Atlas Estates Limited ("Atlas" or the "Company" or the "Group")
UNAUDITED QUARTERLY RESULTS FOR THE THREE MONTHS TO 31 MARCH 2010
17 May 2010
Atlas Estates Limited, the Central and Eastern European ("CEE") property
investment and development company, today reports its quarterly results for the
three months ended 31 March 2010.
The condensed consolidated quarterly report for the three months ended 31 March
2010 are available on the Company's website at www.atlasestates.com.
Financial summary
* Revenue €38.1 million (31 March 2009: €14.3 million)
* Profit from operations of €2.3 million (31 March 2009: €1.6 million)
* Profit after tax of €7.1 million (31 March 2009: loss after tax of €17.4
million)
* Net Asset Value per share at 31 March 2010 of €2.75 (31 March 2009: €2.94
and 31 December 2009: €2.42)
* Net Asset Value at 31 March 2010 of €129.1 million (31 March 2009: €138.6
million and 31 December 2009: €113.9 million)
* Bank loans at 31 March 2010 €260.4 million (31 March 2009: €249.5 million
and 31 December 2009: €260.2 million)
* Cash at 31 March 2010: €14.9 million (31 March 2009: €12.7 million and 31
December 2009: €13.1 million)
Operational summary
* Platinum Towers residential development in Warsaw with 167 sales
completions in the first quarter out of a total 396 available apartments
with revenue of €23.2 million recognised in 2010 (26 apartment sales in
late 2009)
* Capital Art Apartments stage 2 sales completions of 58 out of 300
apartments with revenue of €6.7 million recognised in 2010
* Hilton has seen a recovery in demand and increased occupancy at 64%
compared to 52% in the first quarter 2009
* Completion of cross collateralisation agreement with Erste bank on 4 loans
Commenting, Quentin Spicer, Chairman of Atlas, said:
"The first quarter results of 2010 are pleasing in that the group has reported
a profit after tax of €7 million and an increase in net asset value to €129
million. The sales of €30 million on the completed developments in Warsaw
contributed to an increase in revenue to €38 million in three months. The
Hilton the largest asset in the group has shown signs of stabilisation and
recovery in terms of occupancy levels."
For further information contact:
Atlas Management Company Limited Tel: +44 (0)20 7245 8666
Nahman Tsabar - Chief Executive Officer
Michael Williamson - Chief Financial Officer
Fairfax IS PLC, London Tel: +44 (0)20 7598 5368
David Floyd
Rachel Rees
ATLAS ESTATES LIMITED
CONDENSED CONSOLIDATED QUARTERLY REPORT
FIRST QUARTER 2010
Atlas Estates Limited
Martello Court
Admiral Park
St Peter Port
Guernsey
GY1 3HB
Company number: 44284
Contents
Page
3 Financial Highlights
4 Chairman's Statement
7 Property Manager's Report
15 Property Portfolio Information
17 Interim Condensed Consolidated Financial Information
22 Selected Notes to the Interim Condensed Consolidated Financial Information
Financial Highlights
Selected Consolidated Financial Three months Year ended Three months
Items ended 31 December ended
31 March 2010 2009 31 March
2009
€'000 €'000 €'000
Revenues 38,062 47,279 14,288
Gross profit 5,381 15,549 4,300
Decrease in value of investment - (35,558) -
properties
Profit /(loss) from operations 2,295 (47,132) 1,608
Profit /(loss) before tax 8,891 (57,023) (20,342)
Profit /(loss) for the period 7,112 (49,218) (17,434)
Profit /(loss) attributable to 7,134 (48,677) (16,893)
equity shareholders
Cash flow from operating activities (852) (10,424) 2,396
Cash flow from investing activities (243) 339 (152)
Cash flow from financing activities (3,777) 12,212 5,164
Net increase/ (decrease) in cash 1,700 (2,237) (2,619)
Non-current assets 293,011 280,558 305,183
Current assets 167,282 182,742 164,265
Total assets 460,293 463,300 469,448
Current liabilities (128,465) (231,386) (140,177)
Non-current liabilities (202,727) (118,016) (190,636)
Total liabilities (331,192) (349,402) (330,813)
Net assets 129,101 113,898 138,635
Shareholders' equity attributable 128,633 113,166 137,903
to equity holders of the Company
Number of shares outstanding 46,852,014 46,852,014 46,852,014
Profit /(loss) per share 15.23 (103.9) (36.06)
(eurocents)
Basic net asset value per share (€) 2.75 2.42 2.94
Chairman's Statement
I am pleased to present the unaudited condensed consolidated quarterly report
of Atlas Estates Limited ("Atlas" or "the Company") and its subsidiary
undertakings (together "the Group") for the quarter ended 31 March 2010.
The results for the first quarter are very encouraging as the Group has
reported a profit before tax of €8.9 million and an increase in net asset value
to €129.1 million equivalent to €2.75 per share. In April the Board of
Directors received an offer for the Company details of which are set out below.
Offer for the Company by Fragiolig Holdings Limited
On 14 April 2010 the board of Atlas announced that it had received an approach
which may or may not lead to a cash offer of 90p per Atlas Estates Limited
share being made for the whole of the issued share capital of the Company other
than shares already held by the offeror. This offer price had been included in
the announcement with the consent of the offeror.
On 20 April 2010 the board of Atlas noted the announcement of a mandatory cash
offer by Fragiolig Holdings Limited ("Fragiolig") published on 16 April 2010.
On 6 May 2010 the board announced their views on the offer by Fragiolig for the
entire issued, and to be issued, ordinary share capital of Atlas as announced
on 16 April 2010. The Offer values the entire issued ordinary share capital of
Atlas at £42.17 million and represents a substantial discount to the latest
published NAV per Atlas Share as at 31 December 2009 of €2.42 (and adjusted NAV
per Atlas Share of €2.95). The Board, having considered the information
currently available to it, including the latest published NAV, Atlas' share
price performance and having regard to the risks and operating constraints
highlighted above, believe the Offer price to be fair, given it will afford
Shareholders an opportunity to obtain cash for their Shares in the timescales
of the Offer. The full text of this announcement is available on the Company's
website at www.atlasestates.com.
Reported Results
The Group has reported an increase in basic net asset value of 14% from €113.9
million at 31 December 2009 to €129.1 million at 31 March 2010 (€138.6 million
at 31 March 2009).
Revenue includes sales from development properties on the Platinum Towers and
Capital Art Apartments developments of €30.6 million compared to €6.8 million
for the first three months ended 31 March 2009. Revenue for the three months
ended 31 March 2010 was €38.1 million compared to €14.3 million for the three
months ended 31 March 2009.
The Group has reported a profit from operations of €2.3 million for the three
months ended 31 March 2010 compared to €1.6 million for the three months ended
31 March 2009.
Profit after tax is €7.1 million for the three months ended 31 March 2010
compared to a loss after tax of €17.4 million for the three months ended 31
March 2009. This change quarter on quarter reflects the effect of movements in
exchange rates used in the translation of the results.
Financing, Liquidity and Forecasts
The Group has continued to be in discussions with its banks and has refinanced
or extended loans on several of its properties.
The Group has reported a profit before taxation for the three months ended 31
March 2010 and an increase in net asset value as at 31 March 2010. The
Directors consider that although prospects are generally improving, there are
challenges in the markets in which the Group operates due to reduced access to
bank financing and continued economic uncertainty. The completion of the sale
of the Group's interests in Slovakia, described in more detail below, will
significantly improve the Group's overall cash position and reduce its
borrowings and overheads.
The Group's forecasts and projections have been prepared taking into account
the economic environment and its challenges and mitigating factors. These
forecasts take into account reasonable assumptions as to possible changes in
trading performance, potential sales of properties and the future financing of
the Group.
While there will always remain some inherent uncertainty within the
aforementioned cash flow forecasts, the Directors have a reasonable expectation
that the Company and the Group will have adequate resources to continue in
operational existence for the foreseeable future. Accordingly they continue to
adopt the going concern basis in preparing the condensed consolidated financial
information for the three months ended 31 March 2010, as set out in accounting
policies to the condensed consolidated financial information.
Investing Policy
The Company actively invests in a portfolio of real estate assets across a
range of property types throughout CEE.
The Company targets countries within the CEE which possess attractive
investment fundamentals including political and economic stability, strong GDP
growth and low inflation. The Company may also make investments in countries
which attract increasing foreign direct investment from being part of, or from
being expected to join, the EU. The Company shall not invest in states of the
former USSR.
The Company makes investments both on its own and, where appropriate, with
joint venture partners in residential, industrial, retail, office and leisure
properties in order to create an appropriately balanced portfolio of
income-generating properties and development projects. There are no set
restrictions on either sector or geographical spread of investments within the
Company's stated investment region.
The Company may employ leverage to enhance returns on equity although the
extent of such leverage will vary on a property by property basis. Wherever
possible, the Directors intend to seek financing on non-recourse, asset by
asset basis. The Company has not set limit on its overall level of gearing,
however it is anticipated that the Company will employ a gearing ratio of up to
75% of the total value of its interest in income-generating properties within
its property portfolio.
The Company seeks to provide Shareholders with an attractive overall return
through a combination of income and long term appreciation of the Company's
assets.
The Board recognises that the current state of the credit markets and general
downturn in the CEE economies in which the Company invests have had a negative
effect on the overall value of the Group's portfolio, causing a decline in the
Company's net asset value per share. In order for the Company to achieve its
long term investing policy, the Board's short term investment strategy for 2009
and 2010 is cash focused with new development activity in relation to parts of
its portfolio being selectively deferred but with current active projects
displaying good sales being progressed on time and on budget and being brought
to a conclusion to achieve intended returns. No dividends are expected to be
paid in the short term.
Disposal of interests in Slovakia and new loan in Hungary
Atlas announced on 3 November 2009 that it had signed an agreement for the sale
of its entire investment interests throughout Slovakia (the "Slovakia
Portfolio"), comprising 3 sites: one in Bratislava and two in Kosice, which
were held in a joint venture in which Atlas had a 50 per cent interest. The
Group is expected to realise €8 million in net proceeds from the sale of the
Slovakia Portfolio. The combined impact of ceasing to consolidate its share of
debt in the joint venture and the receipt of the cash consideration will reduce
the Group's overall debt by some €20.5 million pending any reinvestment of the
cash proceeds. The Board intends to utilise the net proceeds to fund the
development of the Group's remaining assets, with particular focus on the
assets located in Warsaw, Poland, where the Group has a strong presence and is
likely to realise value from development activity within the next two to three
years. This contrasts with the projects in Slovakia, which would have required
the investment of large amounts of capital with returns arising in the long
term.
