairment of inventory
Impairment losses on inventory for the six months ended 30 June
2011 were EUR0.6 million against an impairment gain EUR0.8 million
for the six months ended 30 June 2010. The change of direction in
the impairment is due to exchange rate movements, mainly that the
Romanian Lei appreciated by 1.2% during the six months ended 30
June 2011 compared with a 3.3% depreciation in the corresponding
period in 2010.
Impairment of property, plant and equipment
There were no impairment gains or losses on property, plant and
equipment for the half-year ended 30 June 2011 (EUR4.1 million
impairment gain in the six months ended 30 June 2010).
Sales and marketing expenses
Sales and marketing expenses were EUR0.3 million for the six
months ended 30 June 2011, a decrease of EUR0.1 million from EUR0.4
million in the first half of 2010.
Administrative expenses
Administrative expenses were EUR2.4 million for the half-year
ended 30 June 2011, a decrease of EUR0.3 million compared to the
EUR2.7 million for the six months ended 30 June 2010.
Net financing income
Net financing income was EUR6.2 million for the six months ended
30 June 2011, an increase of EUR23.8 million, compared to the net
financing expenses of EUR17.6 million for the corresponding period
in 2010. The increase in financial income is primarily due to
retranslation of certain Group loans as a result of the marked
appreciation of 4.5% in the Hungarian Forint in the first six
months of 2011, while the first six months of 2010 saw a 5.6%
depreciation. As explained in the 'net loss on fair value of
investment property' section, this relates to a consolidation of
retranslation at the subsidiary level, not the underlying value of
the loans in Euros.
Six months ended 30 June 2011 2010
Net interest expenses (4.4) (3.9)
Net FX movement 10.7 (13.6)
Other (0.1) (0.1)
Total net finance income/(expenses) 6.2 (17.6)
Current income tax
Current income tax was EUR0.3 million for the half-year ended 30
June 2011, a decrease of EUR0.1 million, from EUR0.4 million for
the six months ended 30 June 2010.
Deferred income tax
The appreciation of the local currencies in the six months ended
30 June 2011 lowered the difference between the historical cost of
the Group's property portfolio values and revalued carrying amounts
and the deferred tax calculated on the positive difference.
Deferred income tax gains were EUR1.4 million for the six months
ended 30 June 2011, compared to a EUR1.3 million deferred tax
expense for the six months ended 30 June 2010.
Statement of financial position review
Investment property
The value of investment property was EUR396.7 million as at 30
June 2011, slightly increased from EUR392.9 million as at 31
December 2010. The increase is due to the relocation of ABLON's
Budapest offices from the Gateway project to a smaller office area
situated in BC 30. The own area was reclassified from property,
plant and equipment to investment property and revaluations were
applied for the area previously shown at cost. The office in BC 30
had been taken out of investment property and shown as property,
plant and equipment as at 31 December 2010, as the area was already
being used by ABLON at that time.
Property, plant and equipment
Property, plant and equipment increased by EUR0.2 million, from
EUR34.1 million as at 31 December 2010 to EUR34.3 million as at 30
June 2011. The increase is due to the appreciation of the local
currencies.
Long-term inventory
Long-term inventory increased by EUR0.2 million, from EUR55
million as at 31 December 2010 to EUR55.2 million as at 30 June
2011.
Current assets
Current assets include inventories (in particular, residential
property intended for sale), current receivables (rent receivables,
receivables from property sales and receivables from shareholders)
and other assets, bank balances and cash. Total current assets
increased by EUR2 million, from EUR24.3 million as at 31 December
2010 to EUR26.3 million as at 30 June 2011. The increase was due to
a EUR2.5 million increase in cash and cash equivalents.
Non--current liabilities
Non--current liabilities include long--term borrowings from
commercial banks and shareholders, as well as deferred tax
liabilities for future tax obligations. Total non--current
liabilities decreased by EUR0.6 million, from EUR187.5 million as
at 31 December 2010 to EUR186.9 million as at 30 June 2011.
Current liabilities
Current liabilities decreased by EUR6.5 million, from EUR85.2
million as at 31 December 2010 to EUR78.7 million as at 30 June
2011. The decrease was primarily due to a decrease of EUR4.9
million in short-term loans due to loan repayments.
Liquidity and Cash flow
The Group's internal sources of liquidity and cash flow are
generated from rental revenues and the sale of residential
apartments. The Group had a positive operational cash flow of
EUR0.9 million for the six months ended 30 June 2011, an
improvement of EUR3.1 million compared to the negative operational
cash flow of EUR2.2 million for the six months ended 30 June
2010.
The Group's loan to equity ratio improved by 7.7 percentage
points to stand at 94.1% as at 30 June 2011, while it was 101.8% as
at 31 December 2010. The Group's debt ratio (as measured by debt to
total assets) was 46% as at 30 June 2011, a decrease of 1
percentage point from 47% as at 31 December 2010. The lower
indebtedness of the Group was achieved largely due to the capital
inflow from the rights issue while the comprehensive income and
continuing repayment of loans from operational cash flow also
contributed.
The Group finances its development activity with bank loans.
Typically, project finance covers the three-year duration of the
construction and, after completion of construction, the loan is
usually extended to a long-term loan of between 12-15 years.
Influenced by recession in its home markets, the Company
announced a moratorium on the construction of new projects in the
Group's development pipeline in February 2009. Over the ensuing
years, the loans relating to these projects expired and were
continuously prolonged. This pattern continues today as the Group
assesses opportunities in market niches where perceived demand and
the availability of project finance are expected to allow the start
of the construction phase with the likelihood of profitable
results.
Due to the short-term nature of the loan prolongations, the
current liabilities of the Group exceed its current assets. That
said, the Group does have 10 unencumbered properties with an
appraised value of EUR100.4 million.