The completion of the disposal of Atlas interests in Slovakia was to be in two
stages. The first stage was completed in November 2009 and proceeds of €853,000
were received. The second stage was due for completion within 70 days of the
signing of the contract, when a further €7,147,000 was due to be received. On
18 January the Company announced that due to delays by the purchaser in
obtaining a relevant consent from the loan provider to the joint venture, the
completion of the sale of investments in Slovakia did not take place by the due
date. The parties to the contract still wish to proceed with the sale and
purchase of the remainder of the portfolio and negotiations are taking place
with a view to completing this transaction as soon as practicable.
On 25 January 2010 the Company announced that its Hungarian subsidiary Cap East
Kft, which owns the Metropol office building in Budapest, had signed a credit
facility for €3.1 million with FHB Kereskedelmi Bank Zft. This loan will be
utilised as working capital for operations and to fund the development of its
portfolio. This new loan is a significant achievement in very tight credit
conditions. It will provide increased liquidity and will enable the business to
increase investment in projects, which are realising value.
Amendment agreements with Erste Bank to the facility agreements for Millennium,
Ligetvaros, Solaris and Voluntari
On 24 February 2010 the Group companies Atlas Estates (Millennium) Sp. z. o.o,
Ligetvaros Kft, Atlas Solaris SRL and World Real Estate SRL signed an amendment
agreement with Erste Bank. This agreement created a cross collateralisation
arrangement between these four companies with respect to the loans provided by
Erste Bank. In return for this cross collateralisation the bank agreed to waive
any claims for any breaches of covenants which were in existence. A new
covenant of interest service coverage has been included, with a priority of
payments list, reduced margins on each loan and extension of maturity dates for
the two Romanian land loans to 31 December 2012. This agreement provides the
Group with major improvements in the loan terms on each of these four assets
and overcomes breaches of covenants on three of the loans. As a result of this,
loans of €88 million were reclassified in the current reporting period from
current liabilities to non-current liabilities due in after one year.
Net Asset Value ("NAV") and Adjusted Net Asset Value ("Adjusted NAV")
The Company has used NAV per share and Adjusted NAV per share as key
performance measures since its IPO. In the three months to 31 March 2010, NAV
per share, as reported in the interim condensed consolidated financial
information, which has been prepared in accordance with International Financial
Reporting Standards ("IFRS"), has increased by 14% to €2.75 per share from €
2.42 as at 31 December 2009 (€2.94 as at 31 March 2009).
An independent valuation on the entire property portfolio is carried out on a
semi-annual basis. This measures the valuation gains and losses during the
financial period and is included in the basis for the Property Manager's
performance assessment and fee calculations. The latest independent valuation
was performed on 31 December 2009 and has been used in the financial statements
at 31 March 2010. Land holdings are valued on either a residual value or a
comparative basis. No profit is taken to reflect the stage of development of
each site.
As in the previously reported quarterly results, the Adjusted NAV per share,
which includes valuation gains net of deferred tax on development properties
held in inventory and land held under operating lease, has not been included.
The Directors consider that it is more prudent and appropriate to wait until
the independent valuation is undertaken at 30 June 2010, as since the last
independent valuation at 31 December 2009, there has continued to be
significant expenditure on the development properties and significant changes
in the markets for development properties.
Prospects in Central and Eastern Europe
In the longer term the Company remains committed to its strategy of investment
in this region, as we believe that the markets will continue to offer growth
rates ahead of those to be offered in the more developed markets in Western
Europe. The Company has benefited in previous years from the growth in these
markets and in the longer term the Company will benefit from the next positive
stage in the property and economic cycle.
As reported previously, the global economic crisis has had a very significant
impact on the economies and prospects in the CEE region. There have been
improvements in sales demand in recent months in Warsaw, as Poland confirms its
position as the most resilient market in Europe. For 2010 and beyond there have
been forecasts of stabilisation and recovery for certain markets in the CEE
region. The timing and extent of recovery is uncertain and depends upon how the
financial crisis in the global markets resolves itself. Therefore the directors
and management of Atlas continue to adopt a prudent and measured approach to
investment.
Atlas has achieved significant progress with developments in Warsaw and is
realising value from cash in-flows as apartments are sold. Bank refinancing and
cash proceeds due from the sale of assets will provide the Group with the
liquidity to develop further projects. The potential remains for the economies
of the CEE region to revert in time to achieve growth rates outperforming those
of most Western economies.
Quentin Spicer
CHAIRMAN
17 May 2010
Review of the Property Manager
In this review we present the financial and operating results for the three
months ended 31 March 2010. Atlas Management Company Limited ("AMC") is the
Property Manager appointed by the Company to oversee the operation and
management of Atlas' portfolio and advise on new investment opportunities. At
31 March 2010, the Company held a portfolio of 21 properties comprising
10 investment properties of which eight are income yielding properties and two
are held for capital appreciation, two hotels and nine development properties.
As highlighted in the Chairman's Statement on page 5 Atlas signed an agreement
for the sale of its entire investment interests throughout Slovakia (the
"Slovakia Portfolio"), comprising three sites in Bratislava and Kosice. This
will end the Company's interests in Slovakia. The Company has disposed of the
two properties in Kosice, but awaits bank consent to complete the disposal of
its property in Bratislava.
Markets and Key Properties
Poland
This is the major market of operation for the Group, with 75% of the portfolio.
The Polish economy has proven to be the most resilient in the CEE region with
positive GDP growth reported of 1.7% for 2009. The forecasts for 2010 and 2011
are relatively positive in comparison to other markets. The Group's major
operations are in Warsaw with over half of the assets of the Group.
Hilton Hotel, Warsaw
The Hilton Hotel in the Wola district of Warsaw is the Group's most prestigious
asset. In 2009 the CEE region and the hotel market across Europe had been
adversely impacted by the global economic downturn. In the first quarter of
2010 there has been a sign of recovery in the market. This has resulted in
occupancy rates for the first three months of 2010 of 64% compared to 52% in
the first quarter of 2009. Operating margins have also increased in the hotel
operation to 29% in 2010 compared to 27% in 2009.
The Company also lets areas of the property to Holmes Place health club,
Olympic, the casino operator, and a number of smaller retailers. There have
been no significant changes to report in these leases.
Platinum Towers
The Platinum Towers residential development was completed in the third quarter
of 2009. Sales for 26 apartments were recognised in 2009 and in the first
quarter 2010 sales of 167 apartments have been recognised.
In total, pre-completion apartment sales are at 356 (apartments sold subject to
completion).
Capital Art Apartments
The Capital Art Apartments development in Warsaw is a significant development
in the Wola district of Warsaw close to the city centre. It is a three stage
development which will release 739 apartments with parking and amenities,
including retail facilities. Construction of the first stage was completed in
the fourth quarter of 2008. The construction of the second stage was completed
in 2009.
The Company has sold to date 218 out of 219 apartments in stage 1. For stage 2
apartment pre sales have reached 203 out of 300 apartments available. Sales for
58 apartments have been recognised in the first quarter 2010.
Millennium Plaza
Occupancy levels have increased to 68% compared to 63% at 31 December 2009.
Hungary
In Hungary, the Group portfolio comprises seven properties, all of which are
located in Budapest. Five are income producing assets, including the Ikarus
Business Park. As a result of weak economic conditions, new government was
elected in late March 2010. There have been no significant changes in the
properties.
Romania
The Group's portfolio contains three properties in Romania, including the
Golden Tulip Hotel and two significant land banks. In difficult trading
conditions, occupancy rates at the Golden Tulip have fallen to 38% in the first
quarter 2010 compared to 58% in 2009.
Bulgaria
The Group holds one rental property in Sofia. This office building has had no
significant changes in tenancies during the period.
Financial Review
Portfolio valuation and valuation methods
An independent valuation of the entire property portfolio is carried out on a
semi-annual basis by independent valuation experts. Independent valuations may
also be performed when a new property is acquired. The most recent valuation
was performed at 31 December 2009 by independent real estate advisors, King
Sturge.
The properties in Slovakia were independently valued at 30 June 2009 by
Colliers International. These valuations were used to determine the provision
for the loss on disposal and the asset held for sale. No independent valuation
was undertaken at 31 December 2009 on the Slovakian properties as a disposal
price was agreed with a third party purchaser, which was used in the accounting
for the asset held for sale to write the value down to net realisable value.
The gross market value of the property assets within the Company's portfolio,
including valuation gains on development properties held in inventory and land
held under lease but not recognised at fair value in the balance sheet, and
including minority interest, was €473 million as at 31 December 2009.
Loans and valuations
As at 31 March 2010, the Company's share of bank debt associated with the
portfolio of the Group was €260 million (31 December 2009: €260 million; 31
March 2009: €250 million). Loans and valuations may be analysed as follows for
those periods in which valuations were undertaken:
Loans Valuation Loan to Loans Valuation Loan to
31 March 31 March Value 31 March 31 March Value
2010 2010 Ratio 2009 2009 Ratio
31 March 31 March
2010 2009
€'000 €'000 €'000 €'000
Investment 117,602 159,182 73.9% 114,853 175,583 65.4%
property
Hotels 66,197 104,050 63.6% 68,218 104,112 65.5%
Development 43,004 118,140 36.4% 34,272 97,282 35.2%
property in
construction
Other 21,237 38,649 54.9% 32,163 85,820 37.5%
development
property
248,040 420,021 59.1% 249,506 462,797 53.9%
Liabilities 12,369 21,855 56.6% - - -
disclosed as
held for sale
Total 260,409 441,876 58.9% 249,506 462,797 53.9%
The valuations in the table above differ from the values included in the
consolidated balance sheet as at 31 March 2010 due to the treatment under IFRS
of land held under operating leases and development property.
Loans maturing within one year are €73 million at 31 March 2010 (excluding
those classified as held for sale) compared to €156 million at 31 December 2009
and €97 million at 31 March 2009. There is one loan in breach at 31 March 2010
relating to an LTV covenant breach. This loan was in breach at 31 December 2009
and 31 March 2009. All other breaches have been remedied or renegotiated. Also
included within loans repayable on demand at 31 March 2010 is an amount of €9.6
million (2009: €9.0 million) and negotiations are on going with the bank on
refinancing terms.
At 31 December 2009 there were three loans in breach, included in a recent
cross collateralisation agreement with Erste Bank, which is detailed in the
debt financing section below. Under this agreement the breaches under the three
loans have been waived.