The Group has six loans with covenants:
One loan (with an outstanding amount of approximately EUR38.5
million as at 30 June 2011 and an expiry date of 25 October 2012)
has a 130% interest service cover ("ISC") covenant with certain
cash trap provisions in force when the ISC ratio is between 100 and
130%. Although the Group companies which are subject to the loan
agreement are not in technical breach of this covenant, the current
ISC ratio of such loan is between 100 and 130% and, therefore,
those Group companies are subject to the cash trap provisions.
Pursuant to those provisions, all excess net operating income (if
any) of such Group companies is collected on reserve accounts and
may only be used for the payment of certain re-letting expenditures
in respect of certain premises if there is not sufficient current
income.
Another loan (with an outstanding amount of approximately EUR9.1
million as at 30 June 2011 and an expiry date of 30 April 2013) has
a 120% debt--service coverage ratio ("DSCR") covenant and the
relevant Group company is currently in breach of this covenant. The
Group company has deposited EUR300,000 at the lender's request into
a special reserve account until such time as the covenant ceases to
be breached.
A third loan (with an outstanding amount of approximately
EUR12.4 million as at 30 June 2011 and an expiry date of 31 March
2019) has a 115% DSCR covenant. The relevant Group company is
technically in breach of this covenant, although the lender has not
issued a default notice.
The three remaining loans with covenants are within those
covenants' requirements.
Portfolio summary
The updated list of the Group's projects as at 30 June 2011 is
detailed below:
Expected
Annualized Future
Group Project Completed Gross Occupancy Under Develop-ment
Project holding Type Area Rent rate develop-ment sites Valuation
-------------- -------- ------------
(EUR
million (EUR
p.a.) (sq. million)
(sq. as at (%) as at as at m) as as at
m) 30.06.11 30.06.11 30.06.11 at 30.06.11 31.12.10
-------------- -------- ------------
Budapest
-------------- -------- ------------ ---------- ----------- ---------- ------------- ------------- ----------
BC. 99 100% Office 17,100 2.4 89% - 36,200
Budafoki
/ Hightech
Park 100% Office 2,600 0.1 44% - 142,900
Fogarasi 100% Office 2,700 0.4 100% - -
M3 100% Office 17,900 0.5 18% - -
BC. 91 100% Office 6,600 0.7 73% - -
BC. 30 100% Office 13,000 1.7 74% - -
Buy-Way
Dunakeszi 100% Retail 21,600 1.1 57% - 3,700
Buy-Way
Soroksar 100% Retail 11,500 0.4 42% - -
Zoldvaros 100% Residential - - - - 29,100
Gateway 100% Office 34,900 5.6 95% - -
Europeum 100% Retail 6,500 1.4 91% - -
Marriott
Courtyard 100% Hotel 12,600 - - - -
Airport City 100% Storage 19,600 0.9 57% - 51,600
Hold 100% Hotel - - - - 6,800
Katona 100% Hotel - - - - 6,100
Nap 100% Hotel - - - - 5,100
Rosslyn 100% Hotel - - - - 5,500
Erzsebet 100% Office - - - - 17,900
Newage 100% Office - - - - 13,700
Rakoczi 100% Retail 750 - - - -
-------------- -------- ------------ ---------- ----------- ---------- ------------- ------------- ----------
Total
Budapest 167,350 15.2 67% - 318,600 365
-------------- -------- ------------ ---------- ----------- ---------- ------------- ------------- ----------
Prague
-------------- -------- ------------ ---------- ----------- ---------- ------------- ------------- ----------
Palmovka 100% Office 4,500 0.7 93% - -
Meteor 100% Office 14,400 2.0 91% - 5,800
VIVA
Residence 58% Residential 14,900 - - - -
May House 100% Office - - - - 8,000
Mixed
Kolben 100% use - - - - 74,200
Ritka 100% Residential - - - - 31,500
Total Prague 33,800 2.7 91% - 119,500 96
-------------- -------- ------------ ---------- ----------- ---------- ------------- ------------- ----------
Bucharest
-------------- -------- ------------ ---------- ----------- ---------- ------------- ------------- ----------
Mogosaia 88% Residential - - - - 40,000
Sunset Res. 88% Residential - - - - 165,000
Pipera 3H 100% Mix - - - - 100,000
Pipera 4H 100% Mix - - - - 100,000
Airport city 100% Office - - - - 264,000
Vlad Tepes 100% Office - - - - 11,000
Total
Bucharest - - - - 680,000 59
-------------- -------- ------------ ---------- ----------- ---------- ------------- ------------- ----------
Poland
K.B.P. 100% Mix - - - - 18,700
Gdansk 51% Residential - - - - 58,000
Jerusalemska 100% Office - - - - 40,000
-------- ------------
Total Poland - - - - 116,700 54
-------------- -------- ------------ ---------- ----------- ---------- ------------- ------------- ----------
Total Group 201,150 17.9 70% - 1,234,800 574
-------------- -------- ------------ ---------- ----------- ---------- ------------- ------------- ----------
The table shows expected annualised gross rent as given to the
valuation of the separate buildings, the data is not consolidated.
Own offices in BC 30 and Meteor have an expected annualised gross
rent of EUR0.2 million which is included in the totals.
The above valuations are based on the appraisal reports
conducted by GVA Robertson in Budapest, Prague, and Poland, and by
King Sturge in Romania as at 31 December 2010. The values are based
on the residual development approach for the future development
sites (except for Romania where the market comparable approach was
used) and discounted cash flow method for the yielding
properties.
Net Asset Value ("NAV")
The Company's real estate assets were valued on 31 December 2010
at EUR574.0 million by external independent appraisers (GVA and
King Sturge), in accordance with International Valuation Standards.
The following table demonstrates the calculation of Adjusted Net
Asset Value based on the GVA and King Sturge valuation report and
the Company's financial statements as at 30 June 2011:
EUR Million (except per share data)
30 June 2011 31 December 2010
Shareholders' equity 248.6 235.2
Valuation Adjustments 78.8 82.3
Deferred Tax Liability 23.2 23.5
Minority rights (2.1) (2.3)
Total adjusted net
asset value 348.5 338.7
NAV per share EUR 2.57 3.10
NAV per share LIR 2.33 (EUR/LIR = 1.1) 2.67 (EUR/LIR = 1.16)
[1] Property valuation of EUR574 m less IFRS investment property
(EUR396.7m), property plant and equipment (EUR34.3m) and
inventories (EUR64.2m)
Dividend Policy
The Company has adopted a dividend policy that will reflect
long-term earnings and cash flow potential while at the same time
maintaining both prudent dividend cover and adequate capital
resources within the business.
As a result of continued uncertainty in the economic outlook of
the Group's markets, the Board of Directors of the Company has
decided it would not be prudent to recommend the payment of an
interim dividend.
This approach supports the Company's initiatives to preserve
cash during the current challenging market environment. The Board
of Directors of the Company believe that shareholders' interests
will be better served by retaining the Group's cash to improve its
working capital position. The Company cannot at this stage indicate
when it will pay its next dividend.
Directors' declaration of responsibility
In the Directors' opinion:
The condensed consolidated interim financial statements and
notes have been prepared in accordance with IAS 34 'Interim
Financial Reporting' as adopted by the European Union, the
Disclosure and Transparency Rules ("DTR") of the Financial Services
Authority in the United Kingdom, applicable accounting standards
and the Companies (Guernsey) Law 2008 using the most appropriate
accounting policies for the Group's business and supported by
reasonable and prudent judgements.
The condensed consolidated interim financial statements and
notes give a true and fair view of the assets, liabilities and
financial position of the Group as at 30 June 2011 and the results
and cash flows of the Group for the six months then ended.
The interim report includes a fair review of the information
required by DTR 4.2.8R and DTR 4.2.7R, namely:
-- an indication of important events that have occurred during
the six months ended 30 June 2011 and their impact on the condensed
consolidated interim financial statements, and a description of the
principal risks and uncertainties for the remaining six months of
the current financial year; and
-- material related party transactions that have taken place in
the six months ended 30 June 2011 and any material changes in the
related party transactions described in the annual report for the
year ended 31 December 2010.
KPMG Hungaria Kft. Tel.: +36 (1) 887 71 00
Vaci ut 99. Fax: +36 (1) 887 71 01
H-1139 Budapest E-mail: info@kpmg.hu
Hungary Internet:kpmg.hu
Independent Auditors' Report on Review of Interim Financial
Information
To the shareholders of ABLON Group Limited
Introduction
We have reviewed the accompanying condensed consolidated
statement of financial position of ABLON Group Limited (the
"Company") as at 30 June 2011, the condensed consolidated
statements of comprehensive income, changes in equity and cash
flows for the six month period then ended and a summary of
significant accounting policies and selected explanatory notes
("the condensed consolidated interim financial information").
Management is responsible for the preparation and presentation of
this condensed consolidated interim financial information in
accordance with IAS 34, 'Interim Financial Reporting'. Our
responsibility is to express a conclusion on this condensed
consolidated interim financial information based on our review.
Scope of Review
We conducted our review in accordance with the International
Standard on Review Engagements 2410, "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity". A
review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the accompanying condensed consolidated
interim financial information as at 30 June 2011 is not prepared,
in all material respects, in accordance with IAS 34, 'Interim
Financial Reporting'.
Emphasis of Matter
Without qualifying our conclusion, we draw attention to Note 2
(c) in the condensed consolidated interim financial information.
The Company's current liabilities exceeded its total current assets
by EUR 52 million as at 30 June 2011. Based on the loan contracts
the Company can make corrective payments and deposits within 5 to
30 days upon the lender's written request to cease the covenants
being breached.
These circumstances, along with other matters as set forth in
Note 2 (c), indicate the existence of a material uncertainty that
may cast significant doubt about the Company's ability to continue
as a going concern. The management's view on how the Company is
able to continue as a going concern is also disclosed in Note 2
(c).
26 August 2011
KPMG Hungaria Kft.