Cash and cash equivalents was €14.9 million at 31 March 2010 (31 December 2009:
€13.1 million and 31 March 2009 €12.7 million). The gearing ratio is 191%,
based upon net debt as a percentage of equity attributable to shareholders and
is 66% based upon net debt as a percentage of total capital (net debt plus
equity attributable to equity holders). The ratios were 218% and 69%
respectively as at 31 December 2009 and 172% and 63% respectively as at 31
March 2009.
Debt financing
The Group has its principal facilities with Erste Bank, Investkredit Bank and
Raiffeisen Bank. The financial covenants within the Group's secured debt
facilities fall into two main categories: annual Loan to Value ("LTV") tests
and interest (and debt) service cover ratios ("ISCR" and "DSCR") based on
audited financial statements for each company. Management continue to have
detailed discussions with its senior debt providers.
The companies signed in February 2010 a cross-collateralisation agreement with
Erste Bank on all four of their loans. The terms of this amendment agreement to
the four facilities included a bank waiver with respect to all previous
breaches of covenants or default events under the facilities. New terms have
been agreed, including a priority of payments schedule, reduced margins for
each loan and new maturity dates. A new ISCR covenant is to be measured across
the combination of all four assets. A new LTV covenant comes into effect from 1
January 2013. This is a significant step forward for the Group as this
agreement overcomes the breaches of covenant and events of default on three
properties and facilities.
The LTV covenant was breached on Atlas House, Sofia and the loan continues to
be classified as a current liability. The debt has been serviced and the bank
has provided a signed term sheet for a waiver on this breach to 31 December
2010. The Vajnory land loan which matured in March 2009 was successfully
extended for 12 months to March 2010. Bank consent under this loan agreement is
required for the completion of the disposal of Atlas interests in Slovakia, as
set out in the Chairman's Statement.
Discussions have been ongoing to secure an extension of the land loan for the
Kokoszki plot in Gdansk. Terms are agreed in principal and the Company is
awaiting final signature.
Review of the operational performance and key items on the Income Statement
The financial analysis of the income statement set out below reflects the
Period Period
ended ended
Property Development Hotel 31 March 31 March
Rental Properties Operations Other 2010 2009
€ millions € millions € millions € millions € millions € millions
Revenue 3.2 30.6 4.3 - 38.1 14.3
Cost of (1.5) (28.1) (3.1) - (32.7) (10.0)
operations
Gross profit 1.7 2.5 1.2 - 5.4 4.3
Administrative (0.2) (0.3) (0.8) (1.2) (2.5) (2.9)
expenses
Gross profit 1.5 2.2 0.4 (1.2) 2.9 1.4
less
administrative
expenses
Gross profit % 53% 8% 28% n/a 14% 30%
Gross profit 47% 7% 9% n/a 8% 10%
less
administrative
expenses %
Revenue
As the Company maintains a diversified portfolio of real estate investments,
seasonality or cyclicality of yielded income or results is also highly
diversified. The available portfolio of assets for lease, the systematic
execution and sale of residential projects and the geographical reach of the
Company's portfolio has, to a significant extent, resulted in stable levels of
income being earned.
Development Properties
31 March 31 March Change Translation Operational
2010 2009 quarter on foreign change
€ millions € millions quarter exchange 2010 v 2009
2010 v 2009 effect € millions
€ millions € millions
Revenue 30.6 6.8 23.8 0.8 23.0
Cost of operations (28.0) (5.7) (22.3) (0.7) (21.6)
Gross profit 2.6 1.1 1.5 0.1 1.4
Administrative (0.3) (0.6) 0.3 - 0.3
expenses
Gross profit less 2.3 0.5 1.8 0.1 1.7
administrative
expenses
Sales are only recognised when apartments have been handed over to new owners
with the full price of the apartment received by the Group as a result. As a
result the economic risks and rewards were transferred to the new owner and in
accordance with the Group's accounting policy the revenue and associated costs
of these apartment sales are recognised in the income statement.
Apartment sales in developments in Warsaw
Capital Art Capital Art Platinum Towers
Apartments stage 1 Apartments stage 2
Total apartments 219 300 396
for sale
Pre sales of 218 203 356
apartments
Sales completions 99 - -
in 2008
Sales completions 107 - 26
in 2009
Sales completions 7 58 167
in 2010
Total sales 213 58 193
completions
Pre sales in 2009 21 95 31
Pre sales in 2010 - 10 -
On stage 2 at Capital Art Apartments, for the three months ended 31 March 2010,
revenue of €6.7 million and gross profit of €1.3 million (2009: €nil) have been
recognised on the sales of 58 apartments.
For Platinum Towers, for the three months ended 31 March 2010, of the 396
available apartments completed sales were represented by 167 apartments. This
resulted in sales of €23.2 million and a gross profit of €1.2 million being
recognised in the income statement.
Property Rental
31 March 31 March Change Translation Operational
2010 2009 quarter on foreign change
€ millions € millions quarter exchange 2010 v 2009
2010 v 2009 effect € millions
€ millions € millions
Revenue 3.2 3.5 (0.3) 0.3 (0.6)
Cost of operations (1.5) (1.4) (0.1) (0.1) -
Gross profit 1.7 2.1 (0.4) 0.2 (0.6)
Administrative (0.2) (0.1) (0.1) - (0.1)
expenses
Gross profit less 1.5 2.0 (0.5) 0.2 (0.7)
administrative
expenses
The revenue of the Group has been affected principally by the loss of tenants
and falling rental levels at its two largest properties the Millennium Plaza
and Ikarus Industrial Park.
Hotel operations
31 March 31 March Change Translation Operational
2010 2009 quarter on foreign change
€ millions € millions quarter exchange 2010 v 2009
2010 v 2009 effect € millions
€ millions € millions
Revenue 4.3 4.0 0.3 0.5 (0.2)
Cost of operations (3.1) (2.9) (0.2) (0.3) 0.1
Gross profit 1.2 1.1 0.1 0.2 (0.1)
Administrative (0.8) (0.7) (0.1) (0.1) -
expenses
Gross profit less 0.4 0.4 - 0.1 (0.1)
administrative
expenses
The Hilton in Warsaw has seen an occupancy rate of 64% for the first quarter
2010 compared to 64% in the 12 months ended 31 December 2009 and 52% for the
three months ended 31 March 2009.
Occupancy rates at the Golden Tulip Hotel in Bucharest, Romania were 38% for
the three months ended 31 March 2010 compared to 57% for the year ended 31
December 2009 and 58% for the three months ended 31 March 2009.
Cost of operations
Cost of operations was €32.7 millionin the quarter ended 31 March 2010, of
which €28.0 million relates to the cost of construction of the apartments sold
during the quarter. Cost of operations for the quarter ended 31 March 2009 was
€10.0 million, of which costs relating to apartment sales were €5.6 million.
The resultant increase of €0.3 million in costs not relating to apartment sales
between the quarter ended 31 March 2010 and quarter ended 31 March 2009
includes the effect of appreciaitng currencies in the region of 0.4 million.
The underlying cost of operations has decreased by €0.1 million, reflecting
cost savings implemented by management.
Administrative expenses
We can report that administrative expenses were €2.5 million compared to €2.9
million in the first quarter 2009. This decline of €0.4 million includes the
effect of appreciating currencies in the region of €0.1 million. The underlying
administrative expenses have decreased by €0.5 million, reflecting extensive
cost savings implemented by management and the effect of reduced management
fees.
Foreign exchange
There have been significant fluctuations in exchange rates in the underlying
currencies in the countries in which the Group operates and owns assets. A
summary of exchange rates by country for average and closing rates against the
reporting currency as applied in the financial statements are set out below.
Polish Hungarian Romanian Slovakian Bulgarian
Zloty Forint Lei Crown Lev
Closing rates
31 March 2010 3.8622 266.39 4.0958 N/A 1.95583
31 December 4.1082 270.84 4.2282 N/A 1.95583
2009
% Change (6.0%) (1.6%) (3.1%) N/A 0%
31 March 2009 4.7013 309.22 4.2348 N/A 1.95583
Average rates
1st quarter 3.9924 268.57 4.1160 N/A 1.95583
2010
Year 2009 4.3273 280.58 4.2373 N/A 1.95583
% Change (7.7%) (4.3%) (2.9%) N/A 0%
1st quarter 4.4903 294.57 4.2662 N/A 1.95583
2009
Net Asset Value
The Group's property assets are categorised into three classes, when accounted
for in accordance with International Financial Reporting Standards. The
recognition of changes in value from each category is subject to different
treatment as follows:
* Yielding assets let to paying tenants - classed as investment properties
with valuation movements being recognised in the Income Statement;
* Property, plant and equipment operated by the Group to produce income, such
as the Hilton hotel or land held for development of yielding assets (PPE) -
revaluation movements are taken directly to reserves, net of deferred tax;
and
* Property developments, including the land on which they will be built -
held as inventory with no increase in value recognised in the financial
statements.
The Property Manager's basic and performance fees are determined by the
adjusted NAV. For the three months to 31 March 2010 the fee payable to AMC was
€0.8 million (€1.0 million to 31 March 2009).
Ongoing activities
The Company's property portfolio is constantly reviewed to ensure it remains in
line with its stated strategy of creating a balanced portfolio that will
provide future capital growth over the longer term, the potential to add value
through active and innovative asset management programmes and the ability to
deliver strong development margins.
Financial management, operational management and material risks
The management team continuously monitors the territories in which the Company
is invested, analysing the economics of the region and the key measures of the
sectors in which it operates to ensure that it maintains its strategy and does
not become over-exposed to, or reliant on, any one particular area. At the same
time, it evaluates the risks and rewards associated with a particular country,
or sector, in order to maximise return on investment and therefore the return
it can deliver to shareholders.
The Company has completed four years as a quoted company and is a dual-listed
entity in Warsaw and London. In continuing to fulfil its obligations to its
shareholders and the markets, together with maintaining its policy of maximum
disclosure and timely reporting, it is continually improving and developing its
financial management and operational infrastructure and capability. Experienced
operational teams are in place in each country, where there is significant
activity, otherwise a central operational team and investment committee monitor
and control investments and major operational matters. As such, the management
team continually reviews its operating structures to optimise the efficiency
and effectiveness of its network, which is particularly important given the
current environment.
We continue to enhance our internal control and reporting procedures and IT
systems in order to generate appropriate, timely management information for the
ongoing assessment of the Group's performance. There is in operation a
financial reporting system which provides the Group with the required reporting
framework, financial management and internal control.
Global economic conditions
The Board and AMC closely monitor the effects that the current global economic
conditions have on the business and have and will continue to take steps to
mitigate, as far as possible, any adverse impact that may result for the
business.