Agocs Gabor
Partner
ABLON Group Limited
Condensed Consolidated Interim Financial Statements
Prepared under IAS 34 'Interim Financial Reporting'
Six months ended 30 June 2011
Condensed consolidated statement of financial
position
30 June 31 December
In thousands of Euros Note 2011 2010
ASSETS
Non-current assets
Investment property 5 396,678 392,931
Property, plant and equipment 6 34,301 34,101
Deferred tax assets 1,727 1,553
Long term inventory 7 55,218 54,967
Total non-current assets 487,924 483,552
----------------------------------------- ------ --------- ------------
Current assets
Inventories 7 8,965 9,728
Trade and other receivables 3,327 3,123
Cash and cash equivalents 13,988 11,481
Total current assets 26,280 24,332
----------------------------------------- ------ --------- ------------
TOTAL ASSETS 514,204 507,884
----------------------------------------- ------ --------- ------------
EQUITY
Capital and reserves
Share capital 9 1,358 1,096
Treasury shares (68) (68)
Translation reserve (2,200) (8,948)
Share based payment reserve 1,813 1,813
Share premium 9 266,479 257,727
Retained earnings (17,621) (15,541)
Total equity attributable to the
equity holders of the parent 249,761 236,079
----------------------------------------- ------ --------- ------------
Non-controlling interest (1,128) (887)
TOTAL EQUITY 248,633 235,192
----------------------------------------- ------ --------- ------------
LIABILITIES
Non-current liabilities
Borrowings 8 162,619 163,102
Deferred tax liability 23,174 23,510
Other non-current liabilities 1,112 909
Total non-current liabilities 186,905 187,521
----------------------------------------- ------ --------- ------------
Current liabilities
Borrowings 8 71,437 76,335
Trade and other payables 7,105 8,668
Current income tax liabilities 124 168
Total current liabilities 78,666 85,171
----------------------------------------- ------ --------- ------------
TOTAL LIABILITIES 265,571 272,692
----------------------------------------- ------ --------- ------------
TOTAL EQUITY AND LIABILITIES 514,204 507,884
----------------------------------------- ------ --------- ------------
Condensed consolidated statement of comprehensive
income
For the six months ended 30 June
In thousands of Euros Note 2011 2010
Revenue 15,020 17,073
Cost of sales (7,085) (7,318)
---------
Gross profit 7,935 9,755
Net gain / (loss) from fair value adjustment
on investment property 5 (14,250) 11,180
(Write down )/ Reversal of write down
of inventory 7 (608) 754
Impairment of property, plant and equipment 6 - 4,133
Selling and marketing costs (276) (406)
Administrative expenses (2,420) (2,710)
Other income 71 455
Other expenses (64) (243)
--------- ---------
Net operating profit / (loss) (9,612) 22,918
Finance income 8 11,414 2,096
Finance expenses 8 (5,179) (19,711)
Net finance income / (expenses) 6,235 (17,615)
--------- ---------
Profit or (loss) before income tax (3,377) 5,303
Current tax (expense) (324) (375)
Deferred tax benefit 1,387 (1,266)
Total income tax income / (expenses) 1,063 (1,641)
--------- ---------
Profit or (loss) for the period (2,314) 3,662
--------- ---------
Other comprehensive income
Foreign currency translation differences 6,741 (3,972)
Other comprehensive income for the period 6,741 (3,972)
--------- ---------
Other comprehensive income attributable
to:
The owners of the Company 6,748 -
Non-controlling interest (7) -
Total comprehensive income for the period 4,427 (310)
--------- ---------
Profit or (loss) attributable to:
The owners of the Company (2,080) 3,662
Non-controlling interest (234) -
Profit or (loss) for the period (2,314) 3,662
--------- ---------
Total comprehensive income attributable
to:
The owners of the Company 4,668 (310)
Non-controlling interest (241) -
---------
Total comprehensive income for the period 4,427 (310)
--------- ---------
Earnings per share
Basic earnings/ (loss) per share (Euros) 9 (0.02) 0.03
--------- ---------
Diluted earnings/ (loss) per share (Euros) 9 (0.02) 0.03
--------- ---------
Condensed consolidated statement of changes in equity
Total
attributable
to equity
in thousands of Attributable to equity holders holders of Non-controlling Total
Euros of the Company the Group interest equity
Share
based
payment
Share Treasury Retained Share reserve Trans-lation
capital shares earnings premium (1) reserve
Balance at 1
January 2010 1,096 (68) (42,794) 257,727 1,834 (7,568) 210,227 - 210,227
Movement in
equity from
share based
payments - - - - (21) - (21) - (21)
-------- --------- --------- -------- -------- ------------- ------------- ---------------- --------
Capital
transactions
with
shareholders - - - - (21) - (21) - (21)
-------- --------- --------- -------- -------- ------------- ------------- ---------------- --------
Profit /(loss)
for the year - - 3,662 - - - 3,662 - 3,662
Total other
comprehensive
income/(expense) - - - - - (3,972) (3,972) - (3,972)
-------- --------- --------- -------- -------- ------------- ------------- ---------------- --------
Total
comprehensive
income for the
period - - 3,662 - - (3,972) (310) - (310)
-------- --------- --------- -------- -------- ------------- ------------- ---------------- --------
Balance at 30
June 2010 1,096 (68) (39,132) 257,727 1,813 (11,540) 209,896 - 209,896
-------- --------- --------- -------- -------- ------------- ------------- ---------------- --------
Balance at 1 July
2010 1,096 (68) (39,132) 257,727 1,813 (11,540) 209,896 - 209,896
-------- --------- --------- -------- -------- ------------- ------------- ---------------- --------
Capital
transactions with
shareholders - - - - - - - - -
-------- --------- --------- -------- -------- ------------- ------------- ---------------- --------
Profit /(loss)
for the year - - 23,591 - - - 23,591 (843) 22,748
Total other
comprehensive
income/(expense) - - - - - 2,592 2,592 (44) 2,548
-------- --------- --------- -------- -------- ------------- ------------- ---------------- --------
Total
comprehensive
income for the
period - - 23,591 - - 2,592 26,183 (887) 25,296
-------- --------- --------- -------- -------- ------------- ------------- ---------------- --------
Balance at 31
December 2010 1,096 (68) (15,541) 257,727 1,813 (8,948) 236,079 (887) 235,192
-------- --------- --------- -------- -------- ------------- ------------- ---------------- --------
Balance at 1
January 2011 1,096 (68) (15,541) 257,727 1,813 (8,948) 236,079 (887) 235,192
Shares issued 262 - - 8,752 - - 9,014 - 9,014
Capital
transactions
with
shareholders 262 - - 8,752 - - 9,014 - 9,014
-------- --------- --------- -------- -------- ------------- ------------- ---------------- --------
Profit /(loss)
for the year - - (2,080) - - - (2,080) (234) (2,314)
Total other
comprehensive
income - - - - - 6,748 6,748 (7) 6,741
-------- --------- --------- -------- -------- ------------- ------------- ---------------- --------
Total
comprehensive
income for the
period - - (2,080) - - 6,748 4,668 (241) 4,427
--------
Balance at 30
June 2011 1,358 (68) (17,621) 266,479 1,813 (2,200) 249,761 (1,128) 248,633
-------- --------- --------- -------- -------- ------------- ------------- ---------------- --------
(1) Share based payment figures for 2010 have been restated and
as a result EUR(21,000) has been reclassified from Other
comprehensive income
to Equity through Consolidated statement of changes in
equity.
Condensed consolidated statement of
cash flows
For the six months ended 30 June
In thousands of Euros 2011 2010
Cash flows from operating activities
Profit for the period (2,313) 3,662
Adjustments for:
- Income tax expense (1,063) 1,641
- Depreciation of property, plant and
equipment 127 189
- Hotel depreciation 611 288
- (Gain) or loss on sale of property,
plant and equipment - 29
- Foreign exchange (gain) or loss on
translation to functional currency (11,240) 13,087
- Change in fair value of investment
property 14,250 (11,180)
- Impairment loss / (reversal of impairment)
on PPE - (4,133)
- Write down/ (reversal of write down)
of Inventory 608 (754)
- Interest income (70) (101)
- Interest expenses 4,502 4,014
- Cost of share based payments - (21)
Change in inventories 1,052 2,913
Change in trade and other receivables (204) 580
Change in trade and other payables (1,563) (6,515)
Change in other non-current liabilities 1,080 (1,358)
Interest paid (4,502) (4,276)
Income taxes paid (368) (229)
Net cash generated from/ (used in)
operating activities 907 (2,164)
Cash flows from investing activities
Interest received 70 101
Addition to investment property (1,416) (3,150)
Acquisition of property, plant and
equipment (795) (1,033)
Net cash (used in) investing activities (2,141) (4,082)
Cash flows from financing activities
Proceeds from borrowings - 1,327
Repayment of borrowings (5,381) (3,467)
Proceed from issuance of share capital 9,014 -
Repurchase of treasury shares - -
Net cash from / (used in) financing
activities 3,633 (2,140)
Net increase / (decrease) in cash and
cash equivalents 2,399 (8,386)
Cash and cash equivalents at 1 January 11,481 22,046
Effect of exchange rate fluctuations
on cash held 108 220
Cash and cash equivalents at 30 June 13,988 13,880
Notes to the condensed consolidated interim financial
statements
1. Reporting Entity
ABLON Group Limited (hereinafter "the Company") is a company
domiciled in Guernsey. The consolidated financial statements of the
Company as at and for the six months ended 30 June 2011 comprise
the Company and its subsidiaries (together referred to as the
"Group" and individually as "Group entities").
The Company's ordinary shares are listed on the Official List
and traded on the Main Market of the London Stock Exchange. The
official address of the Company's headquarters is Frances House,
Sir William Place, St Peter Port, Guernsey GY1 4HQ.
The Group's primary activity is to purchase, develop, rent, hold
and sell real estates with a real estate portfolio mainly located
in Central and Eastern Europe.
The Group entities are limited liability companies incorporated
and domiciled in Hungary, the Czech Republic, Romania, Poland,
Croatia and Cyprus as listed below:
Name of entity Controlling Country
Shareholders of incorporation
share
AB-GR NEKRETNINE d.o.o. 100% Croatia
ABLON Bucharest Real Estates 100% Romania
Development S.R.L
ABLON GROUP d.o.o. 100% Croatia
ABLON Kft. 100% Hungary
ABLON s.r.o. 100% Czech Republic
ABLON Sp. z o.o. 100% Poland
Airport City Kft. 100% Hungary
Airport City s.r.o. 100% Czech Republic
ALAMONDO LIMITED 100% Cyprus
Avacero Ltd. 100% Cyprus
AVIDANO LIMITED 100% Cyprus
B.C.P. Kft. 100% Hungary
BC 2000 s.r.o. 100% Czech Republic
Bluebeat Ltd. 100% Cyprus
BREGOVA LIMITED 100% Cyprus
Bright Site Kft. 100% Hungary
CD Property s.r.o. 100% Czech Republic
Century City Kft. 100% Hungary
DERISA LIMITED 100% Cyprus
DH Est-Europe Real Estate SRL 100% Romania
DORESTO LIMITED 100% Cyprus
Duna Office Center Kft. 100% Hungary
ES Bucharest Development S.R.L. 100% Romania
ES Bucharest Properties S.R.L. 100% Romania
ES Hospitality S.R.L. 100% Romania
First Chance Kft. 100% Hungary
First Site Kft. 100% Hungary
Future Field Kft. 100% Hungary
GARET Investments Sp. z.o.o. 100% Poland
Global Center Kft. 100% Hungary
Global Development Kft. 100% Hungary
Global Estates Kft. 100% Hungary
Global Immo Kft. 100% Hungary
Global Investment Kft. 100% Hungary
Global Management Kft. 100% Hungary
Global Properties Kft. 100% Hungary
GOMENDO LIMITED 100% Cyprus
GORANDA LIMITED 100% Cyprus
HD Investment s.r.o. 100% Czech Republic
Hotel Rosslyn Kft. 100% Hungary
ICL 1 Budapest Kft. 100% Hungary
Insite Kft. 100% Hungary
ISTAFIA LIMITED 100% Cyprus
JONVERO LIMITED 100% Cyprus
LERIEGOS LIMITED 100% Cyprus
LN Est-Europe Development SRL 100% Romania
MESARGOSA LIMITED 100% Cyprus
MH Bucharest Development S.R.L 88% Romania
MH Bucharest Properties S.R.L 88% Romania
Mor Eden Sp. z.o.o. 100% Poland
MQM Czech s.r.o. 100% Czech Republic
New Field Kft. 100% Hungary
New Sites Kft. 100% Hungary
OSMANIA LIMITED 100% Cyprus
Polygon BC s.r.o. 100% Czech Republic
PRINGIPO LIMITED 100% Cyprus
RSL Est-Europe Properties SRL 100% Romania
RSL Real Estate Development 100% Romania
S.R.L.