Among the demonstrations of the economic uncertainty are the variations in
exchange rates of countries in the region. AMC has been advising the Board on a
regular basis with respect to financial performance and the effect of external
factors on the business.
Financing and liquidity
Management has experienced a change in the approach and requirements of lenders
for financing in the CEE region which has been reflected in the covenants that
are applied to facilities, such as a reduction of loan to value ratio,
increasing margins and an increase in levels of required pre-sales on
development projects. Negotiation and completion of financing agreements is
also taking longer than previously experienced. Management team see this as a
potential risk to the ongoing development of the Company and as a result are
devoting significant resource to the management of banking relationships and
the monitoring of risk in this area.
Cash is managed both at local and head office levels, ensuring that rent
collection is prompt, surplus cash is suitably invested or distributed to other
parts of the Group, as necessary, and balances are held in the appropriate
currency. The allocation of capital and investment decisions are reviewed and
approved by local operational management, the executive team, the central
finance and operational teams, by the investment committee of AMC and, finally,
by Atlas' Board. This approach provides the Company with a rigorous risk
management framework. Where possible, the Company will use debt facilities to
finance its projects, which the Company will look to secure at appropriate
times and when available, depending on the nature of the asset - yielding or
development.
As at 31 March 2010, the Company's share of bank debt associated with the
portfolio was €260 million, with cash and cash equivalents of €14.9 million.
The gearing ratio is 191%, based upon net debt as a percentage of equity
attributable to shareholders and is 66% based upon net debt as a percentage of
total capital (net debt plus equity attributable to equity holders). The ratios
were 218% and 69% respectively as at 31 December 2009 and 172% and 63%
respectively as at 31 March 2009. Where possible, we refinance properties where
valuations have increased, thereby releasing equity for further investment.
Currency and foreign exchange
Foreign exchange and interest rate exposures are continually monitored. Foreign
exchange risk is largely managed at a local level by matching the currency in
which income and expenses are transacted and also the currencies of the
underlying assets and liabilities.
Most of the income from the Company's investment properties is denominated in
Euros and our policy is to arrange debt to fund these assets in the same
currency. Where possible, the Company looks to match the currency of the flow
of income and outgoings. Some expenses are still incurred in local currency and
these are planned for in advance. Development of residential projects has
created receipts largely denominated in local currencies and funding facilities
are arranged accordingly. "Free cash" available for distribution within the
Company is identified and appropriate translation mechanisms put in place.
Conclusions
AMC's key strategic objective is the maximisation of value for the Company's
shareholders, which it continues to work towards. Its teams are very
experienced in the active management of investment and development property and
provide the Company with a great deal of valuable local market knowledge and
expertise. Good progress has been made with the construction of two key
development projects in Warsaw, Platinum Towers and Capital Art Apartments and
pre-sales and sales completion activity has been very successful, underpinning
our confidence in the medium and long term market prospects.
The Company's key objectives in the current economic climate remain the
minimisation of financial risks, optimising cash retention and operational
effectiveness and enhancing the Group's liquidity, which will enable it to
progress its portfolio of developments. The Company has a portfolio of strong
underlying assets and a development pipeline that we believe will enable us to
continue to meet the ongoing demand for the quality and specification of the
space that Atlas delivers. In turn, we believe that this will position us to
preserve and, over the longer term, create value that we aim to deliver to the
shareholders, once stability and more certain economic conditions return to the
markets, both within our target territories and across the global economy as a
whole.
Nahman Tsabar Michael Williamson
Chief Executive Officer Chief Financial Officer
Atlas Management Company Limited Atlas Management Company Limited
17 May 2010
Property Portfolio Information
Location/Property
Description
Company's ownership
Poland
Hilton Hotel
First Hilton Hotel in Poland - a hotel with 314 luxury rooms, large
conferencing facilities, 4,500 square meters Holmes Place health club and spa
and casino and retail outlets. Location close to the central business district
in Wola area of Warsaw.
100%
Platinum Towers
396 apartments in two towers; the residential development has been completed in
the 3rd quarter of 2009 with two residential towers, a piazza and commercial
area on the ground and fist floors. Location close to the central business
district in Wola area of Warsaw.
100%
Platinum Towers - offices
Land with zoning for an office scheme of class A office space planned over 40
floors.
100%
Capital Art Apartments
739 apartment three stage development with Stage 1 completed in 4th quarter
2008 with 218 out of 219 apartments pre sold. Stage 2 with the construction of
300 apartments completed in 2009. Stage 3 construction will follow. Location
close to the central business district in Wola area of Warsaw.
100%
Zielono
Land with zoning and building permit for 265 apartments. Construction will
commence with appropriate financing. Location in a residential area of Warsaw.
76%
Millennium Tower
32,700 square metres of modern accommodation in the central business district
of Warsaw with 6,100 square meters of retail and 26,600 square meters of office
space.
100%
Cybernetyki project
3,100 square metres plot of land zoned for 11,000 square metres and with
building permit for residential development. Construction will commence with
appropriate financing. Location in Mokotow district close to the central
business district of Warsaw.
50%
Sadowa project
6,550 square metres office building close to the city centre of Gdansk.
100%
Kokoszki, Gdansk
430,000 square metres plot in Gdansk with zoning for construction of 130,000
square metres of mixed use development, situated on the outskirts of Gdansk.
100%
Hungary
Ikarus Business Park
283,000 square metres plot with 110,000 square metres of built business space
and 70,000 of currently lettable, located in the 16th district, a suburban area
of Budapest
100%
Metropol Office Centre
7,600 square metres office building in the 13th district of central Budapest.
100%
Atrium Homes
Two phase development of 22,000 square meters of 456 apartments with 235
apartments in phase 1 with building permits, located in the 13th district in
central Budapest.
100%
Ligetvaros Centre
6,300 square metres of office/retail space with rights to build extra 6,400
square metres, located in the 7th district, a central district in Budapest.
100%
Varosliget Centre
12,000 square metres plot in the 7th district in central Budapest, with zoning
for a mixed use development of 31,000 gross square metres.
100%
Moszkva Square
1,000 square metres of office and retail space in the Buda district of the
city.
100%
Volan Project
20,640 square metres plot, zoning for 89,000 square metres mixed use scheme in
a central district of Budapest.
50%
Romania
Voluntari
99,116 square metres of land in three adjacent plots at the pre-zoning stage,
in the north eastern suburbs of the city, known as Pipera.
100%
Solaris Project
32,000 square metres plot for re-zoning to mixed-use development in a central
district of Bucharest.
100%
Golden Tulip Hotel
83 room hotel in the city centre of Bucharest.
100%
Bulgaria
The Atlas House
Office building in Sofia's city centre with 3,472 square metres of lettable
area spread over eight floors.
100%
INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
CONSOLIDATED INCOME STATEMENT
For the three months ended 31 March 2010
Three months Three months ended Note
ended 31 March 2009
31 March 2010
(unaudited) (unaudited)
€'000 €'000
Revenues 38,062 14,288 3
Cost of operations (32,681) (9,988) 4.1
Gross profit 5,381 4,300
Property manager fee 851 1,035
Central administrative expenses 624 820
Property related expenses 1,048 1,032
Administrative expenses (2,523) (2,887) 4.2
Other operating income 127 374
Other operating expense (690) (179)
Profit from operations 2,295 1,608
Finance income 302 115
Finance costs (2,851) (3,410)
Other gains and (losses) - 9,145 (18,655)
foreign exchange
Profit /(loss)before taxation 8,891 (20,342)
Tax (expense / credit (1,779) 2,908 5
Profit /(loss) for the period 7,112 (17,434)
Attributable to:
Equity shareholders of the 7,134 (16,893)
Company
Minority interests (22) (541)
7,112 (17,434)
Profit / (loss) per €0.01 15.23 (36.06) 7
ordinary share - basic
(eurocents)
Profit / (loss) per €0.01 15.23 (36.06) 7
ordinary share - diluted
(eurocents)
All amounts relate to continuing operations.
INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the three months ended 31 March 2010
31 March 2010 31 March 2009
€'000 €'000
PROFIT/(LOSS) FOR THE PERIOD 7,112 (17,434)
Other comprehensive income:
Exchange adjustments 8,217 (18,502)
Deferred tax on exchange adjustments (130) 719
Other comprehensive income for the period 8,087 (17,783)
(net of tax)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 15,199 (35,217)
Total comprehensive income attributable to:
Equity shareholders of the parent Company 15,221 (34,676)
Non-controlling interests (22) (541)
15,199 (35,217)
INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEET
As at 31 March 2010
31 March 31 December 31 March
2010 2009 2009
(unaudited) (unaudited)
€'000 €'000 €'000 Notes
ASSETS
Non-current assets
Intangible assets 228 227 520
Land under operating lease - 13,960 13,166 14,554
prepayments
Property, plant and equipment 100,456 95,525 95,983 8
Investment property 168,519 161,027 177,284 9
Other loans receivable 2,420 2,380 8,055
Deferred tax asset 7,428 8,233 8,787
293,011 280,558 305,183
Current assets
Inventories 120,334 138,720 144,667 10
Trade and other receivables 5,364 4,380 6,929
Cash and cash equivalents 14,751 13,051 12,669 11
140,449 156,151 164,265
Assets classified as held for 26,833 26,591 - 14
sale
TOTAL ASSETS 460,293 463,300 469,448
Current liabilities
Trade and other payables (35,383) (55,543) (42,699)
Bank loans (72,974) (156,031) (96,956) 13
Derivative financial (335) (368) (522)
instruments
(108,692) (211,942) (140,177)
Liabilities directly (19,773) (19,444) - 14
associated with assets
classified as held for sale
Non-current liabilities
Other payables (5,708) (5,308) (10,057)
Bank loans (175,067) (91,719) (152,550) 13
Derivative financial (1,444) (1,257) (1,531)
instruments
Deferred tax liabilities (20,508) (19,732) (26,498)
(202,727) (118,016) (190,636)
TOTAL LIABILITIES (331,192) (349,402) (330,813)
NET ASSETS 129,101 113,898 138,635
EQUITY
Share capital account 6,268 6,268 6,268
Revaluation reserve 7,487 6,936 15,575
Other distributable reserve 194,817 194,817 194,817
Translation reserve 983 (6,795) (22,465)
Accumulated loss (80,922) (88,060) (56,292)
Equity attributable to equity 128,633 113,166 137,903
holders of the Company
Minority Interests 468 732 732
TOTAL EQUITY 129,101 113,898 138,635
Basic net asset value per share €2.75 €2.42 €2.94
INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the three months ended 31 March 2010
Three Months Ended 31 Share Other Accumulated Total Minority Total
March 2010 (unaudited) capital reserves loss interest equity
account
€'000 €'000 €'000 €'000 €'000 €'000
As at 1 January 2010 6,268 194,958 (88,060) 113,166 732 113,898
Total comprehensive - 8,087 7,134 15,221 (22) 15,199
income for the period
Transfer of minority - 242 - 242 (242) -
interest
Share based payments - - 4 4 - 4
As at 31 March 2010 6,268 203,287 (80,922) 128,633 468 129,101
Year ended 31 December Share Other Accumulated Total Minority Total
2009 capital reserves loss interest equity
account
€'000 €'000 €'000 €'000 €'000 €'000
As at 1 January 2009 6,268 205,710 (39,412) 172,566 1,273 173,839
Total comprehensive - (10,752) (48,677) (59,429) (541) (59,970)
income for the year
Share based payments - - 29 29 - 29
As at 31 December 2009 6,268 194,958 (88,060) 113,166 732 113,898
Three Months Ended 31 Share Other Accumulated Total Minority Total
March 2009 (unaudited) capital reserves loss interest equity
account
€'000 €'000 €'000 €'000 €'000 €'000
As at 1 January 2009 6,268 205,710 (39,412) 172,566 1,273 173,839
Total comprehensive - (17,783) (16,893) (34,676) (541) (35,217)
income for the period
Share based payments - - 13 13 - 13
As at 31 March 2009 6,268 187,927 (56,292) 137,903 732 138,635
INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
CONSOLIDATED CASH FLOW STATEMENT
Three months ended 31 March 2010
Three months Three months
ended 31 ended 31
March 2010 March 2009
(unaudited) (unaudited)
Note €'000 €'000
Cash inflow generated from operations 12 402 4,592
Interest received 35 39
Interest paid (1,104) (2,072)
Tax paid (185) (163)
Net cash inflow / (outflow) from operating (852) 2,396
activities
Investing activities
Purchase of investment property (62) (84)
Purchase of property, plant and equipment (122) (84)
(Purchase of) / proceeds from property, (59) 17
plant and equipment
Purchase of intangible assets - software - (1)
Net cash used in investing activities (243) (152)
Financing activities
New bank loans raised 1,380 6,245
Repayments of bank loans (5,209) (1,056)
New loans granted to JV partners (33) (355)
New loans received from minority investors 85 330
Net cash (used in) / from financing (3,777) 5,164
activities
Net increase in cash and cash equivalents 4,362 7,408
in the period
Effect of foreign exchange rates 6,572 (10,027)
Net increase/ (decrease) in cash and cash 1,700 (2,619)
equivalents in the period
Cash and cash equivalents at the beginning 13,051 15,288
of the period
Cash and cash equivalent at the end of the 14,751 12,669
period
Cash and cash equivalents
Cash at bank and in hand 11 14,930 12,669
Cash assets classified as held for sale (179) -
Bank overdrafts - -
14,751 12,669
ATLAS ESTATES LIMITED
SELECTED NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Three months ended 31 March 2010
1. Basis of preparation
This condensed interim financial information for the three months ended 31
March 2010 has been prepared in accordance with International Accounting
Standard No. 34, "Interim Financial Reporting" ("IAS 34"). The financial
information has been prepared on a going concern basis and on a historical cost
basis as amended by the revaluation of land and buildings and investment
property, and financial assets and financial liabilities at amortised cost. The
consolidated balance sheet, consolidated statement of comprehensive income,
consolidated cash flow statement and consolidated statement of changes in
equity are unaudited. This unaudited interim condensed consolidated financial
information should be read in conjunction with the audited consolidated
financial statements and notes thereto for the year ended 31 December 2009. The
quarterly financial results are not necessarily indicative of the full year
results.
As at 31 March 2010 the Group held land and building assets with a market value
of €473 million, compared to external debt of €260 million. Subject to the time
lag in realising the value in these assets in order to generate cash, this loan
to value ratio gives a strong indication of the Group's ability to generate
sufficient cash in order to meet its financial obligations as they fall due.
Any land and building assets and associated debts which are ring-fenced in
unique, specific, corporate vehicles, which are subject to any repossession by
the bank on default of loan terms would clear the outstanding debt and not
result in additional finance liabilities for the Company or for the Group.
There are also unencumbered assets which could potentially be leveraged to
raise additional finance.
For the first time the Group has entered into a cross collateralisation
agreement on four of its loans with one bank. This has been necessary due to
technical covenant breaches. As a result of the amendment agreement the bank
has agreed to a waiver of all prior covenant breaches and improved terms and
conditions for the Group.
In the preparation of the condensed interim financial information for the three
months ended 31 March 2010, the directors continue to classify one loan
totaling €5.6 million within the financial statements from non current
liabilities to current liabilities as bank loans and overdrafts due within one
year or on demand, where a covenant breach on this loan arose. The bank is
aware of the technical breach and has not asked for repayment of the loan. In
addition there is one loan that is repayable on demand in the amount of €9.6
million (31 December 2009: €9.0 million due within one year). Negotiations are
ongoing with the bank on refinancing terms. Loans maturing within one year
total €73 million (excluding loans associated with assets held for sale) at 31
March 2010 compared to €156.0 million at 31 December 2009.
In assessing the going concern basis of preparation of the condensed interim
financial information for the three months ended 31 March 2010, the directors
have taken into account the status of current negotiations on loans. These are
disclosed in note 13 as part of the bank loans note. The Company has also
continued to provide funds to service interest and capital repayments on these
loans on behalf of its subsidiary companies
The Directors have also taken into account the disposal of the Group's
interests in Slovakia as announced on 3 November 2009. On completion of this
transaction, the combined impact of ceasing to consolidate its share of debt in
the joint venture and the receipt of the cash consideration will reduce the
Group's overall debt by some €20.5 million pending any reinvestment of the cash
proceeds.
The Group's forecasts and projections have been prepared taking into account
the economic environment and its challenges and the mitigating factors referred
to above. These forecasts take into account reasonably possible changes in
trading performance, potential sales of properties and the future financing of
the Group. They show that the Group will have sufficient facilities for its
ongoing operations.
While there will always remain some inherent uncertainty within the
aforementioned cash flow forecasts, the directors have a reasonable expectation
that the Company and the Group have adequate resources to continue in
operational existence for the foreseeable future. Accordingly they continue to
adopt the going concern basis in preparing the interim condensed consolidated
financial information for the three months ended 31 March 2010.
The condensed consolidated financial information does not include any
adjustments that would result if the going concern basis of preparation were to
become no longer appropriate.
2. Accounting policies
The accounting policies adopted and methods of computation are consistent with
those of the annual financial statements for the year ended 31 December 2009,
as described in the annual financial statements for the year ended 31 December
2009.
Certain new standards and interpretations have been published that are
mandatory for the Group's accounting periods beginning on or after 1 January
2010 and which the entity has not early adopted. None of these standards are
expected to have a significant impact on recognition or measurement of the
Group's assets or liabilities.
The following standards and interpretations, issued by the IASB or the
International Financial Reporting Interpretations Committee (IFRIC), are also
effective for the first time in the current financial year and have been
adopted by the Group with no significant impact on its consolidated results or
financial position for the current reporting period.
IFRS3 (revised) - Business combinations (effective for accounting periods
beginning on or after 1 July 2009). IFRS3 (revised) has been endorsed for use
in the EU.
IFRIC17, 'Distributions of Non-cash Assets to Owners' (effective for accounting
periods beginning on or after 1 July 2009). This IFRIC has been endorsed for
use in the EU.
Amendment to IAS39 'Reclassificaton of Financial Assets: Effective Date and
Transition' (effective for accounting periods starting on or after 1 July
2009). This amendment has been endorsed for use in the EU.
Amendment to IAS39 'Financial Instruments: Recognition and Measurement:
Eligible Hedged Items' (effective for accounting periods starting on or after 1
July 2009). This amendment has been endorsed for use in the EU.
Amendments to IFRIC9 and IAS39 'Embedded Derivatives' (effective for accounting
periods starting on or after 1 July 2009). This amendment has been endorsed for
use in the EU.
IFRIC18, 'Transfers of Assets from Customers' (effective for accounting periods
beginning on or after 1 July 2009). This interpretation has been endorsed for
use in the EU.
The IASB2009 annual improvement project includes further minor amendments to
various accounting standards and is effective from various dates from 1 January
2010 onwards, and has now been endorsed for use in the EU.
The following standards and interpretations issued by the IASB or IFRIC have
not been adopted by the Group as these are not effective for the current year.
The Group is currently assessing the impact these standards and interpretations
will have on the presentation of its consolidated results in future periods.
Revised IAS24 'Related Party Disclosures' (effective for accounting periods
beginning on or after 1 January 2011). This revision has not yet been endorsed
for use in the EU. This revision will only impact disclosure and have no effect
on the net assets or result of the Group.
Amendment to IAS32 'Classification of Rights Issues' (effective for accounting
periods beginning on or after 1 February 2010). This amendment has been
endorsed for use in the EU.
Amendment to IFRS1 'Additional Exemptions for First-time Adopters' (effective
for accounting periods beginning on or after 1 January 2010). This amendment
has not yet been endorsed for use in the EU.
IFRIC19, 'Extinguishing Financial Liabilities with Equity Instruments'
(effective for accounting periods beginning on or after 1 July 2010). This
interpretation has not yet been endorsed for use in the EU.
Amendment to IFRIC14, 'Prepayments of a Minimum Funding Requirement' (effective
for accounting periods beginning on or after 1 January 2011). This amendment
has not yet been endorsed for use in the EU.
IFRS9 'Financial Instruments' (effective for accounting periods beginning on or
after 1 January 2013). This standard has not yet been endorsed for use in the
EU.
IFRS2 (Amended) 'Group Cash-settled Share-based Payment Transactions'
(effective for accounting periods beginning on or after 1 January 2010). This
amendment has not yet been endorsed for use in the EU.
IFRS1 (amended) 'Limited exemption from Comparative IFRS7 Disclosures for first
time adopters' (effective for accounting periods beginning on or after 1 July
2010). This amendment has not yet been endorsed for use in the EU.