SHAHEDA LIMITED 100% Cyprus
SPH Development Sp. z o.o. 51% Poland
SPH Properties Sp. z o.o. 100% Poland
STRIPMALL Management Kft. 100% Hungary
Szolgaltatohaz Kft. 100% Hungary
TUNELIA LIMITED 100% Cyprus
Volanti Ltd. 100% Cyprus
YZ Holding spol. s.r.o. 100% Czech Republic
-------------------------------- -------------- ------------------
2. Basis of preparation
(a) Statement of compliance
The condensed consolidated interim financial statements have
been prepared in accordance with International Accounting Standard
No. 34 'Interim Financial Reporting' ("IAS 34").
These financial statements are not intended to be used for
statutory filing purposes.
These condensed consolidated interim financial statements were
authorised for issue by the Board of Directors on 26 August,
2011.
(b) Basis of measurement
The condensed consolidated interim financial statements have
been prepared on the historical cost basis except for the
following:
-- investment property is measured at fair value
The methods used to measure fair values are discussed further in
the accounting policy published in the most recent consolidated
financial statements of the Group.
(c) Going concern
The condensed consolidated financial statements have been
prepared on a going concern basis, which assumes that the Group
will be able to meet the mandatory repayment terms of the banking
facilities.
The Group's current liabilities exceeded current assets by EUR52
million as at 30 June 2011 (EUR61 million as at 31 December 2010).
During the half-year, ABLON completed a fully subscribed rights
issue in May 2011. The net proceeds were EUR9 million, which has
strengthened the Group's balance sheet and provided additional
working capital headroom. The Group had cash and cash equivalents
of EUR14 million as at 30 June 2011 (EUR11.5 million as at 31
December 2010).
Based on the cash flow forecast for the next 12 months, the
Group will be able to finance all of its operations. The cash flow
forecast is based on projected and not contracted cash inflows,
therefore it might be adversely affected by unfavourable market
conditions.
The Group relies on external funding to finance its current and
future development projects.
As at 30 June 2011, the Group had six loans with covenants:
One loan (with an outstanding amount of approximately EUR38.5
million as at 30 June 2011 and an expiry date of 25 October 2012)
has a 130% interest service cover ("ISC") covenant with certain
cash trap provisions in force when the ISC ratio is between 100 and
130%. Although the Group companies which are subject to the loan
agreement are not in technical breach of this covenant, the current
ISC ratio of such loan is between 100 and 130%, and therefore those
Group companies are subject to the cash trap provisions. Pursuant
to those provisions, all excess net operating income (if any) of
such Group companies is collected on reserve accounts and may only
be used for the payment of certain re-letting expenditures in
respect of certain premises if there is not sufficient current
income.
Another loan (with an outstanding amount of approximately EUR9.1
million as at 30 June 2011 and an expiry date of 30 April 2013) has
a 120% debt--service coverage ratio ("DSCR") covenant and the
relevant Group company is currently in breach of this covenant. The
Group company has deposited EUR300,000 at the lender's request into
a special reserve account until such time as the covenant ceases to
be breached.
A third loan (with an outstanding amount of approximately
EUR12.4 million as at 30 June 2011 and an expiry date of 31 March
2019) has a 115% DSCR covenant. The relevant Group company is
technically in breach of this covenant, although the lender has not
issued a default notice.
The three remaining loans with covenants are within those
covenants' requirements.
Management believes that, similarly to prior years, all expiring
loan contracts will be renewed and covenants technically in breach
will not be called by the lender because historic evidence shows
that loans expiring in the previous years were prolonged by the
same lender and also some covenants technically in breach were in
the same status in recent periods. The capital and cash position
under this case shows that the current cash flow is sufficient to
finance the Group's operation and to meet the repayment obligations
to the banks.
Management anticipates that any additional repayments required
in the coming 12 months will be met from alternative forms of
capital raise such as further asset sales, equity or debt financing
or shareholder loan.
The low loan to value ratio for the Group (calculated by
dividing the total borrowings by the aggregate market value of the
properties) and the availability of individually high yielding
assets ensure that this scenario can also be managed without any
significant loss being recognized in the financial statements.
Management acknowledges that uncertainty remains over the
ability of the Group to meet its funding requirements and to
refinance or repay its banking facilities as they fall due.
However, as described above, management has a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future.
(d) Functional and presentation currency
The functional currencies of the Group's entities are the
currencies of the primary economic environment in which the
entities operate. The following functional currencies are used:
Hungarian Forint (HUF) in Hungary, Czech Crowns (CZK) in the Czech
Republic, Polish Zloty (PLN) in Poland, Romanian Lei (RON) in
Romania, Croatian Kune (HRK) in Croatia and Euros (EUR) in
Cyprus.
The condensed consolidated interim financial statements are
presented in Euros, which is the Group's presentation currency. All
information presented in Euros has been rounded to the nearest
thousand.
(e) Use of estimates and judgements
The preparation of financial statements in conformity with IFRSs
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
Information about significant areas of estimation uncertainty
and critical judgements in applying accounting policies that have
the most significant effect on the amounts recognised in the
condensed consolidated interim financial statements is included in
the most recent consolidated financial statements of the Group.
3. Significant accounting policies
The accounting policies as described in the most recent
consolidated financial statements of the Group have been applied
consistently to all periods presented in these condensed
consolidated interim financial statements, and have been applied
consistently by Group entities.
4. Segment information
The following segment information has been prepared in
accordance with IFRS 8, "Operating Segments" on the basis of the
internal reports about components of the entity. Internal reports
for the Group are based on IFRS.