3. Business segments
For management purposes, the Group is currently organised into three operating
divisions - the ownership and management of investment property, the
development and sale of residential property and the ownership and operation of
hotels. These divisions are the basis on which the Group reports its segment
information. Segment information about these businesses is presented below:
Three months ended 31 Property Residential Hotel Other 2010
March 2010 rental operations
sales
€'000 €'000 €'000 €'000 €'000
Revenues 3,222 30,564 4,274 2 38,062
Cost of operations (1,527) (28,036) (3,115) (3) (32,681)
Gross profit 1,695 2,528 1,159 (1) 5,381
Administrative expenses (221) (293) (847) (1,162) (2,523)
Other operating income 48 - - 79 127
Other operating expenses (56) (32) (553) (49) (690)
Profit / (loss) from 1,466 2,203 (241) (1,133) 2,295
operations
Finance income 167 120 2 14 302
Finance costs (1,364) (1,037) (447) (3) (2,851)
Other gains and (losses) 5,066 83 3,899 97 9,145
- foreign exchange
Segment result before tax 5,335 1,369 3,213 (1,025) 8,891
Tax charge (1,779)
Profit for the periodas 7,112
reported in the income
statement
Reportable segment 175,345 159,188 115,106 449,639
assets
Unallocated assets 10,654 10,654
Total assets 460,293
Reportable segment (131,560) (117,926) (78,530) (328,016)
liabilities
Unallocated (3,176) (3,176)
liabilities
Total liabilities (331,192)
Other segment items
Capital expenditure 66 4 114 - 184
Depreciation 15 30 681 7 733
Amortisation 1 - 9 1 11
Three months ended 31 Property Residential Hotel Other 2009
March 2009 rental operations
sales
€'000 €'000 €'000 €'000 €'000
Revenues 3,458 6,755 4,009 66 14,288
Cost of operations (1,386) (5,720) (2,879) (3) (9,988)
Gross profit 2,072 1,035 1,130 63 4,300
Administrative expenses (98) (583) (676) (1,530) (2,887)
Other operating income 70 50 150 104 374
Other operating expenses (53) (34) (9) (83) (179)
Profit / (loss) from 1,991 468 595 (1,446) 1,608
operations
Finance income 18 24 5 68 115
Finance costs (1,801) (743) (863) (3) (3,410)
Other gains and (losses) (10,440) (759) (7,516) 60 (18,655)
- foreign exchange
Segment result before tax (10,232) (1,010) (7,779) (1,321) (20,342)
Tax credit 2,908
Lossfor the periodas (17,434)
reported in the income
statement
Reportable segment assets 147,633 198,971 110,311 456,915
Unallocated assets 12,533
Total assets 469,448
Reportable segment liabilities (109,292) (137,163) (81,290) (327,745)
Unallocated liabilities (3,068)
Total liabilities (330,813)
Other segment items
Capital expenditure 46 108 2 - 156
Depreciation 15 47 663 - 725
Amortisation 6 - 8 - 14
There are immaterial sales between the business segments. Unallocated assets
represent cash balances and other receivables held by the Company and those of
selected sub-holding companies, including related tax balances. Unallocated
liabilities include accrued costs within the Company and selected sub-holding
companies, including related tax balances.
4. Analysis of expenditure
4.1 Cost of operations
Three months Three months
ended 31 March ended 31 March
2010 2009
€'000 €'000
Costs of sale of residential property 27,405 5,454
Utilities, services rendered and other costs 2,850 2,418
Legal and professional expenses 518 243
Staff costs 1,311 1,332
Sales and direct advertising costs 360 306
Depreciation and amortisation 237 235
Cost of operations 32,681 9,988
4.2 Administrative expenses
Three months Three months
ended 31 March ended 31 March
2010 2009
€'000 €'000
Audit, accountancy and tax services 189 167
Incentive and management fee 851 1,035
Other professional fees 242 395
Utilities, services rendered and other costs 279 295
Share based payments 4 13
Staff costs 323 339
Depreciation and amortisation 508 607
Other administrative expenses 127 36
Administrative expenses 2,523 2,887
5. Tax (expense) / credit
Three months Three months
ended 31 March ended 31 March
2010 2009
Continuing operations €'000 €'000
Current tax (47) (7)
Deferred tax (1,732) 2,915
Tax(expense) / credit for the period (1,779) 2,908
On an individual company basis, an estimate has been made of the effective tax
rate for the full year and has been applied to the quarter results.
6. Dividends
There were no dividends declared or paid in the three months ended 31 March
2010 (2009: €nil).
7. Earnings/ Loss per share ("EPS" / "LPS")
Basic loss per share is calculated by dividing the loss after tax attributable
to ordinary shareholders by the weighted average number of ordinary shares
outstanding during the period.
For diluted loss per share, the weighted average number of ordinary shares in
issue is adjusted to assume conversion of all dilutive potential ordinary
shares. The difference in the number of ordinary shares between the basic and
diluted loss per share reflects the impact were the outstanding share warrants
to be exercised.
Reconciliations of the losses and weighted average number of shares used in the
calculations are set out below:
Three months ended 31 March 2010 Loss Weighted Per share
average number amount
of shares
Continuing operations €'000 Eurocents
Basic EPS
Profit attributable to equity 7,134 46,852,014 15.23
shareholders of the Company
Effect of dilutive securities
Share warrants - - -
Diluted EPS
Adjusted profit 7,134 46,852,014 15.23
Three months ended 31 March 2009 Loss Weighted Per share
average number amount
of shares
Continuing operations €'000 Eurocents
Basic LPS
Loss attributable to equity (16,893) 46,852,014 (36.06)
shareholders of the Company
Effect of dilutive securities
Share warrants - - -
Diluted LPS
Adjusted loss (16,893) 46,852,014 (36.06)
The outstanding share warrants exercise price exceeds current market value;
therefore the warrants are not dilutive. As a result, diluted loss per share
equals basic loss per share.
8. Property, plant and equipment
Buildings Plant and Motor Total
equipment vehicles
€'000 €'000 €'000 €'000
Cost or valuation
At 1 January 2009 103,060 10,238 303 113,601
Transfers between categories - (62) - (62)
Additions at cost 49 160 24 233
Exchange adjustments 692 329 16 1,037
Disposals - (40) (127) (167)
Revaluation (10,852) - - (10,852)
At 31 December 2009 92,949 10,625 216 103,790
Additions at cost - 122 - 122
Exchange adjustments 5,503 532 9 6,044
Disposals (54) - - (54)
At 31 March 2010 98,398 11,279 225 109,902
Accumulated depreciation
At 1 January 2009 (3,949) (1,517) (100) (5,566)
Charge for the period (1,546) (787) (68) (2,401)
Transfer - 5 - 5
Exchange adjustments (116) (255) (21) (392)
Disposals - 18 71 89
At 31 December 2009 (5,611) (2,536) (118) (8,265)
Charge for the period (468) (210) (10) (688)
Exchange adjustments (353) (149) (5) (507)
Disposals 14 - - 14
At 31 March 2010 (6,418) (2,895) (133) (9,446)
Net book value at 31 March 2010 91,980 8,384 92 100,456
Net book value at 31 December 2009 87,338 8,089 98 95,525
Buildings Plant and Motor Total
equipment vehicles
€'000 €'000 €'000 €'000
Cost or valuation
At 1 January 2009 103,060 10,238 303 113,601
Transfer between categories 5 194 18 217
Additions at cost 2 72 10 84
Exchange adjustments (10,795) (1,108) (32) (11,935)
Disposals -- (4) (45) (49)
At 31 March 2009 92,272 9,392 254 101,918
Accumulated depreciation
At 1 January 2009 (3,949) (1,517) (100) (5,566)
Transfer between categories 3 (203) (17) (217)
Charge for the period (567) (186) (21) (774)
Disposals - 3 15 18
Exchange adjustments 404 190 10 604
At 31 March 2009 (4,109) (1,713) (113) (5,935)
Net book value at 31 March 2009 88,163 7,679 141 95,983
Buildings were valued at 31 December 2009 by qualified professional valuers
working for the company of King Sturge, Chartered Surveyors, acting in the
capacity of External Valuers. All properties were valued on the basis of market
value and the valuations were carried out in accordance with the RICS Appraisal
and Valuation Standards. For all properties, valuations were based on current
prices in an active market. No valuation has been performed at 31 March 2010,
as the Group undertakes valuations on a semi-annual basis.
9. Investment property
31 March 2010 31 December 31 March 2009
2009
€'000 €'000 €'000
At beginning of the period 161,027 198,677 198,677
Disposals - (2,725) -
Transfers from other assets - 2,229 -
categories
Capitalised subsequent 62 268 84
expenditure
Exchange movements 7,430 (1,862) (21,477)
PV of annual perpetual usufruct - (2) -
fees
Fair value losses - (35,558) -
At end of period 168,519 161,027 177,284
The fair value of the Group's investment property at 31 December 2009 was
arrived at on the basis of valuations carried out at that date by King Sturge.
The valuations, which conform to International Valuation Standards, were
arrived at by reference to market evidence of transaction prices for similar
properties. No valuation has been performed at 31 March 2010, as the Group
undertakes valuations on a semi-annual basis.
The Group has pledged investment property of €162.0 million (31 December 2009:
€152.8 million; 31 March 2009: €159.8 million) to secure certain banking
facilities granted to subsidiaries. Borrowings for the value of €117.6 million
(31 December 2009: €117.2 million; 31 March 2009: €114.9 million) are secured
on these investment properties (note 13).
10. Inventories
31 March 2010 31 December 2009 31 March 2009
€'000 €'000 €'000
Land held for development 61,762 63,055 75,417
Construction expenditures 3,491 30,465 64,546
Completed properties 77,232 67,055 4,704
Freehold and leasehold properties 142,485 160,575 144,667
held for resale
Less assets classified as held (22,151) (21,855) -
for sale and shown in current
assets (note 14)
Total inventories 120,334 138,720 144,667
€29.9 million (31 December 2009: €15.1 million; 31 March 2009: €5.5 million) of
inventories was released to cost of operations in the income statement during
the period. €nil million (31 December 2009: €9.9 million; 31 March 2009: €nil)
was recognised in income statement during the period in relation to write-down
of inventories. All inventories are held at cost with the exception of €30.7
million, which are held at net realisable value (31 December 2009: €29.1
million; 31 March 2009: €2.6 million).
Bank borrowings are secured on land for the value of €76.6 million (31 December
2009: €76.0 million; 31 March 2009: €70.1 million) (note 13).
11. Cash and cash equivalents
31 March 2010 31 December 2009 31 March 2009
€'000 €'000 €'000
Cash and cash equivalents
Cash at bank and in hand 13,679 11,740 11,078
Short term bank deposits 1,251 1,525 1,591
14,930 13,265 12,669
Less assets classified as held (179) (214) -
for sale and shown in current
assets (note 14)
Total 14,751 13,051 12,669
Included in cash and cash equivalents is €9.4 million (31 December 2009: €6.1
million; 31 March 2009: €2.9 million) restricted cash relating to security and
customer deposits.