Operating segments
The Group determines three different operating segments based on
the functionality of investment properties:
1. commercial segment
2. residential segment
3. hotel segment
Commercial segment contains buildings built for the Group for
the purpose of earning rental income, residential segment contains
buildings constructed for private individuals for immediate sale
after completion, hotel segment contains buildings held for
operation as hotels.
All the Group's activities and assets are located in Central
Europe.
Segment assets include all operating assets used by a segment
and consist primarily of investment property, property plant and
equipment, inventories and receivables. While most such assets can
be directly attributed to individual segments, the carrying amount
of certain assets used jointly by two or more segments is allocated
to the segments on a reasonable basis.
Segment liabilities include loans, all operating liabilities and
consist primarily of accounts payable, wages and accrued
liabilities. Unallocated liabilities mainly comprise deferred tax
liabilities.
Additions to non-current assets comprises additions to
investment property (Note 5) and property, plant and equipment
(Note 6).
Period ended 30 June
2011 Commercial Residential Hotel Unallocated Total
Revenue 11,638 1,592 1,790 - 15,020
Cost of sales (3,822) (1,116) (2,147) - (7,085)
Segment gross profit/(loss) 7,816 476 (357) - 7,935
Revaluation gain /(loss) (14,250) - - - (14,250)
(Impairment losses)/Reversal
of impairment losses - (608) - - (608)
Net operating profit
/ (loss) (7,562) (421) (560) (1,069) (9,612)
Net finance income /
(expenses) 2,186 (1,267) 1,400 3,916 6,235
Profit / (loss) before
income tax (5,376) (1,688) 840 2,847 (3,377)
Total income tax (expenses)
/ income - - - 1,063 1,063
Period ended 30 June
2011 Commercial Residential Hotel Unallocated Total
Reportable segment assets 415,096 63,599 26,203 7,579 512,477
Deferred tax assets - - - 1,727 1,727
Total assets 415,096 63,599 26,203 9,306 514,204
Reportable segment
liabilities 181,540 35,202 25,308 347 242,397
Deferred tax liabilities - - - 23,174 23,174
Total liabilities 181,540 35,202 25,308 23,521 265,571
Capital expenditure 2,211 64 - - 2,275
Depreciation 127 - - - 127
Period ended 30 June
2010 Commercial Residential Hotel Unallocated Total
Revenue 11,421 5,284 368 - 17,073
Cost of sales (2,751) (3,684) (883) - (7,318)
Segment gross profit/(loss) 8,670 1,600 (515) - 9,755
Revaluation gain /(loss) 11,180 - - - 11,180
(Impairment losses)/Reversal
of impairment losses - 754 4,133 - 4,887
Net operating profit
/ (loss) 18,197 2,233 3,544 (1,056) 22,918
Net finance income /
(expenses) (14,090) (3,972) (2,179) 2,626 (17,615)
Profit / (loss) before
income tax 4,107 (1,739) 1,365 1,570 5,303
Total income tax (expenses)
/ income - - - (1,641) (1,641)
Period ended 31 December
2010 Commercial Residential Hotel Unallocated Total
Reportable segment assets 413,204 65,076 24,408 3,643 506,331
Deferred tax assets - - - 1,553 1,553
Total assets 413,204 65,076 24,408 5,196 507,884
Reportable segment
liabilities 186,524 36,884 25,439 335 249,182
Deferred tax liabilities - - - 23,510 23,510
Total liabilities 186,524 36,884 25,439 23,845 272,692
Capital expenditure 6,550 485 - - 7,035
Depreciation 340 - - - 340
5. Investment property
Investment property is presented in the statement of financial
position using the fair value model. 98% of the fair value of
investment properties were based on independent valuation reports
as at 31 December 2010. The remaining 2% of the fair value of the
investment properties were valued at a more conservative value,
based on management judgment.
The following table shows the movements in the balances of
investment property during the period and the classification of the
investment property by country and by status:
Period Period ended
ended 30 31 December
Investment property June 2011 2010
At beginning of period 392,931 379,840
Acquisition due to subsequent capitalisation
of expenditures 1,416 5,657
Transfer from/(to) property, plant and
equipment 1,356 (871)
Net gain/(loss) from fair value adjustments (14,250) 12,756
Effect of movements in exchange rates 15,225 (4,451)
----------- -------------
Balance at end of period 396,678 392,931
----------- -------------
Period Period ended
ended 30 31 December
By location June 2011 2010
Hungary 298,528 294,781
Czech Republic 56,316 56,316
Romania 17,230 17,230
Poland 24,604 24,604
Total 396,678 392,931
----------- -------------
Period Period ended
ended 30 31 December
By status of the project June 2011 2010
Projects for future development 125,223 124,897
Projects under development - -
Finished projects 271,455 268,034
Total 396,678 392,931
----------- -------------
The transfer from Property, plant and equipment is due to the
moving of ABLON offices in Budapest.
Net losses on the fair value adjustment of investment property
for the half-year ended 30 June 2011 were EUR14.3 million. The main
reason for the losses are foreign exchange movements caused by a
4.5% appreciation of the Hungarian Forint from 278.75 HUF/EUR as at
31 December 2010 to 266.29 as at 30 June 2011.
6. Property, plant and equipment
Plant and
Land & buildings equipment Total
Cost
Balance at 1 January 2010 34,239 1,014 35,253
Additions 805 88 893
Disposals - (57) (57)
Transfer from/(to) investment
property 871 - 871
Reclass between categories (3,762) 3,762 -
Effect of movements in
exchange rates (889) (20) (909)
--------
Balance at 31 December
2010 31,264 4,787 36,051
----------------- ----------- --------
Balance at 1 January 2011 31,264 4,787 36,051
Additions 774 21 795
Disposals - (7) (7)
Transfer from/(to) investment
property (1,600) - (1,600)
Effect of movements in
exchange rates 1,370 207 1,577
Balance at 30 June 2011 31,808 5,008 36,816
----------------- ----------- --------
Depreciation and impairment
losses
Balance at 1 January 2010 4,493 595 5,088
Depreciation for the year 174 166 340
Hotel depreciation 324 409 733
Disposals - (24) (24)
Reversal of impairment
loss (4,070) - (4,070)
Effect of movements in
exchange rates (102) (15) (117)
Balance at 31 December
2010 819 1,131 1,950
----------------- ----------- --------
Balance at 1 January 2011 819 1,131 1,950
Depreciation for the year 54 73 127
Transfer from/(to) investment
property (244) - (244)
Disposals - (7) (7)
Hotel depreciation 266 345 611
Effect of movements in
exchange rates 30 48 78
Balance at 30 June 2011 925 1,590 2,515
----------------- ----------- --------
Carrying amount
At 1 January 2010 29,746 419 30,165
----------------- ----------- --------
At 31 December 2010 30,445 3,656 34,101
----------------- ----------- --------
At 30 June 2011 30,883 3,418 34,301
----------------- ----------- --------
7. Inventories
Period ended
Period ended 31 December
30 June 2011 2010
CURRENT INVENTORY
Opening balance 9,728 13,473
Additions 57 164
Transfer from/(to) long
term inventory - -
Transfer from/(to) investment
property - -
Disposal (1,111) (4,674)
Effect of movements
in exchange rates 291 765
-------------- -------------
Closing balance 8,965 9,728
LONG TERM INVENTORY
Opening balance 54,967 53,284
Additions 7 321
Transfer from/(to) current
inventory - -
Transfer from/(to) investment
property - -
Disposal (5) (7)
Write down of inventory (608) (649)
Reversal of write down - 1,826
Effect of movements
in exchange rates 857 192
-------------- -------------
Closing balance 55,218 54,967
Total inventory 64,183 64,695
-------------- -------------
Inventories comprise plots and developments for residential
purposes. Inventories which are expected to be realised beyond the
normal operating cycle of the residential property construction
business are classified as long term inventories. These are mainly
plots in Romania, Hungary, Poland and the Czech Republic, where the
Group plans to develop residential projects, but due to the current
financial and economic market conditions the development is
postponed for an unknown period of time.
Disposal includes selling of the apartments of Viva
Residences.
Write down of inventory is the result of FX changes.
8. Borrowings
This note provides information about the contractual terms of
the Group's interest-bearing borrowings which are measured at
amortised cost.
30 June 31 December
2011 2010
Non-current liabilities
Secured bank loans 162,619 163,102
162,619 163,102
-------- ------------
Current liabilities
Current portion of secured
bank loans 69,313 74,233
Current portion of loans
from non-controlling interest 2,105 2,083
Current portion of loans
from related parties 19 19
71,437 76,335
-------- ------------
Total borrowings 234,056 239,437
======== ============
The maturity of non-current borrowings
is as follows:
31 December
30 June 2011 2010
Between 1-2
years 57,116 46,799
Between 2-3
years 7,705 15,921
Between 3-4
years 7,965 7,802
Between 4-5
years 15,390 15,940
Over 5 years 74,443 76,640
Breakdown of borrowings by currency:
As at 31 December
As at 30 June 2011 2010
By currency of
the loan in
presentation
currency (in Average Average
thousands of interest Nominal Carrying interest Nominal Carrying
Euros) rate value amount rate value amount
EUR 4.2% 225,289 225,289 3.8% 229,439 229,439
CHF 2.2% 2,163 2,163 2.2% 2,161 2,161
CZK 4.2% 5,643 5,643 3.5% 6,880 6,880
PLN 3.6% 961 961 3.0% 957 957
Total
borrowings 234,056 234,056 239,437 239,437
-------- --------- -------- ---------
Details of finance income and expenses:
Period Period
ended ended
30 June 31 June
in thousands of Euros 2011 2010
Interest income on financial assets
carried at amortised cost 70 101
Foreign exchange gains 11,344 1,995
Finance income 11,414 2,096
----------- ---------
Interest expense on borrowings (4,502) (4,276)
- Less: interest capitalized - 262
Foreign exchange losses (588) (15,559)
Other (89) (138)
Finance expenses (5,179) (19,711)
----------- ---------
9. Earnings per share
Period Period ended
ended 30 30 June
in thousands of Euros June 2011 2010
Profit attributable to ordinary
shareholders (2,080) 3,662
Weighted average number of shares
(in thousands) 118,339 109,413
Diluted weighted average number
of shares (in thousands) 118,339 109,413
----------- -------------
Basic earnings per share (in
Euros) (0.018) 0.033
----------- -------------
Diluted earnings per share (in
Euros) (0.018) 0.033
----------- -------------
During the period the average share price was below the exercise
price of the options, therefore options did not have a diluting
effect.
The par value per share is 0.01 Euros
The Group has completed a rights issue in May 2011. The number
of shares issued increased by 26,259,163 shares to 135,843,882
shares. Out of these shares the Group has 171,541 repurchased
shares in Treasury (unchanged from 30 June 2010).
The net proceeds of the rights issue were TEUR 9,014, comprising
TEUR 262 Share Capital and TEUR 8,752 Share premium.
10. Events after the reporting period
The ordinary shares of ABLON moved from trading on the AIM
Market of the London Stock Exchange to Standard Listing on the
Official List of the UK Listing Authority and trading on the Main
Market of the London Stock Exchange on 1 July 2011.
On 6 July 2011, the Company announced the start of the Karolkowa
Business Park project as a construction financing contract was
signed on that day.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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