12. Cash generated from operations
Three months ended Three months ended
31 March 2010 31 March 2009
€'000 €'000
Profit/ (loss)for the period 7,112 (17,434)
Adjustments for:
Effects of foreign currency (9,234) 18,769
Finance costs 2,851 3,410
Finance income (302) (115)
Tax credit / (expense) 1,779 (2,908)
Bad debt write off 124 14
Depreciation of property, plant and 733 818
equipment
Amortisation charges 11 21
Loss on sale of property plant and 43 14
equipment
Charge relating to share based payments 4 13
Other operating expenses 582 -
3,703 2,602
Changes in working capital
Decrease / (increase) in inventory 18,292 11,936
Decrease / (increase) in trade and other (1,107) 1,150
receivables
(Decrease) / increase in trade and other (20,486) (11,096)
payables
(3,301) 1,990
Cash inflow generated from operations 402 4,592
13. Bank loans
31 March 2010 31 December2009 31 March2009
€'000 €'000 €'000
Current
Bank loans and overdrafts due
within one year or on demand
Secured (72,973) (156,031) (96,956)
Non-current
Repayable within two years
Secured (6,494) (5,293) (50,959)
Repayable within three to five
years
Secured (87,925) (12,338) (26,260)
Repayable after five years
Secured (80,648) (74,088) (75,331)
(175,067) (91,719) (152,550)
Total (248,040) (247,750) (249,506)
Bank loans directly associated (12,369) (12,240) -
with assets classified as held
for sale
Total bank loans (260,409) (259,990) (249,506)
The bank loans are secured on various properties of the Group by way of fixed
or floating charges.
On 24 February 2010 the Group companies Atlas Estates (Millennium) Sp. z. o.o,
Ligetvaros Kft, Atlas Solaris SRL and World Real Estate SRL signed an amendment
agreement with Erste Bank. This agreement created a cross collateralisation
arrangement between these four companies with respect to the loans provided by
Erste Bank. In return for this cross collateralisation the bank agreed to waive
any claims for any breaches of covenants which were in existence. A new
covenant of interest service coverage has been included, with a priority of
payments list, reduced margins on each loan and extension of maturity dates for
the two Romanian land loans to 31 December 2012. This agreement provides the
Group with major improvements in the loan terms on each of these four assets
and overcomes breaches of covenants on three of the loans. As a result of this,
loans of €88 million were reclassified in the current reporting period from
current liabilities to non-current liabilities due in after one year.
There is one loan (related to the loans on Atlas House within Immobul EOOD)
which continues to be classified as a current liability as a result of the
breach of the loan to value ratio covenant.
The fair value of the fixed and floating rate borrowings approximated their
carrying values at the balance sheet date, as the impact of marking to market
and discounting is not significant. The fair values are based on cash flows
discounted using rates based on equivalent fixed and floating rates as at the
end of the period.
The Polish subsidiary Atlas Estates (Kokoszki) Sp. z o.o. is still in
negotiation concerning terms for the extension of its €9.6 million facility.
The bank has offered to extend the loan to 30 September 2011.
Bank loans are denominated in a number of currencies and bear interest based on
a variety of interest rates. An analysis of the Group's borrowings by currency:
Euro Zloty Other Total
€'000 €'000 €'000 €'000
Bank loans and overdrafts - 31 March 202,621 57,773 15 260,409
2010
Bank loans and overdrafts - 31 December 203,042 56,933 15 259,990
2009
Bank loans and overdrafts - 31 March 203,307 46,177 22 249,506
2009
14. Assets classified as held for sale and directly associated liabilities
On 3 November 2009 Atlas announced an agreement for the sale of its entire
investment interests throughout Slovakia (the "Slovakia Portfolio"), comprising
one site in Bratislava and two sites in Kosice. The Group realised €0.9 million
in net proceeds from the first stage of the sale and is expecting to realise a
further €7.1 million on completion of the second stage. It is anticipated that
the net proceeds will be utilised to fund the development of the Group's
remaining assets, with particular focus on the assets located in Warsaw,
Poland, where the Group has a strong presence and is likely to realise value
from development activity within the next two to three years. This contrasts
with the projects in Slovakia, which would have required the investment of
large amounts of capital with returns arising in the long term
The assets and liabilities directly associated with this sale were separately
classified as of 31 March 2010. €5.9 million (31 December 2009: €5.9 million;
31 March 2009: €nil) was recognised as a provision for the value of the
development land held in Slovakia. The major classes of assets and liabilities
held for sale were as follows:
Assets: 31 March 2010 31 December 2009
€'000 €'000
Deferred tax asset 145 142
Inventories 22,151 21,855
Trade and other receivables 42 100
Shareholder loan receivable 4,316 4,280
Cash and cash equivalents 179 214
Total assets classified as 26,833 26,591
held for sale
Liabilities: 31 March 2010 31 December 2009
€'000 €'000
Trade and other payables (6,487) (6,426)
Bank loans (12,369) (12,240)
Deferred tax liabilities (917) (778)
Total liabilities directly (19,773) (19,444)
associated with assets
classified as held for sale
15. Related party transactions
a. Fragiolig is a wholly owned subsidiary of the Izaki Group, an Israel-based
real estate development firm and founding shareholder of Atlas. The Izaki
Group, together with RP Capital Group, also own and manage Atlas Management
Company Limited ("AMC"), which provides executive management services to
Atlas. Fragiolig announced that, as at 4.30 p.m. (London time) on 11 May
2010, valid acceptances had been received in respect of a total of
10,828,132 Atlas Shares, representing approximately 23.1 per cent. of the
issued share capital of Atlas. None of these acceptances were received
from persons acting in concert with Fragiolig. As at 4.30 p.m. (London
time) on 11 May 2010, Fragiolig, together with persons acting in concert
with
15. Related party transactions (continued)
it, owned 15,413,078 Atlas Shares, representing approximately 32.9 per cent. of
the issued share capital of Atlas. Therefore, in combination with the Atlas
Shares already owned by Fragiolig and parties acting in concert with it,
Fragiolig, together with parties acting in concert with it, now owns, or has
received acceptances in respect of, in aggregate, 26,241,210 Atlas Shares,
representing approximately 56.0 per cent. of the issued share capital of Atlas,
all of which count towards satisfaction of the Acceptance Condition. In
addition, as announced on 16 April 2010, Fragiolig has received an irrevocable
undertaking to accept the Offer in respect of a further 3,100,199 Atlas Shares,
representing approximately 6.6 per cent. of the issued share capital of Atlas.
This irrevocable undertaking remains outstanding. As announced on 16 April
2010, Fragiolig granted Capital Venture Worldwide Group Limited an option to
purchase 3,325,346 Atlas Shares at a price of £0.90 per Atlas Share from
Fragiolig during a period of 15 calendar days commencing two Business Days
after the date the Offer lapses or is withdrawn. As the Offer has become
wholly unconditional, this option has ceased to be exercisable.
For details of the shareholders acting in concert with Fragiolig see note 17.
b. Key management compensation
31 March 2010 31 March 2009
€'000 €'000
Fees for non-executive 42 53
directors
The Company has appointed AMC to manage its property portfolio. At 31 March
2010 AMC was owned by the RP Capital Group and RI Limited and RI Holdings
Limited. In consideration of the services provided, AMC received a management
fee of €0.8 million (3 months ended 31 March 2009: €1.0 million). Under the
agreement, AMC are entitled to a performance fee based on the increase in value
of the properties over the 12 month period to 31 December 2009. No performance
fee has been accrued for the 3 months ended 31 March 2010 (3 months ended
31 March 2009: €nil) because no reliable estimate can be made.
AMC also received €nil million (31 March 2009: €0.04 million) in relation to
lease agreements for office space in Poland. As of 31 March 2010 €2.6 million
included in current trade and other payables was due to AMC (31 December 2009:
€2.2 million; 31 March 2009: €1.7 million).
c. Under the loan agreement of 18 May 2007, EdR Real Estate (Eastern Europe)
Finance S.a.r.l, which is also a shareholder in Atlas Estates (Cybernetyki)
Sp. z o.o., has extended a loan facility of €3.9 million to Atlas Estates
(Cybernetyki) Sp. z o.o. for the purpose of covering ongoing investment and
business expenses. The loan facility is to be repaid by 31 December 2020
and bears interest at a variable rate equal to the sum of EURIBOR and the
lender's margin. In 2010 the lender charged €26 thousand as interest (3
months ended 31 March 2009: €16 thousand). As of 31 March 2010 Atlas
Estates (Cybernetyki) Sp. z o.o. has drawn the loan facility plus
associated interest in the amount of €2.6 million (31 December 2009: €2,5
million; 31 March 2009: 2.6 million).
d. Under the loan agreement of 1 August 2005 and annex dated 10 August 2005,
Dellwood Company Limited, which is also a shareholder in Zielono Sp. z
o.o., has extended a loan facility of PLN 2.8 million (€0.6 million) to
Zielono Sp. z o.o. for the purpose of covering ongoing investment and
business expenses. The loan facility is to be repaid within 60 days from
the receipt of a demand of payment and bears interest at a variable rate
equal to the sum of WIBOR and the lender's margin. In 2010 the lender
charged PLN 28 thousand (€7 thousand) as interest (3 months ended 31 March
2009: PLN 23 thousand (€5 thousand)). As of 31 March 2010 Zielono Sp. z
o.o. has drawn the loan facility plus associated interest in the amount of
PLN 1.7 million (€0.4 million) (31 December 2009: PLN 1.4 million (€0.3
million) (31 March 2009: PLN 1.7 million (€0.4 million)).
e. Shasha Transport Ltd, which is also a shareholder in Atlas and Shasha Zrt
(previously: Atlas Estates Kaduri Shasha Zrt), have extended loan
facilities to Atlas and Shasha Zrt for the purpose of covering ongoing
investment and business expenses. The loan facility has no repayment date
and bears interest at a variable rate equal to the sum of EURIBOR and the
lender's margin. In 2010 the lender charged €11 thousand as interest (3
months ended 31 March 2009: €20 thousand). As of 31 March 2010 Atlas and
Shasha Zrt has drawn the loan facilities plus
15. Related party transactions (continued)
associated interest in the amount of €1.8 million (31 December 2009: €1.8
million; 31 March 2009: €1.7 million).
f. Under the loan agreement of 29 September 2005, Kendalside Limited, which is
also a shareholder in Circle Slovakia s.r.o., has extended a loan facility
of €6.0 million to Circle Slovakia for the acquisition of a property. This
facility was extended by €3.0 million on 1 December 2008. The loan facility
is to be repaid by 31 August 2013, and bears interest at a variable rate
equal to the sum of EURIBOR and the lender's margin. In 2010 the lender
charged €63 thousand as interest (3 months ended 31 March 2009: €80
thousand). As of 31 March 2010 Circle Slovakia has drawn the loan facility
plus associated interest amount of €11.6 million (31 December 2009: €11.5
million; 31 March 2009 8.4 million). This loan is included within assets
held for sale as shown in note 14.
16. Post balance sheet events
On 14 April 2010 the board of Atlas announced that it had received an approach
which may or may not lead to a cash offer of 90p per Atlas Estates Limited
share being made for the whole of the issued share capital of the Company other
than shares already held by the offeror. This offer price had been included in
the announcement with the consent of the offeror.
On 20 April 2010 the board of Atlas noted the announcement of a mandatory cash
offer by Fragiolig Holdings Limited ("Fragiolig") published on 16 April 2010.
On 6 May 2010 the board announced their views on the offer by Fragiolig for the
entire issued, and to be issued, ordinary share capital of Atlas as announced
on 16 April 2010. The Offer values the entire issued ordinary share capital of
Atlas at £42.17 million and represents a substantial discount to the latest
published NAV per Atlas Share as at 31 December 2009 of €2.42 (and adjusted NAV
per Atlas Share of €2.95). The Board, having considered the information
currently available to it, including the latest published NAV, Atlas' share
price performance and having regard to the risks and operating constraints
highlighted above, believe the Offer price to be fair, given it will afford
Shareholders an opportunity to obtain cash for their Shares in the timescales
of the Offer. The fyull text of this announcement is available on the Company's
website at www.atlasestates.com.
The market conditions in which the Company is operating and is seeking the
renewal of banking facilities remain difficult and the Company has continued to
support its subsidiaries within its limited resources. No specific events have
occurred which would require any adjustment to the period end balance sheet.
17. Other items
17.1 Information about court proceedings
As of 14 May 2010, the Company was not aware of any proceedings instigated
before a court, a competent arbitration body or a public administration
authority concerning liabilities or receivables of the Company, or its
subsidiaries, whose joint value constitutes at least 10% the Company's equity
capital.
17.2 Information about granted sureties
During the first quarter of 2010, the Company has not granted any sureties (for
loans or credit facilities) or guarantees.
17.3 Financial forecasts
No financial forecasts have been published by the Company in relation to the
year ended 31 December 2010.
17.4 Substantial shareholdings
As of 14 May 2010, the Board was aware of the following direct or indirect
interest in 3% or more of the Company's ordinary share capital (excluding
treasury shares). All shares have equal voting rights.
Table 1 - Significant Shareholders Number of Percentage of
Shares held Issued
Share Capital
As at 4.30 p.m. on 11 May 2010, the interests in
Atlas Shares of Fragiolig and persons acting in
concert with it were as follows:
Fragiolig Holdings Limited 3,325,346 7.10
Atlas International Holdings Limited 6,461,425 13.79
Mishaela Shulman1 54,660 0.12
RP Explorer Master Fund 728,559 1.56
RP Partners Fund 4,832,017 10.31
RP Capital Group employees 11,071 0.02
Total Fragiolig and parties acting in concert: 15,413,078 32.9
Livermore Investments Limited 10,170,372 21.71
Lockerfield Limited 6,730,623 14.37
Finiman LImited 4,097,509 8.75
Capital Venture Worldwide Group Limited 3,100,199 6.62
APB Investments 1,600,000 3.42
TOTAL 41,111,781 87.75
1 Mishaela Shulman is a member of Mr Ron Izaki's family and is deemed to be
acting in concert with the Izaki Group.
17.5 Directors' share interests
There have been no changes to the Directors' share interests during the three
months ended 31 March 2010. No Director had any direct interest in the share
capital of the Company or any of its subsidiaries during the three months ended
31 March 2010. One Director (Mr Spicer) acquired a beneficial interest in
14,785 shares in the Company in 2007.
17.6 Other share interests
No changes have occurred in the three months ended 31 March 2010 in the number
of warrants issued to managing and/or supervisory persons.
18. Principal subsidiary companies and joint ventures
The table below lists the current operating companies of the Group. In
addition, the Group owns other entities which have no operating activities. All
Group companies are consolidated.
No new subsidiary undertakings were acquired and no investments were made in
any additional joint ventures during the period ended 31 March 2010.
Country of Name of subsidiary/joint Status Percentage of
incorporation venture entity nominal value of
issued shares and
voting rights held
by the Company
Holland Atlas Estates Cooperatief U.A. Holding 100%
Holland Atlas Estates Investment B.V. Holding 100%
Holland Trilby B.V. Holding 100%
Guernsey Atlas Finance (Guernsey) Holding 100%
Limited
Netherlands Atlas Estates Antilles B.V. Holding 100%
Antilles
Cyprus Darenisto Limited Holding 100%
Cyprus Kalipi Holdings Limited Holding 100%
Poland Atlas Estates (Poland) Sp. z Management 100%
o.o.
Poland Platinum Towers Sp. z o.o. Development 100%
Poland Zielono Sp. z o.o. Development 76%
Poland Properpol Sp. z o.o. Investment 100%
Poland Atlas Estates (Millennium ) Sp. Investment 100%
z o.o.
Poland Atlas Estates (Sadowa) Sp. z Investment 100%
o.o.
Poland Capital Art Apartments Sp. z Development 100%
o.o.
Poland Grzybowska Centrum Atlas Re Holding 100%
Projects BV SK
Poland HGC S.A. Hotel 100%
operation
Poland HPO Sp. z o.o. Development 100%
Poland Atlas Estates (Cybernetyki) Sp. Development 50%
z o.o.
Poland Atlas Estates (Kokoszki) Sp. z Investment 100%
o.o.
Hungary CI-2005 Investment Kft. Development 100%
Hungary Cap East Kft. Investment 100%
Hungary Felikon Kft. Investment 100%
Hungary Ligetváros Kft Investment 100%
Hungary Városliget Center Kft Investment 100%
Hungary Atlas Estates (Moszkva) Kft. investment 100%
Hungary Atlas and Shasha Zrt Development 50%
Romania World Real Estate SRL Investment 100%
Romania Atlas Solaris SRL Development 100%
Romania DNB Victoria Towers SRL Hotel 100%
operation
Bulgaria Immobul EOOD Investment 100%
Slovakia Circle Slovakia s.r.o Development 50%
19. INTERIM CONDENSED NON-CONSOLIDATED FINANCIAL INFORMATION
NON-CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the three months ended 31 March 2010
Three months Three months
ended ended
31 March 2010 31 March 2009
(unaudited) (unaudited)
€'000 €'000
Revenues - -
Cost of operations - -
Gross profit - -
Administrative expenses (738) (999)
Other operating income 79 -
Loss from operations (659) (999)
Finance income 56 1,917
Finance costs - (1)
Other losses - foreign exchange (5) (17)
(Loss) / profit before taxation (608) 900
Tax expense - -
(Loss) / profit and total comprehensive income (608) 900
for the period
NON-CONSOLIDATED BALANCE SHEET
As at 31 March 2010
31 March 2010 31 December 2009 31 March 2009
(unaudited) (unaudited)
€'000 €'000 €'000
ASSETS
Non-current assets
Investment in subsidiaries 134,409 134,409 21,220
Loans receivable from 776 - 177,975
subsidiaries
135,185 134,409 199,195
Current assets
Trade and other 42 165 193
receivables
Cash and cash equivalents 2,282 3,788 3,142
2,324 3,953 3,335
TOTAL ASSETS 137,509 138,362 202,530
Current liabilities
Trade and other payables (2,675) (2,924) (2,240)
(2,675) (2,924) (2,240)
TOTAL LIABILITIES (2,675) (2,924) (2,240)
NET ASSETS 134,834 135,438 200,290
EQUITY
Share capital account 6,268 6,268 6,268
Other distributable 194,817 194,817 194,817
reserve
Accumulated loss (66,251) (65,647) (795)
TOTAL EQUITY 134,834 135,438 200,290
Basic net asset value per share n/a n/a n/a
NON-CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
As at 31 March 2010
Three Months Ended 31 March Share Other Accumulated Total
2010 capital reserves loss
account
(unaudited) €'000 €'000 €'000 €'000
As at 1 January 2010 6,268 194,817 (65,647) 135,438
Total comprehensive income - - (608) (608)
for the period
Share based payments - - 4 4
As at 31 March 2010 6,268 194,817 (66,251) 134,834
Year Ended 31 December 2009 Share Other Accumulated Total
capital reserves loss
account
€'000 €'000 €'000 €'000
As at 1 January 2009 6,268 194,817 (1,708) 199,377
Total comprehensive income - - (63,968) (63,968)
for the year
Share based payments - - 29 29
As at 31 December 2009 6,268 194,817 (65,647) 135,438
Three Months Ended 31 Share Other Accumulated Total
March 2009 capital reserves loss
account
(unaudited) €'000 €'000 €'000 €'000
As at 1 January 2009 6,268 194,817 (1,708) 199,377
Total comprehensive income - - 900 900
for the period
Share based payments - - 13 13
As at 31 March 2009 6,268 194,817 (795) 200,290
19. INTERIM CONDENSED NON-CONSOLIDATED FINANCIAL INFORMATION - CONTINUED
NON-CONSOLIDATED CASH FLOW STATEMENT
Three months ended 31 March 2010
Three months Three months
ended 31 March ended 31 March
2010 2009
(unaudited) (unaudited)
€'000 €'000
(Loss) / profit for the period (608) 900
Adjustments for:
Effects of foreign currency 5 18
Finance costs - 1
Finance income (56) (1,917)
Charge relating to share based payments 4 13
(655) (985)
Changes in working capital
Decrease / increase in trade and other 123 (17)
receivables
(Decrease) in trade and other payables (249) (192)
Net cash outflow from operating activities (781) (1,194)
Investing activities (720) -
New loans granted to subsidiaries
Net cash used in investing activities (720) -
Financing activities
Interest received - 5
Interest paid - (2)
Net cash from financing activities - 3
Net decrease in cash and cash equivalents in (1,501) (1,191)
the quarter
Effect of foreign exchange rates (5) (18)
Net decrease in cash and cash equivalents in (1,506) (1,209)
the quarter
Cash and cash equivalents at the beginning of 3,788 4,351
the quarter
Cash and cash equivalent at the end of the 2,282 3,142
quarter
Cash and cash equivalents
Cash at bank and in hand 2,282 3,142
Bank overdrafts - -
2,282 3,142
END
ATLAS ESTATES LTD
